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The Axia Institute’s Executive Director Katherine A. Franz, and Michael Howe, CEO, Verify Brand, an Optel company, discuss important trends in pharmaceutical serialization

Leveraging serialization to create a smarter supply chain

INTRODUCTION

The prevailing wisdom in the pharmaceutical industry is that serialization compliance around the world is no longer an option, it’s a necessity. For the past decade, lot-level traceability and serialization compliance projects have been at the forefront of pharmaceutical manufacturers’ attention. Recently, global government-mandated item-level serialization requirements have begun to affect every party in the pharma value chain, from manufacturers to distributors, re-packagers, pharmacies, and even patients.

As pharma organizations go through the process of choosing item-level serialization solutions to meet regulatory deadlines, they must ask a tough question—do I go with basic compliance software or do I choose a solution that not only checks the compliance box but improves my overall business operations simultaneously?

According to KPMG’s 2017 Serialization & Traceability Trends (1) report, more than 70 percent of pharmaceutical organizations surveyed agreed that serialization data has the potential to transform business processes. Currently, pharmaceutical organizations are spending millions of dollars to ensure that they have the necessary resources for compliance. Standards-based track and trace system ensure interoperability and a more streamlined process, which in turn, helps the value chain operate more efficiently.

Fortunately, when track and trace systems are properly architected, pharmaceutical organizations can gain unprecedented visibility into value chain operations, resulting in end-to-end efficiencies and actionable insights that have positive consequences far beyond compliance.

FROM INSIGHTS TO ACTION

As a result of the insights serialization data provides, pharma companies will know exactly where their products are today (e.g., commissioned, in transit, received, shipped), where they’re headed tomorrow, how distribution channels are used (e.g., normal distributing, specialty, direct-to-patient), and whether there is sufficient supply in each region based on forecasts, current demand, and historical trend analyses.

In addition, serialization and traceability software will enable end-to-end visibility and full batch “end-of-life” reconciliation, showing the status of every serial number that was requested for each batch (e.g., good, damaged, destroyed, spoiled, retained, etc.). Importantly, the ability to access complete end-of-life event details exponentially increases the integrity and overall security of the product supply chain.

One way serialization data may be especially powerful right now is by providing product persistence insights. These insights can help identify opportunities to optimize and react to product dwell times in the value chain by alerting pharma organizations when they must change production schedules or implement sales incentives for products that are close to expiration. For example, if a product with a short shelf life has been sitting idle at a 3PL for an extended period of time, an alert would notify the manufacturer, who—in the nearterm—could create sales incentives to move the product and prevent it from being destroyed or returned. Long-term, the manufacturer could shift production capacity to a different product with a higher turnover rate.

Returns and trade management is another area where serialization data can be beneficial to pharma organizations. According to the KPMG serialization report, more than half of the survey respondents highlighted returns credit calculation and diversion monitoring as top organizational priorities. Reports and analytics from track and trace systems can be used to regulate returns authorization and implement trade management programs. For example, if a customer orders a product intended for sale in Spain for $50 per unit, but it’s returned in France for $90 per unit, the pharma manufacturer can either enforce customer returns to the country in which it was sold, or implement a program to prevent parallel trade, such as offering discounts in at-risk regions contingent upon the verification of the product serial number in the country for which it was intended.

Perhaps one of the most exciting ways serialization data can transform business processes is by improving patient and provider engagement. Serialization has the potential to power new and innovative patient and provider engagement programs—an emerging trend in pharma and other life sciences industries.

The McKinsey Global Institute (2) estimates that big-data strategies could generate billions in value for the health care industry by optimizing innovation, improving the efficiency of research and clinical trials, and building new tools for physicians, consumers, insurers, and regulators to provide more individualized approaches. By culling drug response data, pharmaceutical manufacturers may develop patient resources, such as information on websites or mobile apps, which can help patients manage reactions to drugs, thereby driving innovation for drug development.

KEYS TO GETTING THE MOST OUT OF SERIALIZATION DATA

While the possibilities serialization data offer are compelling, it’s critical to emphasize that thorough planning and preparation are essential building blocks to creating a smarter, data-driven value chain from serialization programs. Partner collaboration is key. Companies that communicate with their value chain partners early and often in the planning process can identify win-win opportunities, and are therefore more likely to experience favorable outcomes.

There are a few key items pharma organizations must prioritize with their serialization value chain partners to be successful. The first is integration fl xibility. In today’s global serialization landscape, pharma organizations must be able to connect with many networks and trading partners that use disparate inbound and outbound data transmission formats and protocols. Problems establishing reliable partner connections can cause delayed deployments and lead to postponed production of serialized products, resulting in lost revenue for the manufacturer and customer-imposed fines for the contract manufacturer.

To accommodate the numerous integration scenarios that exist, serialization platforms must allow quick and seamless connectivity to any pharmaceutical trading partner on any network. Systems architected with GS1’s global standards (i.e., EPIS, which stands for Electronic Product Code Information Services) have the capability to handle any type of altered, extended or proprietary messaging format, as well as any of the common system-to-system integration protocols, such as RESTful APIs, SOAP and +AS2. It is therefore imperative that the enterprise platform that serializes and tracks products through the value chain must achieve maximum flexibility in platform dataset configurations, as well as accommodate both standard (e.g., EPCIS) and non-standard communication protocols.

Another key issue pharma organizations must consider is whether their track and trace systems have built-in reporting tools. As pharma organizations evaluate their options, they should not overlook or deprioritize ease of use; the sheer volume of information serialization data yields could require hours spent manually compiling and interpreting data.

A serialization and traceability solution with a built-in reporting engine and advanced analytics is capable of capturing, extracting and analysing EPCIS commissioning, aggregation, shipping, and end-of-life message events when this data is available (to date, not all serialization solutions, 3PLs and linelevel systems have this functionality). This can lower the total cost of ownership and help companies assess their internal manufacturing processes, providing the necessary intelligence to transform business practices within their own four walls.

WHY VALUE BEYOND COMPLIANCE IS GAINING TRACTION

The concept of value beyond compliance of serialization data is more than hype. When selecting a serialization and traceability platform, pharma organizations must critically examine the technical capabilities each system offers and focus on gaining the necessary insights to leverage rich data and insights to enable a smarter supply chain.

Serialization will deliver new and more value chain data, justifying the investment to go beyond minimum compliance requirements, making the data actionable, and ultimately, creating a smarter supply chain. In addition to increased supply chain visibility and efficiencies, track and trace systems can help build stronger relationships among value chains, increase patient engagement initiatives, and give all parties an optimal return on their serialization investment.

REFERENCES

1. 2017 Serialization and Traceability Trends: http://www.kpmg-institutes.com/institutes/healthcare-life-sciences-institute/articles/2017/05/2017-serialization-and-traceability-trends.html (May 1, 2017)
2. How Big Data Can Revolutionize Pharmaceutical R&D: https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/how-big-data-can-revolutionizepharmaceutical-r-and-d (April 2013).

ABOUT THE AUTHORS

Katherine Franz’s leadership of global Fortune 10 companies has transformed manufacturing, service and engineering divisions. As executive director of Michigan State University Axia Institute, she develops effective and sustainable solutions to improve all types of public and private value chains.

Michael Howe has led Fortune 100 companies and built nationally recognized brands with MinuteClinic, Procter & Gamble, PepsiCo and Arby’s. He lends his expertise as a strategic and operational advisor and board member, and has extensive knowledge of technology solutions.