Healthcare Cold-chain Market in India

8 min readJan 18, 2021

Market Overview

According to the government data, India has more than 27,000 functional cold chain points of which around 3 per cent are located at a district level and above.
Due to COVID-19 vaccination drive, India’s Government is planning to use 29,000 cold chain points, 240 walk-in coolers, 70 walk-in freezers, 45,000 ice-lined refrigerators, 41,000 deep freezers, and 300 solar refrigerators.
We expect the growth of the cold chain market for healthcare in India to be more than 20% by the end of 2021.

In the billion-dollar healthcare industry, there is one part which still needs to exploited — Healthcare Cold Chain. To deliver medicines, vaccines, surgical items, and biologics to the destination is not an easy task. A single mistake during the supply process can cost billions of dollars, and sometimes patients’ lives. Effective and efficient delivery of temperature-controlled healthcare products requires lots of planning and management.

According to Deloitte, spending in healthcare expected to rise at a CAGR of 5% in 2019–2023 globally, which means the industry will need a robust cold chain infrastructure. According to DHL, one of the leading logistics companies actively involved in healthcare cold chain says that, due to limited facilities to control the temperature for certain types of medicines and vaccines, the industry loses products worth $2.5 billion to $12.5 billion a year. It shows a massive gap in the industry, which needs to addressed quickly. Healthcare cold chain logistics includes biologics, clinical trials sample, and other drugs and medication, which require a constant temperature to be maintained or are sensitive to heat, humidity, and even light.

Cold chain logistics include various steps such as storage and handling of refrigerated and frozen vaccines, supply chain management, inventory management (cold chain warehouses), and handling of delicate drugs and vaccines. One of the significant elements in the cold chain is the temperature-controlled packaging. Many healthcare products become inefficient due to temperature mismanagement, and many of these issues are not detected until the products reach patients. The continuous demand for the development of new vaccines and drugs and the ever-growing healthcare sector has increased healthcare cold chains’ need.

Healthcare cold chain market will grow with the help of right Government policies at the place, as it is the need of the hour, which we have seen during the pandemic situations like in MERS-Cov in 2012 and COVID-19 recently. The immediate measures and a considerable number of clinical trials, and efficient and effective cold chain logistics play an essential role during these situations. The different regulations for different region affect the growth of the market and service providers. These days, we also see new packaging material and equipment to handle the pharma products to reduce wastage and losses to a bare minimum.

The trend of shipping healthcare products by air is increasing as many high-risk, time-sensitive products cannot wait for long and because of this, the lead time has become the critical factor in the healthcare cold chain market. Logistics companies are trying to find new and innovative ways for efficient delivery and reducing the energy requirement. The same government guidelines for all regions may decrease the lead time and help all the market segments grow.

Market Dynamics

Growth of the healthcare cold chain market depends on how efficiently all the required healthcare products, which need a temperature-controlled environment, reach the destination. In a pandemic situation like COVID-19 when pharma companies will produce billions of doses of vaccines, they need to be reached every corner of the world. As per Credit Suisse, only India will need 1.7 billion COVID-19 vaccine doses, so cold chain infrastructure will play a crucial role as all countries are not ready to handle such doses. Some of the factors that will impact the growth of healthcare cold chain market are:

The need for the temperature-controlled warehouse will increase.
Need to train the staff to handle time & temperature sensitive biologics
Demand for new and improved packaging will increase.
Ensure proper monitoring capabilities to keep the biologics integrity intact

Contrary, the industry is also facing some significant challenges, mostly in developing and under-developed countries:

Poor infrastructure to store and handle temperature-sensitive vaccines
In a situation like COVID-19, delivering billions of effective doses in populated countries require quick and efficient transport and distribution which seems complicated because of the lack of roads in the impoverished region.
Lack of clarity in Government policies

UNICEF procured $100 million of cold chain equipment in 2018 to ensure that it continues to work efficiently and effectively in every country. Still, this is not enough for some countries. Lack of proper knowledge and proper healthcare delivery in some regions had resulted in wastage of essential drugs.

The air transport and sea transport will shape up the logistics industry in healthcare, as not every country has the privilege of having a mass manufacturer, which can fulfil that country’s requirements. Air transport is the fastest option, but at the same time, it is risky. Some mishandling like not setting or maintaining desired temperatures throughout the supply chain or using some faulty equipment to store biologics will result in significant losses across the value chain. Compared to air transport, sea transport is slower but can carry bulk orders in a single journey. It also needs constant monitoring to ensure that healthcare supplies do not get damaged in the journey.

In the coming years, healthcare demand will grow exponentially as more people will move to the upper-income level, and they will require better and faster healthcare facilities. The Government must gear up and start planning to develop the infrastructure, set up research labs/centres, medical laboratories, and path labs to fulfil their needs. Simultaneously, logistics companies must work to transport sensitive products safely and improve the last mile connectivity. The investment by supply chain firms in better quality service, better packaging techniques, technology to improve the monitoring and to handle the biologics will be beneficial for them in future.

Value Chain Analysis

The healthcare value chain includes multiple stakeholders, starting with raw materials suppliers to final products sellers. The manufactures of cold boxes, vaccine carrier box, ice packages, dry ice, refrigerated trucks, etc. come under the purview of the healthcare cold chain’s value chain. They procure different material types, including plastics, metals, cold storage panels, machinery, etc., from their suppliers. Ideally, they should prefer local suppliers to save time and money. Such manufacturers then supply the final products to end-users, including hospitals, urban health centres, research centres, laboratories, etc. All provide the healthcare supplies to their patients across the nation.

Companies like JCB international that makes refrigerated van and trucks should tie-up with local logistics players in other nations to expand their support for healthcare cold chain during the time of pandemics. Instead of the complete dependency on few logistics players, vehicle manufacturers & OEMs can also sign deals with small and mid-sized logistics companies to rent vehicles for a shorter and longer duration, as and when required. It will help to deliver better and faster healthcare services.

World’s leading logistics companies, including FedEx, DHL, and UPS, cannot reach the smallest part of the world to provide cold chain services, so they should think of partnerships and collaborations with local logistic companies to carry our operations those regions. They can also collaborate with local cold storages and warehouses to support the distribution process across the region. It would help them save big on their operations and help them increase their reach to untapped markets.

Small and mid-sized cold chain equipment manufacturers that already have tie-ups with local hospitals, clinics, and pathology labs, should approach leading logistic companies to be a part of the global supply chain network. For example, DHL has opened a temperature-controlled facility in Hyderabad, India, to meet pharmaceuticals’ different needs. These firms can tie-up with start-ups such as Blackbuck and Rivigo (in India) that provide trucking facilities.

A significant challenge that manufacturers face in providing an end-to-end cold chain solution is limited or no electricity in some parts of the world. They must develop innovative solutions such as dry ice, ice packs, and battery-powered cold boxes to deliver adequate medical supplies and vaccines to such regions. In most of these cases, renewable power sources play a significant role, for example, solar-powered cold storage and vans.

Impact of Emerging Technologies

Technology plays a crucial role in the supply chain management process. As the latest technologies are impacting the healthcare sector, supply chain logistics must also gear up to adopt these technologies to increase efficiency and save costs:

Smart Trucking System: The use of smart trucking technology by DHL identifies the shortest and fastest route in real-time and reduces the transit time by 50%, which gives them an edge over other competitors. Logistic companies use smart connectivity networks to reduce transit time.
QR Code / Barcode: Coding system must be used throughout the supply chain so that the package can be delivered accurately. In vaccines, the vaccine manufacturer would mark the entire batch with a QR code or Barcode, meant to be delivered to a specific location (hospitals, labs, etc.). So once delivered, the recipient can confirm the code and check for the delivery. It will also help the GovernmentGovernment to track the vaccination progress.
Internet of Things (IoT): Logistics companies can monitor and change temperature settings remotely when the package is in transit, to check the reaction to local climate change, product damages, unexpected delays, and even any human error. The level of insight provided by IoT technologies enables companies to take preventive measures and preventive maintenance. It helps in reducing financial losses and wastage.
Blockchain Technology: Blockchain technology reduces inadequate record-keeping and authentic transactions, mainly in import-export and cross-border supplies. It ensures the privacy of important information and improves traceability. Huge transactions between participating parties in the supply chain can be done securely.
Temperature-controlled Vehicles: The close monitoring system inside the refrigerated vehicles helps keep the temperature at the desired level as per the requirements. If time-sensitive pharmaceutical products exposed to the environment outside their prescribed range, they may damage and not effective when used. If a constant monitoring system deployed inside the container, the sensors will immediately send an alert to concerned departments in case of an anomaly.
Radio Frequency Identification (RFID): RFID has brought more transparency in the supply chain and made data capturing more hassle-free. Like the QR Code and Barcode, RFID helps consumers to track and trace their deliveries. The only advantage of RFID over the QR Code and Barcode is scanning the RFID tags without even touching any scanner or the package. It provides contactless and faster scanning capabilities.
Renewable Energy Sources (Solar and Wind): The use of renewable sources is on the rise. It will be useful in those places where sunlight and wind are abundant. Logistics company should harness these sources at places where it is minimal or no electricity, to keep running the cold chain supply. Solar-powered vehicles are also trending these days. That can be used for shorter distance and can help logistics companies to save fuel costs.

Conclusion and Recommendations

Overall the healthcare supply chain market is attractive but dominated by some large players at the global level. The industry is also attractive for small players who can operate in local regions, and they can collaborate for broader reach and better operations. The need of the hour is to be ready with the cold chain infrastructure for COVID-19 vaccination process. In countries like India, there is an urgent need to adopt innovative ways and emerging technologies to cope with the massive demand for healthcare supplies to such a vast population.

Here are some of our recommendations for the healthcare cold chain market:

Improve last mile connectivity so that far-off region can also be benefitted
Adopt technologies that can reduce energy costs in the long run, such as solar and wind power
Tie-ups with small Labs and test centres to store extra biologics which can be used for just in time delivery
Create a centralised system where all stakeholders can track the deliveries
Adopt innovative packaging solutions to reduce spoilage and wastage