Chief Executive Officer of MRGN Advisors and Regional Partner.
Switzerland at Mérieux Développement
Pierre has over 30 years of experience in the global life science industry, especially with specialty care, vaccines and immunotherapy, at the helm of international operations, in C-level positions at global level in multinational corporations and as CEO of start-up companies. He is a lecturer in several MBA programs and in life science conferences, and at the Mass Challenge incubator in Switzerland where he is also a mentor for start-up life sciences companies.
Section 1: The Current State of the Cold Chain Market & Trends
1.1. What are the current trends in the cold chain supply market?
The only megatrend is the requirement for more throughput capacity, more shelf space in the cold chambers and fridges, driven not only by vaccines but also by the many biologics that are being used in multiple conditions across; oncology, rheumatology, gastroenterology. All these products are require to be stored at fridge temperature, a few of them are frozen. By virtue of the progression of the number of biologics in the armamentarium, the therapeutic or preventative, there’s a requirement for more shelf space in the cold chain.
R&D projects are split into small molecules and biologics on the other; and, you see a steady progression in the last 20 years in the share of biologics in R&D projects and they have now reached the finish line.
Not all of them require large volumes, such as primary care products which require massive volumes, but there is an ever-expanding number of products which is sufficient itself, to create attention. Simply, if you’re a wholesaler and you have large warehouses, it is feasible for you to mobilize some space and to add one extra cold chamber. If you’re a hospital manager and you have fixed walls and you need to install a new cold chamber, that’s a bigger challenge.
I think right now 40% of all projects are biologics. In the field of oncology, it’s bigger. It’s around 70%+ are biologics. But you do have some published data from GlobalData and Informa on this. They publish those indicators annually or biannually.
1.2. What new technologies have been incorporated into cold chain logistics?
New technologies that have been incorporated into cold chain logistics are typically within the last mile. The technology for cold chambers and fridges has not evolved in recent times. The technology progress is on how to insulate products that need refrigeration when you actually take them from one location to another; or when you take them from one location to the point of usage, and that’s especially relevant in emerging countries.
The other dimension is what tools you use for monitoring because, you want to ensure there are no temperature excursions and if there were any excursions, that those would be limited in time. What you want typically in terms of the monitoring of the cold chain is to have a precise enough monitoring so that you can determine whether there is a risk of alteration of your product.
The issue of having a breach of your cold chain process in the course of shipments, is the risk that the finished product is lost after incurring manufacturing costs before distribution.
This is essentially maximum loss, and we have not even considered the cost of the structure because they’re not just thrown away, those products, they have to be disposed of in a peculiar manner. There are technologies with better sensors, better monitoring tools, real-time monitoring which is being put in place. Those tend to be expensive tools. They’re not used so much for relatively cheap ‘per dose vaccines,’ but they are evidently used for high-value biologics.
Starting from your factory going to main cold chambers and then maybe going to lower cold chambers, in reasonably sophisticated environments, you’re using monitoring equipment constantly with instant alert systems, and it has different probes into the pack.
It would not just be one probe, it would be monitoring the temperature in several parts of the parcel, the package, so that if there was any breach for some reason in one corner, your probe wouldn’t be falsely recording that everything is fine.
The push from the pharma company is demand for supply of space and compliance with the quality agreements, the quality requirements which define storage conditions. Because it is a demand from the companies which is driven by the regulatory requirements, which is signed on by the authorities, the distribution industry has no other choice than to comply.
It could even be conceived, I think, from some companies as a differentiator. It helps their competitive positioning. Let’s talk about the example of the international freight management companies, that ship the products around the world, for example, FedEx or DHL. Whenever one is adopting a new technology, the others are following immediately. They don’t want to look like they’re lagging behind.
1.3. How do cold chain logistic companies view sustainability?
I think the way they’re approaching this is by, staying up-to-date in terms of technological trends and offering a service which is reliable. It’s because of the cost of replacing material which is being lost due to a breach of the cold chain and, therefore, the cost of the insurance that comes with it. One way also for distribution companies to reduce their insurance premiums is to have such high-quality standards that the
In terms of environmental sustainability and compliance with the sustainable development goals and protecting the planet and the impact of the carbon footprint, I’d be surprised if the carbon footprint was improving. For instance, I think the delivery of the COVID-19 vaccine to various corners of the world using refrigerated cargo in airplanes is probably going to have an ugly carbon footprint on its own.
Section 2: How will cold chain be impacted by the COVID Vaccine?
2.1. What are the logistical requirements for a cold stored COVID vaccine?
If it’s just standard refrigeration, like 2-8 centigrade, there’s nothing really specific. There’s nothing new. It’s regular fridge temperature. You find all sorts of your cold chambers and shipping solutions for that. I think this is the easiest. The vast majority of the biologicals, including vaccines, that have to be shipped are at a fridge temperature, this is something that is being done daily with the vaccines.
2.2. What does the cold chain supply model look like for a COVID vaccine?
To take a simple example, it starts from the manufacturing unit where it is manufactured at a very low temperature. The minute the final dose is ready, it is deep frozen, and then you have to maintain the cold chain, so it is put into a deep freezer in quarantine until it passes quality control.
Once it is quality-control-released, it is given to a distributor that would maintain the cold chain and take it to the point of destination, either a wholesaler or a hospital or an academic center that has the deep freezing capability.
However, you may have several steps because you may sell a large quantity to a wholesaler who has the capacity and logistical capabilities to disseminate and sell to other locations. The idea is to avoid, especially during transportation and in the interface job, actually physically moving a product from a refrigeration unit that belongs to party which has to go back to the point of departure to reload, and stays there is a process which is executed flawlessly at best.
2.3. What are the challenges facing cold chain logistics for the supply of a cold stored COVID vaccine?
The challenge is the volume. Why? Because if you’re looking at the vaccine market, roughly we have, 150 million global births annually, and let’s say, they each receive about 20 doses of vaccine every year. In any given year, you could be looking at three billion doses of vaccines in various types of containers. Then you have to add the influenza which is going to adults. That’s about 700 million.
In all, it’s probably 3.5 billion doses of vaccine that have to be shipped annually. I’m not even counting the biologics. All of a sudden, from late 2020 to early 2021 and onward, on top of these existing pediatric vaccines and influenza vaccines, we’re going to need to be shipping 5-7 billion doses of the COVID-19 vaccine. This is a material increase in the volume to be shipped, whilst considering the arguably smaller but ever-increasing volume of oncology products, cell and gene therapy products that also need refrigeration. Then you get the perfect storm.
The first challenge is volume and that is a challenge that applies to everyone, manufacturers of fridges, of cold chambers, refrigerated freight.
The additional layer of complexity is the product specific requirements that don’t fall within the usual range of two to eight centigrade, which is the case of the Moderna vaccine which is six months at minus 20 and stable only one month at regular fridge temperature.
Even worse, the Pfizer and BioNTech product, which is stable at minus 70 centigrade and only five days at fridge temperature, which means that, in principle, if you want to manage those things properly, you need to have a deep freezing capacity next to a regular fridge or cold chamber facility where you essentially take the vaccine from the freezer or ultra-cold freezer into a regular fridge for it to become liquid again, thaw and become liquid, and then be ready for injection within the window stability.
You can’t actually use your bare hands to grab things in there. Remember, it’s minus 70 so your skin will freeze instantly. You have to handle the vaccine using special glove equipment.
2.3.1. Pressure Points in the Supply Chain Model
Any step in the supply chain could be a problem such as insufficient power supply or an unreliable power supply. The other big obstacles are the interface points. Let’s say you delivered to an emerging country. You deliver a container which is refrigerated and you have to get customs clearance on arrival. It means there’s an official who will stamp a piece of paper. Mind you, it is not that simple in some occasions. I’ve seen that vaccine containers sit on the tarmac in an airport where it was 40C in the shade and there was no shade. That kind of problem happens regularly which is why, to me, vaccines such as the Moderna vaccine or the Pfizer vaccine are simply a nonstarter for emerging countries.
2.3.2. Education of End Users
I think the challenge is also at the end user level, end users being healthcare providers, nurses, doctors, or pharmacists in the hospitals, they’re used to products that are refrigerated at 2-8C. All of a sudden if you need them to freeze at minus 20, let alone at minus 70, you need a new standard operating procedure. You need to train your personnel. You’re not using those products the same way as the other products that you do. The risk is that because of habits, because people are unfamiliar with the constraints, problems may occur and problems will occur. The question is not whether they will occur. The question is when and within which proportion.
2.3.3. The Pfizer vaccine can only be kept out of ultra-low temperatures up to 4 times, is this possible?
I think it is probably achievable if upon departure from the manufacturing plant, you actually have parcel sizes that correspond to pretty much the size of the unit at the point of use which is not too far from the immunization points. What actually triggers the exposure to a higher temperature is opening the thing to actually send quantities to different places. If you’re having a regular cold chamber and you receive these big pallets and you need to send smaller fraction of a palette to smaller cold chamber, you can do it in a large cold chamber at 2 to 8C.
Of course, your personnel wears essentially winter gear, and that’s perfectly fine. But if you’re working at minus 20, you don’t have a cold chamber in which a human being can get into to work, although you could conceivably do. Minus 70C, is implausible, you would need Arctic gear. I think it would be a different approach. It would be sizing the pack so that, actually, it gets pretty much all the way to the final point of destination where the entire content of the package will be used in that place.
2.3.4. The problems of transporting several smaller quantities
Dividing up the packages into smaller packages is going to be less efficient and besides, you would have also to size it such that it fits neatly into whatever deep freezer they have at the point of destination because, if your pack doesn’t fit in there, in the final deep freezer, you have an interesting round peg and square hole problem which is becoming a part of their problem.
2.4. How will cold chain logistics companies overcome the challenges?
I think the only strategies they can take is to improve their operations in terms of their technical capabilities. They presumably have some experience, but they do not have routine experience shipping at low or ultra-low temperature. To me, the ultra-low temperature is going to be the absolute nightmare. The low temperature, minus 20, is going to be challenging and the rest, will become a standard practice.
What I understand is actually buying the correct equipment, also making sure that the monitoring equipment is fitted and in place, and I suspect that there will be a lot of design thinking. If your product cannot be exposed to temperatures higher than minus 70C more than four times between manufacturing and administration, where the last occasion is when you actually bring it to fridge temperature and then it’s going to be injected into someone.
This means that you must think about your delivery route which has no more than three or four maximum interface points where the product is taken out of a refrigerated container at the right temperature to move into another container at the right temperature. Knowing that you have to minimize that step, would therefore be a complete redesign of the supply chain.
You would have to think about shipping the whole unit that maintains the temperature all the way to the point of destination as opposed to having a bigger unit and then partition it into smaller blocks as you progress down the supply chain.Which is why, to me, it’s going to be an inherent limitation to the accessibility of the Pfizer vaccine, because by definition, shipping material that can maintain minus 70C to some parts of the world is a nonstarter.
I think delivering the vaccine in the summer is going to be a problem in all countries including the US and European countries. It’s going to change the way you immunize. If you have to maintain minus 70C and you can’t split the quantities into smaller volumes as opposed to what you do normally with vaccines, you actually split it up and it goes all the way to the fridges in the pharmacies, at the doctor’s office, and then it gets administered. What you’re doing is you’re actually bringing the vaccine closer to the people.
This is how you ensure accessibility. You’re going to have to maintain minus 70 until you essentially put it into the fridge, five days later, it has to be administered or it has to be discarded. What do you have to do in order to avoid that case? You have to bring the people to the vaccine. It’s going to be a different flow of vaccines.
2.4.1. The Development of Localized Vaccine Manufacturing
It has always been a line of reasoning that was started back at the time of the H1N1 influenza, before that, the H5N1. It’s about localization of manufacturing rather than relying on the small number of manufacturing plants that have a large capacity. It’s about localizing production so that you have a larger number of facilities that produce smaller amounts themselves but actually serve the population in the country or neighboring countries. Now, the question would be also to adopt novel manufacturing technologies because, you can’t use the same technologies that have been used in the past which are really cost-effective when they’re fully scaled up.
2.4.2. State Intervention for promoting Localised Manufacturing
State intervention will be pivotal. Absolutely critical. Countries are starting to realize that if they are 100% dependent on imports for their public health, when a serious pandemic strikes, they are in trouble. Right now the pandemic has put the world economy on its knees, and we have 1.2 million dead worldwide. There are 7.5 billion human beings on the planet. It is not the end of mankind. If it was something that spreads like the coronavirus, spreads like H1N1 influenza but kills like H5N1, with 30% or 40% lethality, we would having tens of millions of dead, that would be different.
This wake up call, I think, is pretty much in the face of all the governments. In some places, the arbitrage, the trade-off is not going in the direction of building facilities that are there to start producing right away in case something wrong happens.