In assessing Thailand’s supply chain logistics for vaccines, we need to understand the external and internal influences that shaped its standards, policy and strategy. The cold chain plays a critical role in Thailand’s economic growth since it affects other industries that are reliant on its efficiency.
The pharmaceutical cold chain is just a section under the more extensive cold chain logistics system that also transport other temperature-sensitive goods such as raw and fresh produce to food markets and distributors. In developing its national logistic structure, the government is not solely focused on cold pharma but also in other sectors where the efficient cold chain is required.
The cold chain involves various sectors participating in the entire chain from production, storage and distribution. It consists of pharmaceutical companies, medical distributors, farmers, manufacturers, wholesalers, transportation services, retailers, and warehouses, among many others.
Thailand has a robust agrarian sector that employs 37.60 million people (National Statistical Office, 2018). As an international hub for agricultural supply, the Thai government is pushing for better cold chain logistics. Like in the pharma cold chain, logistics for storing and transporting perishable goods require efficient temperature controls and monitoring systems.
Thailand’s self-proclamation as the “kitchen of the world” is living up to global expectations and driving its restaurant industry to new heights. The country’s cold chain sector provides storage for volumes of fresh and frozen meat, seafood and vegetable products for the food market.
In addition to this, Thailand is a known medical tourism center in the Asian region that caters to thousands of patients from different parts of the world. Private hospitals have annual revenues of around US$21.1 billion, US$3 billion of which comes from foreigners. Volumes of vials, medicines, and biopharmaceuticals are stored and transported in cold chains to support the medical tourism sector.
With this backdrop in mind, the cold chain logistics industry can be seen as a critical economic driver of Thailand. Although the article focuses on the state of the pharmaceutical cold chain for vaccines, factors from related industries must be considered to give a broader understanding of the entire subject.
Given these factors and the Thai government’s aggressive implementation of immunization programs, it gives cold chain logistics providers both challenges and growth opportunities.
Thailand Healthcare Supply Chain: An Overview
In 2017, Thailand’s Office of Small and Medium Enterprises Promotion reported that Thailand’s SME GDP value reached 42.39% (6.55 million baht) of the total GDP of 15.45 million baht. The cold chain industry generated a substantial contribution to Thailand’s gross domestic product (GDP), particularly to the small and medium-sized enterprise (SME) sector.
Thailand’s import and export create both opportunities and problems for the cold chain regarding policy, regulation, standardization and demand. The table below shows that pharmaceutical products such as hormones, vitamins, and medicines imports have an average of B99,002.01 million from 2012 to 2018.
Thailand imports its pharmaceutical products from Germany (B13,745.70 million in 2018), the United States (B13,178.8 million) and China (B12,670.60 million).
Pharmaceuticals and Immunization Program
According to Asian Pharma Report: Opportunities and Threats Beyond 2020 by CPhI Insights, the Thai government is looking to make Thailand a leading pharma destination. Thailand’s 4.0 initiative is being implemented to boost the Thai economy. An IQVIA report stated that the ‘Thai pharmaceutical market is 33% forecast to grow at a CAGR of 3.7% (±1.5%) between 2017 and 2022, reaching 178.1 billion Baht by 2022 (circa $6million)’.
The national immunization program is a significant factor contributing to the growth of the pharma cold chain in Thailand. The Health Security Office (NHSO) funds and operates a centralized national immunization program. In 2015, the government allotted 0.7% of its public health budget to immunization.
The country has an excellent success rate in immunization outputs with nearly 100% coverage for identified vaccines in their schedule. While in 1995, the immunization program using four vaccines covered at least 90% of its target, it achieved a 99% success rate in 2013. Growth in the pharmaceutical industry and the immunization program mean a steadily high demand for vaccines. Consequently, these vaccines need to be stored, transported and distributed using the pharma cold chain.
Thailand’s Vaccine Supply Chain
Studies have shown that there is a correlation between vaccine quality and proper transport/storage. In Nigeria, the potency of oral polio vaccine (OPV) as well as vaccines for measles and yellow fever was found to decrease below international standards when they were transported from the national warehouse to health facilities. The potency of the vaccine is affected by repeated cycles of vaccine freezing and thawing caused by deficiencies in cold storage equipment, inconsistent electrical distribution systems, a lack of backup electricity, and improper vaccine storage.
To improve the pharma cold chain, Thailand transitioned from conventional management distribution to vendor-managed inventory system (VMI), thereby streamlining storage, monitoring, transport and distribution.
In the VMI system, the vaccine supply chain starts at the GPO warehouse and goes directly to district warehouses (provincial and district hospitals). It then goes from the district warehouses to the PCUs (health centers or hospital immunization clinics). In the conventional system, the system starts at the central warehouse of the Pharmacy unit of the DDC and goes from the regional warehouses (regional offices for disease prevention and control) to the provincial warehouses (provincial health offices) and continues to the district warehouses (district health offices and hospitals), ending at the PCUs. (An Assessment of Vaccine Supply Chain and Logistics Systems in Thailand.
Thailand’s Healthcare Supply System
In 2014, Duangpun Kritchanchai published a study entitled A Framework for Healthcare Supply Chain Improvement in Thailand. It details past and current problems of the healthcare supply system at that time, including the challenges in the cold chain pharma that store and transport pharmaceuticals, including vaccines.
In one section, Kritchanchai cites this example:
The GlaxoSmithKline, a pharmaceutical company, found that the traditional customer-managed inventory is no longer appropriate to the company. It leads to the inability to meet changing demand patterns and increased transportation costs due to inefficient planning and difficulties for the supplier to determine production capacity (Danese, 2004). Sooksriwong and Bussaparoek (2009) found that ineffective cold chain management during transportation affects products’ quality and stability.
Additionally, the study attributes the problem to the fragmentation of the pharma cold chain industry. The parties involved “tend to operate independently without coordinated effort or any particular concern on alliance formation”. Assessing the health supply chain problem that includes the pharma cold chain, the author represented the issues and solution in this matrix:
After identifying the main three areas of improvement, which are:
- Inefficient business processes.
- Data inconsistency
- Fragmented supply chain system
Problems and Proposed Solution
- An improved vendor-management-inventory system holds the key to a more efficient and cost-effective supply chain for vaccines. Yet, it is not a stand-alone system that could function on its own without human intervention, technical support and connectivity.
- The government and private sector should address these areas of concern or proposals:
- Increase the efficiency of the VMI system by allowing access to inventory data from GPO and other district warehouses so that there is quicker decision-making regarding vaccine stock management
- The development of vaccine inventory software capable of accommodating both the lot numbers and the expiration dates of the vaccines in hospitals. It should be capable of linking to the VMI web page and compatible with drug inventory software
- Availability of stable and fast Internet connection at all health facilities to ensure that data transfer and monitoring has no disruption.
- Extending the VMI distribution system and logistics between hospital and health centers
- Training and continuous improvement program for all personnel involved in the monitoring and data transfer of pharma cold chain logistics
- Aiming for zero tolerance to human and technical errors when it comes to monitoring and control of temperature during vaccine transport and storage
- Crafting of a contingency plan to address unforeseen delays and disruptions in the cold chain due to natural disasters, accidents or any unforeseen eventualities
- Stricter supervision at the regional and provincial levels to forge the pharmacist’s adherence to industry standards in handling vaccines
An Assessment of Vaccine Supply Chain and Logistics Systems in Thailand: https://path.azureedge.net/media/documents/TS_opt_vac_sup_thai.pdf
Thailand Country Brief: Sustainable Immunization Financing in Asia Pacific: https://thinkwell.global/wp-content/uploads/2018/09/Thailand-Country-Brief-081618.pdf
Asian Pharma Report: Opportunities and Threats Beyond 2020: https://www.cphi.com/content/dam/Informa/cphi/sea/en/2020/pdf-files/HLN20CPS-VK-De-Facto-Report-ASEAN-pharma-report.pdf
Duangpun Kritchanchai. 2014. A Framework for Healthcare Supply Chain Improvement in Thailand: https://www.researchgate.net/publication/326402005_A_Framework_for_Healthcare_Supply_Chain_Improvement_in_Thailand