5 Challenges Facing the Pharmaceutical Warehousing Industry in 2022

January 20, 2022

Have you asked yourself recently, “why are there so many drug commercials on television?” Aside from the fact that the United States is one of only two countries that allow direct-to-consumer prescription drug advertising, the pharmaceutical market is booming! Today, it’s growing by nearly 12% annually, and COVID-19 spending is expected to add nearly $160 billion to the market through 2025. Despite this growth, productivity in the warehousing and storage industry dropped 7.6% last year. Much of this can be attributed to growing pains as companies such as pharmaceutical warehouses and distribution centers try to increase warehouse capacity, embrace new automation technologies, improve employee safety, adhere to strict FDA and CGMP guidelines, and more.

Five Challenges for Pharmaceutical Warehousing and Distribution

Let’s take a look at the top five challenges that the pharmaceutical logistics industry is trying to manage and solve.

1. Warehouse Capacity

Many warehouses and distribution centers are built based on the needs of the business at the time of construction. Of course, the pharmaceutical industry is always evolving, and the industry is experiencing rapid growth. Today, more than 130 million Americans are taking prescription drugs – that’s approximately 66% of the country, more than ever before – and many are purchasing them online. While some of this can be attributed to the pandemic (data from CVS reveals that online prescription orders increased 1,000% during the early stages of the pandemic) it’s unlikely that many people will go back to their old ways once the threat is over. 

To stock and store this massive amount of product, pharmaceutical warehousing companies are always looking to expand. However, this can be difficult as many drugs have different shelf lives, require different temperature and humidity control, and have specific handling instructions. The result? Pharmaceutical warehouses quickly reach capacity. So what can pharma warehouses and distribution centers do? To maximize space, many may want to consider expanding vertically, not horizontally. This can be accomplished by installing customized storage solutions using pallet racks, industrial shelving, and other material that matches the layout of the warehouse, improving pharmaceutical storage capacity and efficiency.

2. Product Safety Regulations

The quality of pharmaceuticals is defined as one that is “pure, correctly identified, effective, and safe to use.” To help ensure that this is exactly what customers and patients can expect, pharmaceutical storage requirements for quality control continue to grow stricter. When it comes to warehousing, there are many regulations that must be taken into consideration and followed:

  • Temperature control. Exposing drugs to temperatures outside their required range can render them non-effective at best, and dangerous at worst. Most, though not all, require a cool, dry place while others may even require freezing.
  • Humidity control. Moisture condensing inside packages can impact a medication’s effectiveness. While many manufacturers add silica packs to bottles to absorb moisture, there’s only so much they can do.
  • Ventilation. Depending on the drugs they’re storing, pharmaceutical warehouses may need to employ industrial fans, blowers, and dust collection systems to contain potentially hazardous byproducts while controlling the indoor air quality.
  • Light exposure. The sun’s rays and other sources of light can change the chemical structure of some medications, reducing their potency or even causing side effects in end-users.
  • Contamination prevention. Products need to be housed in areas that will help avoid contamination from other materials. FDA pharmaceutical warehouse contamination prevention requirements cover the full range of drugs, from OTC products to biologicals like blood or plasma used to produce pharmaceuticals. 

To help ensure each drug is being stored properly, many pharmaceutical warehouses are using technologies such as Warehouse Management Systems (WMS). A WMS, most of which are cloud-based solutions, provides transparency into operations, keeping an eye on warehouse design, inventory tracking, picking and packing goods, receiving and put-away, shipping, labor management, yard and dock management, and reporting. Read more about pharmaceutical warehouse requirements in the FDA’s part 205.50 subchapter C of U.S. Title 21.

3. Product Traceability & Tracking

In addition to safety regulations, the FDA’s Current Good Manufacturing Process (CGMP) standards mandate keeping careful track of item locations within the warehouse. Pharmaceutical warehousing requirements direct operators to keep written procedures describing the storage conditions for each drug they house. In addition, each drug must have a unique, traceable code that identifies the lot’s status (e.g., approved, quarantined, or rejected). Written procedures describing the distribution process for each drug, including recalls, are also required. 

Other CGMPs in the pharmaceutical industry state that warehouses must check all product arriving from suppliers to confirm that they are:

  • From an approved source that’s registered in the company’s inventory database.
  • Marked with a clearly visible Unique Identification Number (UIN) that is different from the supplier’s lot number, and that they are labeled correctly (e.g., current, expired, etc.) with all required information.
  • Free of damage and defects.
  • Quarantined until quality control tests are performed (pharma warehouse managers should have a designated area for testing raw materials to confirm they meet all required standards; another section should be set aside for any materials that fail these tests). 
  • Stored by type when appropriate, and that toxic and addictive drugs or chemicals are stored separately in an area where access is limited only to approved personnel.

To manage product traceability and tracking, once again many pharmaceutical warehouses are turning to a modern WMS. With a smart WMS in place, pharma warehousing operators can control and monitor inventory, gaining a 360-degree view of the product in real-time, from the moment it enters a warehouse until it’s transported out to stores or end-users. The system allows them to record changes in inventory, anticipate inventory needs, and much more. It also improves pharma warehousing standards, helping support product traceability and accelerating responsiveness when there is a product recall.

4. Employee Safety

The warehouse can be a dangerous place, and employee safety remains one of the big pharmaceutical industry challenges. Accidents at docks or those involving forklifts, conveyors, materials storage, and manual lifting can result in injury or even death. 25% of all industrial accidents occur at the loading dock while forklift accidents result in nearly 35,000 serious accidents annually.

Aside from the devastating impact on those injured and their families, pharmaceutical warehouse accidents affect the business itself. Warehouse accidents account for 95 million lost workdays every year, and accidents result in a loss of productivity, worker compensation claims, lowered employee morale, and potential OSHA fines. To ensure accidents remain at a minimum and warehouse employees remain safe, pharma companies need to regularly keep track of potential maintenance issues throughout the warehouse and consider installing safety features such as dock alerts, lighting, and safety gates; as well as rack netting, end guards, and pallet support bars. Download our warehouse safety checklist here.

5. Automation & Technology

Digital transformation is poised to forever change warehousing, distribution, and fulfillment, and automation is at the forefront of this evolution. Many of today’s pharmaceutical warehouses, in an effort to comply with strict FDA guidelines and to improve operational efficiencies, are turning to fully automated warehouse solutions. Warehouse automation, the first step toward a true “smart warehouse,” provides real-time insight for quality control and reduces the need for human contact. 

A major benefit of automation in pharma warehouses is putaway and retrieval, such as storage/retrieval machines (S/RMs) that replace work traditionally performed by standard fork-trucks, and articulating-arm robots (a machine with rotary joints, e.g., a trunk, shoulder, upper arm, forearm, and wrist) for case picking activities customarily done by humans. This greatly reduces the risk of contamination, improves employee safety, and helps curtail theft (many drugs yield high profits at low volumes, making them a target for unscrupulous employees). S/RMs and articulating robots are often paired with self-driving pallet trucks that replace manual forklift moves from dock to storage, and small bin automated storage systems that carry items along conveyor belts from the sorting area to picking. 

For a look at automation in action, there’s the Saudi Arabian pharmaceutical company Spimaco. Not long ago, the facility was a cramped, struggling manual operation. The company decided to modernize through automation, and today the new state-of-the-art warehouse allows for palletizing, picking, automated storage and retrieval, and the dispatch of pharma goods in full compliance with regulations. It features 5,000+ storage spaces, hundreds of meters of conveyors for cases and pallets, two palletizing robots, and over 30 automated shuttle vehicles. Spimaco’s automation gives the company full inventory control, high-quality track-and-trace programs, the ability to handle extremely delicate products governed by strict industry rules and regulations, and has almost doubled its throughput rates. 

Because of the cost of adopting new technologies, it’s important for pharma warehouse and distribution centers to truly understand their needs and the intended goals for any new pharmaceutical technologies, as each is different and includes various features. You’ll want to weigh the pros and cons and make sure you’ll see a healthy ROI over the shortest amount of time.

How SSE Helps Pharmaceutical Warehousing Companies

Warehousing in the pharmaceutical industry isn’t always easy. Is your pharmaceutical business feeling the strain of any of these distribution challenges? If your warehouse is located in Florida or South Georgia, the professionals at Southern States Enterprises (SSE) want to help. If your warehouse is located in Florida or South Georgia, the professionals at Southern States Enterprises (SSE) want to help. For over 20 years, companies in the area have relied on Southern States Enterprises as the leading name in motive power, docks and doors, industrial pallet rack, pallet storage systems, and warehouse equipment. 

We know how to expand your facility vertically, allowing you to save money, increase efficiency, improve operations and employee productivity. We also know how to make safety a priority, and know exactly what you need to keep your docks, doors, and racks safe and efficient. Our field service technicians will also keep your facility running smoothly and safely at the lowest possible cost through a planned maintenance and repair schedule using a warehouse safety checklist. And, when it’s time for a new part, a replacement part, of a technology upgrade, we can help and make recommendations and find the right equipment for you.

Visit Our Pharma Industry Page to Learn More!

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