Market Trends of Pharmaceutical 3PL Industry
This section covers the major market trends shaping the Pharmaceutical 3PL Market according to our research experts:
Growth in Demand During the Pandemic
In 2020, the warehousing and storage segment dominated the market for biopharmaceutical third-party logistics (3PL) and held the largest revenue share of 43.6%. This is attributed to a large demand for 3PL services from the pharmaceutical and healthcare industries. To reduce the operating costs and the company's overheads, the life sciences companies are opting for third-party logistic services.
With a surge in demand, the service providers have enhanced their offerings with many value-added services, such as warehousing and packaging. Moreover, to minimize the hassle and reduce the turnaround time, the providers have installed barcode scanners and robots for picking and aligning the products from distant locations.
Pharmaceutical companies pay a lot of attention to packaging quality in terms of purity, uniformity, shelf-life, integrity, and packaging standard of their products. This is expected to boost the market over the forecast period. The 3PL service providers are investing a lot in providing value-added services, which is another key market driver. For instance, Expeditors, a service-based provider of value-added services ranging from simple to complex, offers a range of logistics delivery models that enhance customer services while mitigating transportation and inventory costs. Growing pharmaceutical industries are also driving the market. According to industry sources, in 2021, most of the demand was generated from North America (mainly from the United States), followed by Europe, Africa, and Asia-Pacific.
Top Regional Markets
North America dominated the biopharmaceutical third-party logistics (3PL) market and accounted for the largest revenue share of 41.5% in 2020. This is majorly attributed to the dominance of the region in the biologics and pharmaceutical drugs market and an increase in exports and imports of biopharmaceuticals.
Furthermore, owing to high healthcare expenditure, the adoption of advanced technologies is quite high in the region. Thus, for the improvement of warehousing and transportation, North America-based pharmaceutical companies are relying more on 3PL service providers, which is driving the regional growth. Additionally, the presence of major players is also responsible for the growth of the market for biopharmaceutical third-party logistics (3PL) in the region.
Moreover, in Asia-Pacific, the market for biopharmaceutical third-party logistics (3PL) witnessed the second-largest revenue of USD 15.4 billion in 2020, and it is also expected to witness the fastest CAGR of 7.2% over the forecast period. The growing demand for medicines among the aging population, adoption of technologically advanced services, and growing economic conditions in emerging countries such as China, Japan, and India are among the few factors responsible for its fastest growth rate.
Furthermore, due to the increased demand for healthcare, the pharmaceutical sector continues to grow, in turn, resulting in the growth of the 3PL market. Global pharmaceutical sales grew by 7.7% in 2021. In addition, in 2021, established markets saw an average revenue increase of 6.4%, and emerging markets' revenue grew by 11.9%. The United States, Japan, China, Germany, and France are the world's top five pharmaceutical markets in terms of 2021 sales. In 2021, the United States had 46.8% of global sales.
