June 14, 2019

DHL Supply Chain to expand U.S. pharmaceutical, medical device distribution network

Contract logistics firm will invest $150 million to open nine new facilities, enhance technology, and expand existing operations in the U.S., company says.

By DC Velocity Staff

Contract logistics firm DHL Supply Chain said it will expand its U.S. pharmaceutical and medical device network by 40 percent this year, investing $150 million in new facilities, technology, and other enhancements, the company said today.

The announcement came on the same day that industry giants IBM Corp., KPMG, Merck, and Walmart said they would collaborate on a U.S. Food and Drug Administration (FDA) program to evaluate the use of blockchain to protect pharmaceutical product integrity.

Westerville, Ohio-based DHL Supply Chain, which is a business unit of logistics giant Deutsche Post DHL Group, said it plans to build nine new sites by the end of 2019. That would bring its total number of sites devoted to compliant pharmaceutical and medical device distribution to 30 nationwide. The investment covers the cost of new buildings and technology, as well as the expansion of existing operations, the company said. Target markets include Indianapolis, Ind.; Raleigh, N.C.; and Memphis, Tenn., along with South Central Pennsylvania, California, and Virginia, the company also said.

The pharmaceutical and medical device distribution facilities are part of DHL Supply Chain's life sciences and healthcare business. The new and enhanced sites feature temperature-controlled space that supports pharmaceutical storage requirements, along with space for packaging and managed transportation services, the company said.

The move is DHL's latest investment in the sector, following its announcement in January that its DHL Express unit had launched a medical shipments service between Brazil and the U.S. to expand its share of lucrative business in the pharmaceutical and clinical research sector.

The FDA blockchain program also boosts investment in the sector, supporting the U.S. Drug Supply Chain Security Act (DSCSA) requirements to identify, track and trace prescription medicines and vaccines distributed within the U.S.

IBM has previously created a blockchain program for logistics operations called Tradelens, created in collaboration with ocean shipping company A.P. Moller - Maersk in order to track shipping containers through complex border crossing scenarios. In May, the carriers CMA CGM Group and Mediterranean Shipping Co. (MSC) announced they had also joined TradeLens, helping the program gain critical mass in tracking global inventory flows.

The new program is intended to address a more focused supply chain slice, assisting drug supply chain stakeholders, including the FDA, in developing an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed within the U.S.

The pilot will create a shared permissioned blockchain network that allows real-time monitoring of products and is intended to help reduce the time needed to track and trace inventory; allow timely retrieval of reliable distribution information; increase accuracy of data shared among network members; and help determine the integrity of products in the distribution chain, including whether products are kept at the correct temperature. 

"With successful Blockchain pilots in pork, mangoes and leafy greens that provide enhanced traceability, we are looking forward to the same success and transparency in the biopharmaceutical supply chain," Karim Bennis, Walmart's Vice President of Strategic Planning and Implementation, Health and Wellness, said in a release. "We believe we have to go further than offering great products that help our customers live better at everyday low prices. Our customers also need to know they can trust us to help ensure products are safe. This pilot and U.S. Drug Supply Chain Security Act requirements will help us do just that." 

Blockchain technology is a particularly good match for solving drug supply chain challenges because it is designed to establish a permanent record and may be integrated with existing supply chain and traceability systems, the partners said.

"Blockchain could provide an important new approach to further improving trust in the biopharmaceutical supply chain," Mark Treshock, IBM Global Solutions Leader for Blockchain in Healthcare & Life Sciences, said in a release. "We believe this is an ideal use for the technology because it can not only provide an audit trail that tracks drugs within the supply chain; it can track who has shared data and with whom, without revealing the data itself. Blockchain has the potential to transform how pharmaceutical data is controlled, managed, shared and acted upon throughout the lifetime history of a drug."

Editor's note: This story was revised on June 14 to include more information about IBM's pharmaceutical blockchain program.

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