The logistics of the healthcare sector is growing fast. And companies like Würzburg, Germany-based Va-Q-tec are spawning new TCL technologies that are not only delivering the product but also the bottom line.
In 2001, Joachim Kuhn and Roland Caps co-founded a company that sought to commercialize the thermal insulation technology the two German scientists had developed at a Bavarian energy research center. In the beginning, the two weren’t certain about what industries they would focus on. However, their company, Va-Q-tec AG, quickly centered its product development on healthcare and logistics. The decision proved fruitful. Based in Würzburg, Germany, the company is now global in reach. It makes insulated boxes and containers. In addition to selling these products to clients, Va-Q-tec boasts a fleet of 1,500 insulated containers for rent around the world, with plans to add another 1,000 containers over the next few years.
Va-Q-tec has ridden the dramatic growth of pharmaceuticals-related temperature controlled logistics in the years since the company’s founding. Last year, Va-Q-tec went public in German bourses (stock exchange). The company notched revenue of €35.5 million, an increase of almost 60% from 2015. Revenue for the first half of this year jumped 44% to €22.5 million.
Growth of TCL
Even as the company has branched out into other sectors, including construction and refrigeration and freezer insulation, Va-Q-tec mirrors the growth of healthcare in temperature-controlled logistics. In many ways, demands of pharmaceuticals and those who regulate the industry drive this part of logistics and the technology behind it.
“Modern biotech treatments require more accurate temperature control,” explained Fabian Eschenbach, who heads Va-Q-tec’s healthcare and logistics business unit. “In the past, medicines were just chemicals. Today, they’re complex biotech molecules,” whose lifetime and performance could well be compromised if not stored in a controlled temperature, he said.
Va-Q-tec certainly isn’t alone in the field, either. One recent report lists 20 companies throughout the world that vie for a share in the marketplace for temperature controlled packaging solutions related to pharmaceuticals. Like Va-Q-tec, most of the companies are relatively new.
That marketplace is growing by leaps and bounds. According to estimates by the market research group IMARC, healthcare-related cold chain logistics totaled a tad less than $10 billion last year. It’s expected to expand to $15.1 billion by 2022.
The more narrowly defined healthcare-related cold chain packaging totaled $3.9 billion in 2016, according to IMARC. The research firm estimates that segment of the market will grow by more than 9% annually between 2017 and 2021.
The publication Pharmaceutical Commerce estimates pharmaceutical products that require refrigerated storage and transport was valued at $283 billion in 2017, about 24% of total pharmaceuticals. That figure is expected to reach close to $400 billion by 2021, an almost 30% jump, according to the publication. Pharmaceutical Commerce estimates that “managing the transportation of temperature-controlled products (refrigerated and frozen) will total $13.4 billion this year.”
Va-Q-tec believes that by 2020, 27 of the top 50 best-selling drug products will require cold chain storage and handling.
As the industry moves more and more to biologically based products, regulators around the world are demanding more exacting standards for transport and storage. As Eschenbach explained, in years past, some pharmaceutical companies would interpret regulations allowing temporary storage outside recommended temperature ranges to include transportation to the patient.
“Today, regulatory bodies say, ‘no, that safety buffer is for the patient because you don’t know where the patient stores it,’” Eschenbach said. “Thus you have to have much more accurate temperature control transport to save the performance until the truck reaches the patient.”
Va-Q-tec specializes in what are termed “passive” containers. Unlike refrigerated containers, or reefers, passive containers lack compressors or heaters. They maintain temperatures through advanced insulation panels. These containers are prepared at a certain temperature range, through the use of specialized materials that are frozen. The containers can then maintain that temperature range for five to ten days.
Air Freight Growing
According to Eschenbach, these passive containers have distinct advantages over traditional reefers, which require batteries that need to be recharged after one-and-a-half or two days. Highly reduced energy consumption is an additional benefit. Va-Q-tec developed vacuum insulation technology that Eschenbach said is ten times more efficient than conventional insulation.
Passive containers are made for airfreight and trucking, not for lengthy sea travel. But pharmaceuticals have moved steadily toward air and have become a leading product in airfreight transport. According to an IATA study released late last year, two-thirds of all pharmaceuticals imported into the US in 2015 were transported by air, representing a value of almost $57 billion. In the EU, 37% of imported pharmaceuticals came by air, representing a value of $59 billion, the study said.
Va-Q-tec manufactures boxes of various sizes that follow the lifecycle of a drug’s development. Small boxes are made for drug trials, while the containers are used once the drug is in commercial production.
Va-Q-tec sold its first containers in about 2004 to drug makers Boehringer Ingleheim and Germany’s Merck KGaA (not to be confused with the American Merck & Co.), Eschenbach explained. The company then developed its rental fleet over time, establishing network stations for preparation and drop points for one-way service. The company offers 300 routes worldwide. It also has partnered with a number of airlines, including Emirates, KLM, United and Lufthansa, which extends its ability to offer one-way container service.
While its rental fleet is limited to the pharma trade, Va-Q-tec’s containers are sold to customers moving a variety of temperature-controlled cargo, including seafood. “A lot of products need temperature controlled transportation,” said Moritz von Wysiecki, the company’s global head of marketing. Combine that with increased globalization and “these two trends lead to a sustainable growth of our products and technology,” von Wysiecki said.
The company is also working on pilot projects that incorporate its insulation technology in temperature-controlled vehicles and trailers.
Last-mile distribution of temperature-controlled drugs is another area of particular interest to companies such as Va-Q-tec. That’s because global flows of pharmaceuticals from manufacturing plants to distribution warehouses is by now extremely well-defined and well-controlled. Not so much how to safely transport these drugs from distribution sites to pharmacies or from pharmacies to the patients. “That’s an area where we expect massive growth,” said Eschenbach.
He added that food-related ecommerce is also wide-open. The entire industry lacks regulations and standards and is searching for better ways to deliver fresh food to homes.
“Everyone is trying to find a solution on their own,” Eschenbach said. “Without a clear logistics concept, it’s also hard to find the right thermal packaging solution. That’s why we’re in discussion with many global players going in this direction,” he said, adding: “Development of the logistics supply chain has to go hand-in-hand with the development of the thermal packaging solution.”