Pharma sector growth to boost 3PL in Japan

By Emilie Reymond

- Last updated on GMT

Related tags: Pharmaceutical companies, Supply chain management, Logistics

The burgeoning Japanese pharmaceutical market is set to boost the
third party logistics (3PL) sector as drug makers are expected to
increase their reliance on outsourcing for this type of services in
the future, a new report said.

According to the research published by market analysts Frost & Sullivan, bio-medical companies have been expanding their businesses rapidly in the country and this is opening huge opportunities for 3PL providers. "Although the current level of outsourcing is not very high as far as pharmaceutical companies are concerned, the trend is expected to change in the future,"​ Aarthi Nandakumar, research analyst at Frost & Sullivan, told Outsourcing-Pharma.com. "The industry is expected to turn more and more to professional service providers in order to fulfill their logistics needs." ​ She explained that pharmaceutical companies are increasingly seeing logistics as a non-core activity and as a result, the demand for 3PL is expected to grow. "Pharmaceutical companies are expected to outsource the entire range of storage and distribution activities to 3PL service providers in the future,"​ said Nandakumar. The pharmaceutical market in Japan is estimated to be around ¥8,000bn (€50bn) as of 2006 and is expected to grow at an average rate of 4 to 5 per cent per year. The pharmaceutical sector could be estimated to contribute approximately around 5 percent to the total 3PL market in Japan, worth $47bn (€36bn) in 2006. The only dampener to the potential growth of 3PL in Japan is the conservative nature of Japanese firms in general, said the study. According to the report called "The Strategic Analysis of Third Party Logistics (3PL) Markets in Japan", Japanese companies, taking all sectors together, prefer to have control over their logistics activities and not open to outsourcing, which is likely to limit growth of 3PL in the country. However, Nandakumar explained that the pharmaceutical sector is less conservative compared with other manufacturing sectors such as automotive and hi-tech electronics. "The pharmaceutical companies have been striking many alliances with international companies and global sales channels have become an integral part of the Japanese pharmaceutical industry,"​ she said. Although, she stressed that the loss of control and visibility over the supply chain induced by outsourcing logistics still remains an issue with most Japanese sectors including the pharmaceutical industry.

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