Adam Dowson, Principal Search consultant within the Cold Chain and Pharma Logistics sector, shares his thoughts on the current state of the temperature-controlled packaging industry.
The temperature-controlled packaging industry has grown significantly following the impact of Covid-19, along with all allied markets within Cold Chain. That surge is set to continue with Pharma companies and demanding greater resilience in supply chains increasing demand and utilisation of monitoring components, temperature-controlled packaging (Passive, Active, and hybrid solutions), and logistics and storage solutions. In 2021 the global temperature-controlled packaging market size was around $14.2 billion USD. This is set to grow to 40.9 billion USD by 2030.
There has been significant investment into the pharmaceutical industry in recent years as the use of cutting-edge technologies increases for medicines and treatments and digital platforms for monitoring vibration and other variables of payloads. Additionally, pharma has invested more to expand into treating uncommon illnesses and generating more clinical trials and higher demand for temperature-controlled packaging.
With such high demand in the wake of Covid-19 and upcoming growth looming for the entire market, manufacturing materials will be in short supply. Temperature-controlled packaging is typically produced using a variety of raw materials, including polystyrene, polyurethane, and others. As a result, changes in the price of crude oil affect the cost of raw materials required to produce temperature-controlled packaging, rising as a result of the volatility in crude oil prices may act as a significant barrier to market expansion as a result. For the smaller companies within the market, it may prove more difficult to maintain service levels and market position if there was another bottleneck in supply for temperature-controlled packaging materials.
The demand for environmentally friendly packaging for temperature-sensitive pharmaceuticals is ever increasing with Corporate Social Responsibility quotas and government legislation encouraging progress towards eco-friendly shipments. Adding further costs to the manufacture and shipment of temperature-controlled packaging:
EU Packaging Levy: for every kilogram of plastic packaging waste that is not recycled at the end of life, EU member states must contribute €0.80.
UK Plastics Packaging Tax: taxes usage of plastic packaging that contains less than 30% recycled content. The UK tax may apply to companies who manufacture or import 10 or more tonnes of plastic packaging within a 12-month period.
Globally, numerous countries, states, and cities are introducing regulations banning single use plastics, microbeads, the use and manufacturing of plastic bags, the use of specific plastics, and enforcing a reduction of greenhouse gas emissions.
86% of 15,000 surveyed European consumers aged 45 and under are willing to pay more for sustainable packaging. The same survey reveals that 68% consumers have recently chosen a product based on sustainability and 74% are interested in buying products in refillable packaging.
Several companies have made investments and acquisitions to bring their eco solution to the forefront of the market and their desired clients’ minds.
In March 2022 Cold Chain Technologies LLC acquired Packaging Technology Group, enabling CCT to provide environmentally friendly, kerbside recyclable thermal packaging solutions. Reducing overall carbon footprint.
In December 2022 Sonoco Thermosafe extended their ‘Orion Rental’ packaging program into the UK to meet the demand for eco-friendly packaging. Expanding the options available to UK Healthcare organisations from biologics, vaccines, and clinical supply shipments.
In January 2019 Softbox (Now CSafe since the acquisition) announced plans for new pallet and parcel shipping systems at the IQPC conference in London. The recyclable parcel shipper is produced from recycled corrugated cardboard and is kerbside recyclable, able to control a variety of temperature ranges from 00C to 300C.
Adjusting to Meet Demand
With the added cost of new product development, tax levies, and an increase in overall demand for temperature-controlled packaging, the financial budgets for many companies may be stretched thin without additional financial investment. We may see a reserved approach by SMEs and larger companies anticipating steady growth.
On the other hand, there is a great opportunity for companies well-poised following the attrition of materials from Covid-19. Those with financial backing and investments in infrastructure and resources, made in the years prior to reduce overall costs, are well positioned to greatly increase their market share, and establish a sturdier foothold in the market.
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