José Luis Barrera Aldana
New Projects and Logistics Director
View from the Top

Moving Beyond 3PL

Wed, 09/09/2015 - 13:30

Q: What can you tell us about the creation of NTA Logistics and what is your market strategy?

A: NTA Logistics began as a family company funded by two friends. Initially it was called National Trade Air, but it became NTA Logistics de México in 2003 and repurposed itself into providing logistic services for pharmaceutical companies. The company has grown continuously and multiplied, but as we are specialized in a niche market we have a low profile. Despite this, we are leaders in the market of transportation services for pharmaceutical companies. Among our greatest advantages are our agility and flexibility to provide solutions, which allow us to be ideal intermediaries among laboratories and their different clients. Pharmaceutical companies by nature have rather strict requisites as their products are intended for human health, thus they must guarantee their quality, efficiency, applicability, identity, and purity. In order to work with them we must guarantee and certify that their products maintain these standards while we handle them.

Q: What is the competitive advantage of NTA Logistics?

A: Our flexibility and agility have allowed us to rapidly adapt ourselves to these changes to provide fast responses to all our client’s needs. Our main differentiators are efficient deliveries and real time tracking. Our network covers all main cities in Mexico and our delivery times are 24, 48, and 72 hours depending on the requested service, but we can also offer deliveries the same day in special cases. Our service has grown beyond the distribution of medications and now we are able to deliver medical and laboratory equipment as well as materials for clinical research. We also provide integral and specialized storage services in different schemes including dedicated and shared. For example we provide a service called ‘almacenes dedicados’ (dedicated warehouses) with a sanitary license in our client’s names and we take responsibility for the storage and distribution of their products among their clients, including wholesalers, public and private institutions, doctors, pharmacy chains, and independent pharmacies. We are also the only company in Mexico to have received the NMX SMTC01 certification from CANIFARMA for the storage, transportation, and safekeeping of pharmaceutical merchandise. We have also been recognized as a Socially Responsibly Company (ESR) for four consecutive years.

Q: What is NTA Logistics market strategy?

A: Our market strategy is to offer services only for pharmaceuticals, thus security, innovation, quality, technology, flexibility, and quick responses are essential for our business. Our strategy focuses on long term relationships in order to maintain strong client relationships and grow alongside them. This strategy allowed us to grow as a company and increase the number of services we provide. We increased our clients and now we can offer them a wider portfolio of logistic services to tackle their specific needs as soon as we identify them. We generally create dedicated solutions for clients and then adapt them for the rest of the market. NTA Logistics is currently working directly with more than 50 clients and indirectly with slightly more than 30. An integral and congruent ethics code with the pharmaceutical market is of highest priority for us.

Q: What percentage does logistics represent to total manufacture and distribution costs?

A: As requirements for distribution and storage of medication are extremely strict, these carry high costs. For example, our vehicles cannot be older than five years and we must certify our personnel yearly. The logistic costs vary depending on the cost of the product, but they generally represent from 2.5 to 3%. While the percentage may seem smaller for expensive products, additional requirements such as cold chain, volume delivery, and traceability must be taken into account. On the other hand, recent market changes and the need to manufacture at the lowest possible price are influencing companies to cut costs where possible, and therefore companies aim to reduce distribution costs of expensive products to 1.5%.

Q: What are the main challenges currently being faced by the drug distribution segment?

A: The main challenges for NTA Logistics are adapting to the regulation changes and the policy changes implemented by the companies in the sector. Previously, in order to distribute in Mexico it was necessary to have a local manufacture plant or to create a hosting scheme with a local laboratory. This requisite was modified and nowadays laboratories are able to operate with a storehouse under their control raising the demand of storage services especially for companies that were just entering the country and for laboratories whose manufacture structure required them to close plants in Mexico. Now, it is more common for companies to abandon services they do not consider profitable to focus on their key activities, resulting in companies hiring third parties that provide such services also known as “Third Party Logistics” (3PL) and in some cases 4PL. Among the main factors for them is to correctly choose and develop these third parties. Laboratories are highly interested in security, which they divide into ‘safety and security’. The latter refers to the prevention of robbery and loss of materials, while the former refers to ensuring the transportation chain keeps the integrity of the product from the point it leaves the manufacture plant. This implies having strict traceability in order to know at all times who handled it at every step of the way and whether it was kept under the required safety conditions.

Q: How have recent changes in the distribution segment affected your business?

A: The private market in Mexico represents 75% of the pharmaceutical market in terms of value. It is not equal in terms of units, since the greatest consumer of medication is the public sector, which also pays a fairly low cost. The private sector works with several wholesalers and increasingly through direct sales to pharmacies and supermarkets. In Mexico, the bankruptcy of a mayor distributor led to their market share being reassigned to other distributors in the same segment, as well as new distributors entering the competition. We follow the commercial strategies of manufacturers. In the public market there are new supplying schemes such as the use of a central supplier, integral services, administration of pharmacies and resupply, delivery dates, and products that require strict control of temperature during transit, among others, which force us to develop different logistic models.

Q: What control point do you have to prevent counterfeit products?

A: NTA Logistics is not qualified to identify counterfeit products, thus we monitor medications from the point they leave the production laboratory to the moment they are delivered to the client. The product is only exposed in two events. The first is on the road where it could be opened by authorities or other third parties and the second is during air delivery. Our most common procedure to ensure the integrity of the product are security labels that allow us to check that the product has not been opened at any point during transit. In case it has we immediately notify the laboratory to determine the course to follow. NTA Logistics has an area of equity security which is equally responsible for preventing and handling these events. Our operation process is very fast so the product is minimally exposed to alterations or substitution by third parties, thus we have a low incidence of these situations.

Q: What are your plans for 2015?

A: NTA Logistics is planning to increase its operation capacity and infrastructure on our Distribution Centers, cross docking, and warehouses. We have grown and now we are in a restructuring stage in which we are planning to fortify and simplify our processes to make them more efficient. We are implementing administrative and operational changes, as well as updating our technologies. On market terms we are planning on acquiring new clients and adapt to their needs. We are also aiming to develop the new services we have identified are needed by the market and planning to expand our current services including storage, inbound distribution, and reverse logistics. NTA Logistics wants to continue being identified as the reference point and to address customer needs.