Total Landed Cost and sustainability

How pharma can save money and be friendlier to the planet

Mattias Isaksson Head of Marketing & Communications

In the pharma industry, approximately 90% of all carbon emissions are generated in the manufacturing phase. The biggest positive impact on carbon emissions the secure cold chain can have is therefore to ensure that every single dose that is manufactured reaches the patient securely and on time.

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In 2019 Envirotainer pledged to become carbon neutral, and in 2020 we reached that goal. We are continuously looking at every aspect of our operations, from the manufacturing of our containers to the materials we use, to how we heat our facilities around the world, and we will continue to do so as new scientific breakthroughs unfold and new findings become available.

However, regardless of how successful we are at driving our own emissions down, the biggest positive impact we as a company can have on the climate, is to ensure that every dose that is manufactured reaches the patient securely and on time.

The study of life-cycle emissions for pharmaceutical drugs has only been started relatively recently and while there is still much more work to be done, it is clear that the production of pharmaceuticals is energy and material intensive.

In a study from 2018(i), several companies were asked to estimate how much of their total carbon emissions that stemmed from transportation: GlaxoSmithKline is referred to estimate that transportation cause about 3% of the company’s total carbon emissions, whereas Sanofi is claimed to assess upstream and downstream transportation to cause nearly 7% of total greenhouse gas emissions. Pfizer is referred to have assessed the life cycle of the drug Lyrica, concluding that 90% of the environmental impact is linked to manufacturing, 5% to formulation, 5% to packaging, and less than 1% to distribution and end-of-life management.

In other words – any savings in cost or greenhouse gas emissions your choice of transportation leads to, are in essence irrelevant unless you can ensure 0% product loss.

But even though this is the case, there is still a clear case for carefully evaluating different transportation solutions.

Reusable containers are better for the environment - and they’re cost-efficient

There exists a number of technological alternatives for cold chain logistics. A study that compares life cycle emissions of single-use (with polyurethane or polystyrene isolation) and reusable thermally controlled containers shows the latter to be environmentally superior(ii). The greenhouse gas emissions associated with the reusable container are more than 75% lower than for the single-use container, despite an extra leg of return transport. For other parameters, the reusable option has 60 % less acidification potential, 65% less eutrophication potential, 85% less photochemical ozone potential, 85% less human toxicity potential, and 95% less post-consumer waste. Most of these differences relate to the much higher cradle to gate-emissions for the single-use approach. For the reusable approach, the product use-phase is responsible for most of the total emissions, and within that phase, the emissions almost entirely come from transportation.

So why don’t more companies rely on reusable options, if they are so clearly better for the environment?

The main reason pharmaceutical companies use active temperature-controlled containers is that they want to maximize the safety of their shipment. An active temperature-controlled container has an active electric cooling and heating system, meaning it can continually keep the temperature inside the container constant despite varying ambient temperatures. In addition, you get data logging, no time is required for assembling of the container, a track-record of zero product losses and of course, no disposable materials.

Compared to passive solutions, which are essentially just insulated boxes without any form of active temperature control, it is easy to understand why active temperature-controlled containers are thought to be a more premium, and a more expensive option. And if you just compare the costs of leasing the active containers compared to the price of a passive container or even a cardboard box, active temperature-controlled containers do cost more than their passive counterparts.


But that is like thinking that the cost of the box is the same as the cost of shipping. When you calculate the Total Landed Cost, it becomes clear that in most cases, what you save on a cheaper packaging solution is unfortunately more than offset by higher costs for air freight and auxiliary costs, not to mention the risk of product loss.

Total Landed Cost means including all costs when comparing shipping alternatives

The reason passive shipment solutions are perceived as cheaper, stems from the fact that the various costs associated with shipping pharmaceuticals are allocated to different departments in the company, thus obscuring the Total Landed Cost. So what is Total Landed Cost?


Total Landed Cost is simply the cost of packaging + the cost of air freight + auxiliary costs + the probability of the cost of product loss.

A rare case of having your cake and eating it too

Most companies have accepted that they need to adopt more sustainable ways of doing business in order to preserve the planet. The issue many companies face is that a sustainable business model is often more costly than simply continuing to run operations the way they always have.

Secure cold-chain logistics however is a rare case where choosing what is best for the planet also happens to be what is best for the bottom line. When you weigh all the factors – the cost of packaging, the cost of air freight, auxiliary costs and the probability of product loss – choosing active temperature-controlled containers is better both for the planet and the bottom line. You just have to do the math.

(i)Veleva et al. (2018) Benchmarking Green Chemistry Adoption by the Global Pharmaceutical Supply Chain. ACS Sustainable Chemistry & Engineering 6, 2−14.
(ii)(Goellner & Sparrow (2014).

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