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Pfizer Inc.’s vaccine news this week offered the first real hope that the pandemic nightmare won’t last forever. The industrial sector will play a key role in turning that hope into a reality. In fact, it already is.
First, there are companies like Rockwell Automation Inc., which provide the factory equipment and software used to manufacture testing kits, therapeutic drugs and (hopefully) doses of a vaccine. “Quite simply these cannot be manufactured at the necessary scale, safety and quality without automation,” Rockwell CEO Blake Moret said on a call to discuss the company’s quarterly results this week. “We're proud of the role our innovation is playing at Pfizer, Roche and many other companies as we help the world recover,” he said, without specifying Rockwell’s exact involvement. Pfizer said this week that preliminary findings showed the coronavirus vaccine it co-developed with BioNTech SE was more than 90% effective in preventing illness. Roche Holding AG offers coronavirus tests and is working with Atea Pharmaceuticals Inc. and Regeneron Pharmaceuticals Inc. on potential treatments.
Once a vaccine is approved, be it Pfizer’s version or any of the handful of others in trials, logistics companies including FedEx Corp., United Parcel Service Inc. and Deutsche Post AG will have the critical job of distributing it around the world. It’s a role they’ve been preparing for and one that's likely to be a major boon to their bottom line given the scarcity of freight capacity now and the exacting requirements for vaccine transportation, as my colleague Chris Bryant writes. UPS’s strength in pharmaceutical shipments and close ties to the U.S. government should make it the dominant player in America's vaccine rollout, while FedEx’s U.S.-to-China air-freight network will also be “very helpful,” Berenberg analysts wrote in a late October note.
The Trump Administration launched "Operation Warp Speed" in an effort to accelerate the availability of a vaccine and has suggested the military could support distribution efforts. A Pentagon spokesperson told the Wall Street Journal in October that military transport aircraft will likely only be needed for very remote areas and commercial capacity should be sufficient. Even passenger jets could be put to work distributing vaccines. Certainly there are enough empty ones sitting around these days. Pfizer developed a special thermal cooler with GPS and temperature monitoring to ship the vaccines from its manufacturing facilities and warehouses. The cooler is roughly the size of a suitcase, and the temperature-controlled packaging makes it easier to transport the vials via existing freighters and passenger jets.
Pfizer’s special transport box only keeps the vaccine at the necessary -70 degrees celsius (-94 Fahrenheit) for 10 days, if left unopened. Once opened, the vaccine can be stored for five days in more normal refrigerated conditions, or dry ice can be added to the container to extend its shelf life by 15 days. The vaccine requires two doses, administered three weeks apart. So really, the best storage and transportation option is ultra-cold freezers and that’s where companies like Trane Technologies Plc and Carrier Global Corp. come in. “Cold-chain” transportation has historically been a lumpy business and it tends to get overlooked at these companies when stacked up against their larger heating and air conditioning operations, but it is certainly having a moment now.
Transport refrigeration has traditionally been a cyclical business, with the timing of large orders causing major swings in revenue
Source: Barclays Plc analyst Julian Mitchell
Speaking on Trane’s earnings call last month, chief operating officer Dave Regnery said the market was fairly well-supplied on refrigerated trailers used for land-based transportation, but he sees a need for more cold-storage solutions that can work on airplanes as well as the last stretch of the delivery process before vaccines are handed over to hospitals and doctors’ offices. On the storage front, Trane has developed a mobile deep freezer with 60 times more capacity than the units most commonly used at hospitals today. “Who are we talking to? We're talking to pharma companies, distribution companies, 3PL [third-party logistics], government, health-care providers,” Regnery said. “We're talking to everyone.” UPS has invested in two giant freezer farms in Kentucky and the Netherlands capable of storing nearly 30 million vaccines between the two of them. DHL opened a new $1.6 million cold-storage facility in Indianapolis, while FedEx has 90 such locations worldwide and is planning more.
Carrier launched mobile freezer pods enabled with its Sensitech monitoring technology to make it easier to move vaccines to where they’re needed and ensure the vials don’t go bad. The vaccine is clearly the focus right now, but CEO David Gitlin also sees strategic opportunities in the ways the pandemic has changed the world’s perception around food. The grocery e-commerce boom, for example, will require more innovation in refrigerated food transport, while the focus on China's wet markets as a breeding ground for the coronavirus and other diseases may force a supply-chain rethink in that country. Less than 40% of meat consumed in China is transported in a refrigerated container, compared with more than 90% in the U.S., Gitlin said at a September conference.
In short, ultracold freezers are the kind of thing most of us have never spent much time thinking about. But aren't you glad that these manufacturers were?
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