Nippon Express Co., Ltd. (Mitsuru Saito, President) is in the process of developing pharmaceutical supply chain networks that meet both the hardware and software requirements for Good Distribution Practices (standards for ensuring proper distribution of pharmaceuticals; hereinafter, "GDP") and thereby enable safer and more secure supply of pharmaceuticals. Four core locations in Japan will be going into operation as they are completed, and Nippon Express will be introducing its own dedicated vehicles for pharmaceutical transport to satisfy stringent quality standards.
In view of the globalization of pharmaceutical supply chains, the Company will also be setting up GDP-compliant business locations in major markets worldwide to enhance its supply networks on a global level.
Furthermore, Nippon Express will be looking to employ the digital technologies of IoT and blockchain to track logistics information end-to-end, doing its part to optimize supply chains for the industry as a whole via a data-driven approach that offers traceability and increased operational efficiency.
[Background]
The "Nippon Express Group Management Plan 2023 - Dynamic Growth" deems strengthening the Company's three approaches - a customer-/industry-based approach, a business-based approach and an area-based approach - a priority within the Plan's "Growth Strategy for Core Businesses". In determining how to optimally tailor services to the needs of individual customers, Nippon Express is focusing particular effort on the customer-/industry-based approach that looks at services from a customer perspective.
While leveraging its comprehensive capabilities that take advantage of the full range of ground, sea and air transport modes, the Company is seeking to provide customers with optimal logistics management, including inventory control, through total services that take into consideration potential needs as well.
Designated as one of Nippon Express's priority industries, the pharmaceuticals industry saw its global market achieve an average annual growth rate of 6.3% over the five-year span from 2014 to 2018. This global market topped 100 trillion yen in 2018, and it is expected to continue expanding at a 3%-6% annual rate over the period 2019-2023. Japan's pharmaceutical market is the world's third largest, totaling about 10 trillion yen.
Pharmaceuticals require strict temperature control as well as security management during transport and storage, and the counterfeiting and theft of pharmaceuticals have become serious issues as the pharmaceutical market has become more global in extent. Standards for the proper distribution of pharmaceuticals have been set into law in Europe, and steps are being taken in North America as well to enshrine such standards into law in 2023. With pharmaceutical supply chains becoming ever more globalized, guidelines essentially constituting a Japanese version of GDP were issued by Japan's Ministry of Health, Labour and Welfare in December 2018, and Japanese pharmaceutical manufacturers will need to implement suitable measures to comply with these guidelines.
To ensure it has in place the extensive expertise and strict quality control required for pharmaceutical logistics, Nippon Express created a Pharmaceuticals Business Division and a Pharmaceuticals Logistics Quality Assurance Office in July 2020 to establish uniform Group-wide standards on operational frameworks, human resource development, quality assurance regimes, etc.
①Constructing supply networks in Japan
Nippon Express is currently setting up pharmaceutical-specific facilities in East Japan, West Japan, Kyushu and Toyama to complement the "medical hubs" of Narita International Airport and Kansai International Airport, which have long been involved in the import/export of raw materials and finished products.
These facilities will be equipped to handle GDP-compliant quality control and business continuity plans (BCPs) pertaining to pharmaceutical supply, and platforms will be constructed to allow for joint warehouse storage and transport, operations heretofore carried out on an individual customer basis, to cope with the shortages of truck drivers stemming from the round use of vehicles, and to achieve greater operational efficiency. These facilities will go into service in February 2021.
②Expanding on a global level
Nippon Express is drawing fully on the strengths of its own global network to link up infrastructure and forwarding functions in developing overseas logistics networks that guarantee safety at a global level as required for pharmaceutical logistics.
More specifically, the Company is building GDP-compliant CFS at key pharmaceutical business locations overseas. It has already opened GDP-certified CFS in London and Milan, which both host clusters of manufacturers of new drugs, as well as in India, where generics are driving robust market growth; in the US, the world's largest market, GDP certification was acquired in Chicago. In addition to enhancing business locations in Europe and the US, Nippon Express is planning to obtain GDP certification in Asian countries where medical services are becoming more widely accessible.
The Company will continue enhancing its network in future through M&A and other means with an eye to offering storage and distribution logistics in major markets around the world.
③Increasing supply chain sophistication via a data-driven approach
Nippon Express established a new Digital Platform Strategy Office in April 2020 to provide the pharmaceutical industry and other industries with solutions designed to fully optimize their supply chains.
Construction is underway on a digital platform for the pharmaceutical industry that will utilize IoT devices and blockchain technology to link temperature control and other logistics information end-to-end, and there are plans to make use of the logistics information to develop commercial distribution services.
The Company is also teaming up with industry officials to consider making this digital platform an open one so that interested parties can make joint use of it.
In pursuit of its social mission of becoming a driving force in society's development through logistics, Nippon Express will be making full use of its global pharmaceutical supply networks to serve its customers in the pharmaceutical industry and create new value through logistics.
