Serialization 2.0

Over the last decade, the battle on counterfeited drugs has taken a major position in pharmaceutical companies’ supply chain and packaging strategies. With more and more regulations in place and first experiences on serialization gathered, securing the drug supply chain is now ready for a next step.

Industry's challenges

Today's Pharmaceutical Industry is facing a number of major challenges: blockbusters running out of patent, R&D pipelines emptying up, increase of competition, emerging markets, changing regulations etcetera.

Over the last years, fighting counterfeited products has become one other target area. Driven by regulators around the world, the industry has been looking for ways to deal with the effect fake drugs can have on their businesses. For most of the large players it has become clear that counterfeit products cause a serious risk, not only to the life and health of consumers, but also to the value of their company: financial damages related to brand image, product recalls, lawsuits etc.

However, problems are perceived differently from company to company, and from region to region. In Europe even today, 2-4% of all drugs entering the European market is considered fake. In a series of interviews with industry leaders¹⁾ it was made clear that in Europe counterfeit drugs were hardly perceived as a business issue.

Crucial here is also that the technological measures required will not add to a company's ROI. Interesting replies gathered from the same study however showed that if the improvements would save enough money because of better visibility, better supply chain control, reduced recall costs and less counterfeiting, then the business model will be saleable.

Serialization as a first step to a secure Supply Chain

Next to criminalization of the actual global production and trade of fake medication, regulatory authorities from the start have aimed at sophisticated technology to create a secure drug supply chain. Registration of individual consumer packed items by means of bar-coding, mint-printed labels, holograms or RFID-tags should enable the track and trace and/or the authentication of individually sold medication.

The supplying side of the market has fully embraced the opportunity that comes with these new regulations. Different kind of players, from large global IT powerhouses to garage-size equipment constructors have taken a position in the technical field that full blown Track and Trace environment could build.

In general, the industry's response has been rather re-active. With the lack of a clear ROI, corporate T&T initiatives have been limited to a series of small scale pilots or to the strictly limited compliance to local regulations (e.g. Turkey, France) only.

What all these 'first rounds of serialization' taught is that a re-active approach leads to a rather fragmented, uncoordinated and, in the end, costly set of individual solutions, varying from region to region, often from different suppliers and implemented without the view of a future global serialization data topology.

Development

With regulations around the globe becoming more and more clear the industry is now getting ready for what could be called 'serialization 2.0': not just basic numbering of individual items, or a local repository to comply to local rules, but a global, comprehensive, and secure accepted handling of packaging data that not only complies to various serialization requirements but also increases supply chain efficiency.

In order to get there, multinational pharmaceutical companies will meet a number of challenges:

• Different regulations apply for different regions;
  For multinational companies operating packaging sites in various regions, keeping track of all the individual regulations can be a real burden.
• Process- / technical requirements;

The first rounds of serialization could be considered as rather straightforward.

(e;g. French Coding). In the next wave, regulations often involve more complex data-handling requirements like aggregation of different levels of packaging, but also the incorporation of specific serialization functionality into new or existing MES data handling.     

• Different packaging lines types, with different levels of automation;
  Also here, a global pharmaceutical company faces different standards and levels of technology varying from one location to the other.
• Different levels of ERP:
  Different ERP systems, or none at all, will affect the global standardization of ERP integration with serialization systems and in the end the future integration.
• Not all products and/or regions are affected:
  In a facility where different products are being handled, or from which different countries are being served, this puts a strain on the required line- and site flexibility.
• Effect on Overall Equipment Effectiveness and plant downtimes: Implementing a serialization solution in a packaging site could affect the line of site key indicators: both from the perspective of the actual implementation or by influencing the required packaging capacity - but it does not necessary have to, if innovative designs are used.
• Time:

The often short-term issuing of local regulations make that time pressure on implementation can be severe - putting a strain on all stakeholders involved

• Resources:

Perhaps one of the most critical issues - although not the one most obvious: If the massive wave of regional serialization legislation truly comes up, with its top expected around 2014/2015 when both the US and the EU implement their final legislation, the demand for qualified staffing could become critical.

As a result, the industry is looking more and more for strategic partnerships with suppliers that are actually able to handle this globe-spanning demand in an adequate way. Key to this is two-fold:

Technically -

The actual solution a supplier offers should be able to deal with all the technical challenges mentioned. Preferably build in a modular, scalable way around existing industry standards, the ideal solution is robust, open, and available on a global scale, around the globe.   

Organisation -

Perhaps more important than the actual technical solution, the way a supplier is able to handle the variety of different [local and company-] requirements, with skilled staffing, executed at the same time and presented in all of the relevant regions will be the key decisive factor to the success of a company's serialization roll out.

Only by building partnerships with suppliers that can fulfil the above mentioned requirements, the industry will be able to deal with the wave of serialization coming up - and to exploit the potential supply chain optimization that lies underneath.

1) Booze Allen Hamilton (Munich) in cooperation with Siemens, 2005