While international trade has grown steadily over the past two decades, refrigerated cargo volumes have been growing at a faster pace. While factors such as the pandemic, military conflicts, trade wars, and logistics bottlenecks have weighed down on overall trade volumes in this decade, reefer cargo is expected to continue growing at a robust pace, driven, in part, by the pharma industry.
Pharma is a subset of the broader life sciences sector, which also includes biotechnology and medical devices. Pharma and life sciences products are typically high-value items that are highly regulated and subject to strict trade compliance requirements. There are different aspects to trade compliance, including regulatory requirements, documentation, and adherence to international agreements and governmental authorities, which must be carefully managed to ensure legal and efficient movement of these products.
It is therefore crucial that these products are transported safely and reliably, with the utmost care to preserve their quality and efficacy. At the same time, maintaining full trade compliance throughout transit is essential to avoid costly delays, fines, or product holds at the border. Compliance efforts must align with the specific trade laws and regulations of each country involved, as requirements often vary significantly across jurisdictions and must be met without exception.
Pharma Supply Chains Are Complex and Dispersed
Given the value of pharmaceuticals, both in terms of price and to human lives, their supply chains are carefully designed to ensure that quality is maintained at optimal levels throughout the transport process.
This involves specialized warehouses, temperature-controlled vehicles, and refrigerated containers, as well as ensuring reliable delivery mechanisms. Equally important is robust trade compliance, as the highly sensitive nature of these products makes them subject to stringent import and export controls across multiple jurisdictions.
At the regulatory level, trade compliance in the pharmaceutical and life sciences industries encompasses strict quality certifications, country-of-origin documentation, accurate tariff classification, and adherence to customs regulations and laws in all relevant countries. Understanding and adhering to the law in each country involved in the supply chain is essential to avoid regulatory issues and ensure smooth operations.
This includes obtaining mandatory licenses and certifications, ensuring precise documentation aligned with customs codes, and implementing compliance protocols to satisfy country-specific trade laws. International agreements, such as the WTO Customs Assessment Agreement, play a significant role in shaping customs valuation and trade compliance requirements for the industry.
This requires accurate and complete documentation, strict adherence to regulatory requirements, full customs and trade compliance, proactive planning, and timely corrective actions when delays are anticipated — responsibilities that all manufacturers, exporters, and importers of pharmaceutical and life sciences products must actively manage.
Pharma and life sciences supply chains are dispersed and interdependent, with sources of raw materials, manufacturing capacity, and distribution networks often located in different countries and continents.
Several countries, including the US, rely heavily on China and India for the manufacturing of active pharmaceutical ingredients (APIs) used in generic medicines. In turn, the Indian pharmaceutical industry is highly dependent on China, with over 43% of total pharmaceutical imports coming from China. This interconnectedness makes global trade compliance not just a legal requirement but a strategic necessity for uninterrupted operations.
Challenges and Sensitivity of Parma and Life Sciences Supply Chains
The pharma supply chain faces multiple challenges, arising from its unique nature and special requirements.
These include:
- Regulatory risks
- Non-compliance with international quality standards
- Inadequate transport networks
- Tariff-related disruptions
- Complex documentation and multi-country trade compliance mandates
- Trade restrictions
The time sensitivity of pharmaceutical products is especially critical, given their short shelf life and high value. As a result, companies tend to minimize inventory, which increases pressure on supply chain timelines.
Additionally, pharma products are frequently shipped across multiple customs jurisdictions. Each touchpoint introduces potential risk — from misclassification and missing paperwork to non-compliance with evolving trade regulations.
The Trump-era tariffs, applied unevenly across countries and product categories, added yet another layer of complexity. These tariffs and related trade restrictions not only increase costs and cost volatility but also impact pricing strategies for pharmaceutical companies. As a result, pharma companies must produce accurate trade documentation proving origin, ensure compliance with updated tariff codes, and stay current on exemptions and changes.
Leveraging Technology to Streamline International Trade Compliance
Manual customs clearance processes are no longer sufficient to support the complexity of the modern pharma and life sciences trade environment. Especially with the fluid nature of global tariffs and increasing scrutiny, automating trade compliance has become a competitive advantage.
Businesses in the sector are increasingly investing in technology to digitize documentation, automate classification and validation, and centralize compliance workflows.
KlearNow, as a leader in the logtech space, enables pharma and life sciences companies to meet evolving trade compliance demands while optimizing their supply chains.
Its global control tower product, KlearHub, is designed to:
- Automate customs filings and document preparation
- Ensure trade compliance across jurisdictions through built-in rule engines and validation layers
- Provide real-time visibility into shipment and compliance status
- Flag discrepancies before they become regulatory issues
- Leverage data analysis to compare shipment and compliance data with external lists, enhancing trade compliance screening and identifying entities linked to sanctions or risks
With KlearHub, importers can significantly reduce non-compliance risks, improve customs clearance timelines, and avoid costly shipment delays. Data-driven analysis helps identify and mitigate compliance risks before they escalate into regulatory issues.
In an industry where every delay can impact lives, trade compliance is not just a legal concern — it’s a mission-critical function.
To see how KlearHub can strengthen your compliance and logistics strategy, schedule a free demo here.
Frequently Asked Questions
1. Why must pharma companies comply with international trade regulations?
Pharma companies must comply with a wide range of trade and customs regulations to ensure the safe, legal, and timely movement of sensitive products. Non-compliance can result in delays, financial penalties, and risks to patient health.
2. How do shipping procedures and import compliance impact pharmaceutical supply chains?
Proper shipping procedures and import compliance are essential for maintaining product integrity and avoiding customs delays. Temperature control, accurate documentation, and adherence to applicable regulations help ensure regulatory approval at every border.
3. What steps can companies take to mitigate risk and maintain consumer trust?
To mitigate risk and preserve consumer trust, companies should automate compliance workflows, monitor regulatory changes, and ensure full visibility across their supply chains. Proactive planning and real-time tracking reduce the chances of non-compliance.
4. Why is trade compliance critical to delivering treatments to patients around the world?
Effective trade compliance ensures that treatments reach patients around the world without disruption. By focusing on compliance and ethical practices, pharma companies can uphold safety, efficiency, and access to life-saving medicines.
