The Hot Market for Cold Chain Services

In the midst of a continually growing, healthy market for pharmaceutical cold chain services, the number of worries seems to be keeping pace. The ability to deliver valuable pharma products at specified temperatures is not universal; logistics costs jump up and down as natural and manmade disasters interfere with deliveries; and the business environment is fluid, as a lull settles into the rapid-fire cell and gene therapy (CGT) market. Behind all of this is the new uncertainties to international trade brought about by the Trump administration, which simultaneously wants to impose tariffs on selective nations, demand reshoring of pharma production, and seek lower drug costs. And behind all of that are concerns about cargo theft and counterfeit or adulterated drug trafficking.

On the other hand, clients of cold chain services can rely on increasingly sophisticated packaging, containerization, and delivery technologies. Vendors are building out more options for delivering products safely and securely, and while regulatory screws continue to tighten around shipment documentation and sustainability and environmental restrictions, new technologies offer alternative pathways to compliance.

All in all, it makes for a lively market for investment in vendor growth.

“The interest of the private equity community in the pharma cold chain remains robust,” says Karen Donovan, a principal at Health Business Group, a consulting firm that has been involved in past transactions. “Mainly, they are looking for the potential of high-value, high-growth businesses.”

A timely example of this is Frontier Science Solutions, a warehousing and logistics company that is seeking to build a “direct global gateway” between Europe and North America. The company says it has received a $1.5-billion investment from GID, a North Carolina real estate and investment firm, to expand operations at Shannon Airport, County Clare, Ireland, and Wilmington International Airport in North Carolina. The Wilmington facility will be structured as a free-trade zone, and will be GMP-compliant for room-temperature (15-25°C), cold-chain (2-8°C), and frozen (0 to -80°C), while also including cryogenic) pharmaceuticals, along with storage, packaging, and delivery services. Ground has been broken on the Wilmington facility, with planned overall capacity of 500,000 square feet (and another 250,000 square feet in the works). It will be operational in August, says the company.

Growth is also on the minds of MD Logistics, which announced last September it would be converting half of its 400,000-sq. ft., Plainfield, IN, facility to full cGMP compliance, with both room-temperature and 2-8°C service. The company, an independent subsidiary of Nippon Express, will also benefit from a similar GDP conversion of Nippon’s Philadelphia facility.

Growth through acquisition has been an attractive option for many organizations in the pharma cold chain. One recent example is Knipper Health, long known for its marketing services and 3PL operations in pharma. At the end of last year, it announced the acquisition of the sample fulfillment services of Patheon Pharma, from Thermo Fisher Scientific.

“The Memphis facility will expand our cold chain footprint beyond our existing Lakewood, NJ, and Charlestown, IN, locations and further strengthen the company’s position for future growth,” said Michael LaFerrera, Knipper Health CEO.

The pharma cold chain market generally breaks down into temperature-controlled packaging, logistics services, and instrumentation/data. New offerings in these categories include:

1. Artyc, a relatively recent Silicon Valley startup, has extended the technology of its battery-powered, reusable MedStow Micro container to 5 L. The company has been working for a couple years with a sample-management clinical company, and now wants to handle outgoing deliveries of biological drugs and CGT trials. It is rated for up to 72 hours of service before battery recharging, and a -20° to 25°Ctemperature range.

2. The Cryoport Express Cryogenic HV3 Shipping System is configured roughly like a carry-on suitcase for air passengers, but can safely hold CGT products and related items at temperatures to -150°C . It can be used for lab-based storage, as well as delivery to point-of-care facilities. Condition and location monitoring are integrated into the container. Cyroport also operationalized its IntegriCell service in the past year, via a newly opened facility in Villers-le-Bouillet, Belgium, and complementing a similar facility at its Houston, TX, location. IntegriCell offers pharma clients a method to pre-qualify apharesis extractions from patients (the portion of human blood that contains white cells, aka leukopaks), cryopreservation, storage, and delivery—essentially, the first step to developing an autologous cellular therapy.

3. At the other end of the volume range, Envirotainer has expanded its RelEye line of pallet containers to an RKN (single pallet) version, for air freight of bulk deliveries. The existing RelEye line includes the RAP (four pallet) and RLP (two pallet) versions. All have active refrigeration via onboard compressors; fans and batteries; and advanced insulation technology. Each has 18 sensors for internal and external condition monitoring, and can be backed up by the company’s 24/7 Control Tower service. Rated for 130-170 hours service at 4-30°C. RKN tare weight is 583 kg.

4. An alternative to the active-powered unit-load device (ULD) technology is passive temperature control, via insulation and phase-change material. Sonoco ThermoSafe introduced the Pegasus ULD several years ago, but in the past year has had it certified by over a dozen air carriers. One of the first to certify the unit was United Air Cargo, which has since certified an additional 14 types of bulk containers. Unlike other passive pallet containers, the Pegasus unit is FAA-certified as an AKP ULD that locks into place in the cargo hold, providing some efficiencies to the air carrier. Active units, which are generally heavier than passive ones, have been competing for market share for years—and will continue to do so. The unit is rated for up to 300 hours of 2-8°C service, and tare weight is 616 kg.

5. Somewhat straddling the bulk container range is the new Credo Vault from Peli BioThermal. With an internal capacity of 1638 L, the passive, highly insulated unit can be packed four to a PMC pallet (a standard “cookie sheet” for loading aircraft), thus affording the shipper to send products in multiple temperature ranges in one shipment. The unit is rated at 144 hours at 2-8°C, and has a tare weight of 398 kg.

6. Temperature control for labs, hospitals, biobanks, and the like is being enhanced with the newly introduced VIP Eco-Smart ultra-low-temperature freezer from PHC Corp. of North America. The units have capability between 528 and 729 liters, and can now switch between 115 Vac and 240 Vac. An innovative inverter compressor, combined with high-performance insulation, cuts average power consumption by 30%, according to the firm.

7. Q Products & Services, well known in the industry for its PalletQuilt and related thermal covers (usable on both insulated or uninsulated containers), is extending its product lines with the Power In-Lock device, a locking and communication module to be mounted in trailers, on containers, or storage units. The module is activated via a Bluetooth connection, and provides status to one’s desktop or mobile device.

CGTs picking up steam

When looking at the products these vendors protect and deliver, two trends stand out: the entire pharma industry is going in a direction of more temperature-controlled products (predominantly injectable biologics); and the cold chain vendor community is competing aggressively for future CGT business.

That CGT focus is occurring even though there is something of a lull in the CGT developer space. According to an annual count1 published by Fierce Biotech, the number of CGT bankruptcies was 27 in 2023, dropping to 22 in 2024, which it says “may point to a gradual recovery.”

For gene technologies, especially those making use of CRISPR technology, the current perspective is grim: “Most stocks of CRISPR companies are down 80% from their 2021 peak,” according to STAT News.2 

"We expect the macroeconomic and sector-specific challenges that have impacted many companies serving the life sciences industry to continue for the near future," Jerrell Shelton, CEO of Cryoport, told analysts at the company’s Q3 2024 meeting. Nevertheless, “we continue to be optimistic about our long-term business growth trajectory.”

All that being said, the longer-term outlook is positive. An annual report from BioPlan Associates, which tracks global biomanufacturing trends, reported that the capacity for bioprocessing reached 14 million L in 2024, up 15% from the year before, and will grow at double-digit rates through the next five years. And the American Society of Gene & Cell Therapy, in a quarterly report based on the Citeline data service, counts a surprisingly high 33 commercial gene therapies, 35 RNA therapies (including a bunch of COVID-19 vaccines), and 72 cell therapies approved worldwide, with healthy pipelines of investigational products in the works.

Even so, CGTs will be an unusual platform for cold chain logistics growth, for the simple reason that a large number of them are based on developing therapies for individual patients, and for rare to ultra-rare diseases. A 2023 study from IQVIA, “Pharma’s Frozen Assets,” found that during 2021, all cold chain pharmaceuticals represented only 0.2% of the industry’s volume of prescriptions, while at the same time constituting 32% of the industry’s revenue. By volume, CGTs will represent a small fraction of that 0.2%.*

So, the bulk of the pharma cold chain market is 2-8°C refrigerated product, and not ultra-cold CGTs. In the 2-8°C regime, the star products today are the GLP-1 obesity and diabetes treatments; over the past few years, Novo Nordisk’s Ozempic and Wegovy GLP-1s have risen to $40.6 billion in sales, according to the company. Eli Lilly’s sales of Mounjaro and Zepbound have jumped to $5.4 billion in 2024, after being on the market a shorter time than Novo Nordisk’s. The GLP-1 market is expected to expand as new therapeutic targets are found, and as next-generation GLP-1s are approved. Biosimilars, whose lower prices expand the market for biologics, are another growth factor, as are vaccines. Currently, the 2-8°C sector is valued at nearly $400 billion, according to the IQVIA study, and has been growing at almost twice the rate of room-temperature products.

As money continues to flow into CGTs, via venture capital or Big Pharma acquisitions, vendors continue to invest in the field. UPS Healthcare Logistics recently announced that it plans to double its revenue between 2023 and 2026 (to $20 billion) and is following through by acquisitions of two European pharma cold-chain companies, Frigo-Trans and BPL. It has also just announced that three earlier acquisitions—Marken, MNX, and Polar Speed—will now be united as UPS Healthcare Precision Logistics. The announcement did not specify CGTs, but given Marken’s long involvement in clinical trial logistics, that can be assumed.

Other recent acquisitions include Cold Chain Technologies’ purchase of Tower Cold Chain, a UK company—both providers of temperature-control packaging and containers—and Sensitech’s purchase of the Monitoring Solutions business of Berlinger & Co. Both of these companies have been providers of temperature-tracking hardware and services.

Will sustainability sustain?

It’s possible that the Trump administration’s full-scale reversion away from sustainability and climate change mitigation will have broader, global implications, but for now, most governmental and corporate efforts remain focused on making progress on those fronts.

“While policy shifts in the US may create short-term discussions, the broader industry trend is clear—pharma companies are continuing to invest in sustainable practices,” says Alison Crawley, global sustainability manager, Sonoco ThermoSafe, “not only to meet regulatory requirements but also to drive efficiency, reduce waste, and support their own ESG commitments. Sustainability isn't just a regulatory obligation; it’s a business and reputational imperative in a globally interconnected market.”

In the recent past, commentators on the sustainability issue in pharma cold chain noted that discussions had gone from it being a “nice to have” feature of vendor contracts to a “must have.” Now the discussion is evolving further, with vendors offering state-of-the-art analytical techniques for measuring carbon footprints precisely. One example is SkyCell, which has marketed a bulk container for air freight for several years; it offers a “TCO + CO2e” (total cost of ownership plus CO2 emissions) formula for its reusable units. Envirotainer and others offer comparable analytical techniques.

Another aspect of addressing the sustainability issue is to switch from air freight to ocean shipping, via “reefer” containers that have onboard refrigeration. Ocean freight for cold chain pharma took a hit during the pandemic, when ports around the world were backed up for weeks because of delivery hurdles (which in turn raised costs astronomically), but has since bounced back. Conventionally, ocean freight offers a seven- to tenfold reduction in shipping costs, and an even greater reduction in carbon emissions.

Several years ago, an industry consultant, Alan Kennedy, pioneered an industry consortium for ocean freight, called the Poseidon initiative, to harmonize operating practices among life science shippers and customers. Now, saying that “With the market moving towards more resilient and sustainable intermodal transportation solutions, it was not deemed appropriate (nor unbiased) to focus on a single mode,” according to Kennedy. To that end, Poseidon has been subsumed into a new consortium, GDP-Universal Compliance Initiative (GDP-UCI), and now has 36 members, ranging from ports to logistics companies and a few pharma shippers. The deliverable, says Kennedy, will be an Integrated Pharma Eco-Lanes certification project to align pharma's environmental/sustainability objectives with GDP.

Ocean freight also figures in the reusability or reverse-logistics practices of cold-chain packaging companies. Emball’iso, a global provider of passive containers, touts a four-continent, multiple-site reconditioning system that allows clients to return the containers via ocean freight.

Sidestepping the reusability process altogether, packaging provider Temperpack has done away with expanded-polystyrene insulation altogether, offering two alternative materials—ClimaCell, made from paper and starch, that can be “curbside recyclable.” It has won Cytiva, a biotech manufacturer, as a client for the company’s cold-chain products.

Although the relatively high carbon footprint of air freight is a challenge, that community is not sitting still. One initiative, obtaining fuel from renewable or biological sources—sustainable aviation fuel—has been deployed by several air carriers. Another, growing rapidly, is drone delivery, whose carbon footprint is only the electricity that charges its batteries.

Drone delivery, led by companies like Zipline or Matternet, has been in use for several years in African countries, where getting needed health supplies to remote regions is a challenge. Now, however, it is making headway in the developed world, especially for last-mile delivery from hospital systems. Zipline, for example, is commercializing a Platform 2 drone, which can hover upwards of 300 feet over a location, then drop a “droid” that has some maneuverability on a tether, complete the delivery, and then retract the drone and return to its home base. Both Zipline and Matternet have FAA approval for “beyond visual line of sight” (BVLOS) operation, meaning that the drone flight does not need on-the-ground visual guidance. Both companies, interestingly, note that they are compatible with cold chain deliveries.

The push toward more sustainable operations has some hurdles to overcome besides the Trump administration animus. France, for example, announced last fall that a mandate to eliminate polystyrene and similar polymers from packaging (which would have significant implications for cold-chain packaging still used for the majority of shipments) by January has been pushed back to 2030.

— Nicholas Basta is Founder and Editor Emeritus of Pharmaceutical Commerce

* This analysis might underplay part of the cold chain market, because there are some room-temperature products that require temperature control similar to the refrigerated products. Additionally, the actual shipment volume of, say, an injectable pen with its associated temperature control could be an order of magnitude larger than a comparable shipment of an oral solid.

References

1. Masson, G. The 2024 Biotech Graveyard. Fierce Biotech. October 31, 2024. https://www.fiercebiotech.com/special-reports/2024-biotech-graveyard

2. Mast, J. The CRISPR Companies are Not OK. STAT News. February 6, 2025. https://www.statnews.com/2025/02/06/crispr-gene-editing-medical-breakthrough-not-matched-by-financial-success