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European Pharmaceutical Contractor

Stay on Track

Pharmaceutical companies are working to address regulatory requirements for serialisation to ensure that inventory moving through their supply chains is auditable, and can be tracked and traced. The challenges in making this happen are significant – to address them, companies will need to look hard at how they manage their supply chains. By networking with their manufacturers, suppliers and shipping providers, companies can help ensure that accurate, timely information about products and components is available at a moment’s notice and can be continually shared.

Strict Measures

The EU Directive on Falsified Medicines, and the Drug Quality and Security Act in the US, place demands on companies to be able to trace and validate the origin of “medicinal products for human use”, and the ingredients within them. Meanwhile, Brazil, India and China, among other countries, are implementing their own approaches.

There are clear reasons for introducing stringent measures: authorities are waging a global battle to combat the circulation of counterfeit drugs in the market. They also have to work to safeguard against the interception of drugs that then enter the black market or are used as currency.

Serialisation is viewed as a solution. With this method, each medicine packet can carry its own code that can be ‘read’ by each party along the supply chain, giving access to information describing the product’s contents, as well as details of its journey from components to completion and to retail outlet.

Brand reputation is essential in all industries, but in pharma it is of the utmost importance. Serialisation offers a scope upon which a product’s veracity can be proven. This is extremely valuable in an age of increasing threat from counterfeit goods.

Combatting Counterfeits

The volume of counterfeit drugs circulating in both official and black market channels is staggering, and represents a significant danger to human health. The problem is particularly acute in the developing world – for many developing countries in Africa, and in parts of Asia and Latin America, the proportion of medicines that are counterfeit can be as high as 30% (1).

In 2009, the World Health Organization (WHO) reported that 34 million counterfeit tablets had been taken out of circulation in Europe in just a two-month period. In the same report, the WHO cited an estimate from the US Center for Medicine in the Public Interest that global sales of counterfeit medicines would top $75 billion in 2010 (2).

Knowing that medicines and the ingredients they contain are safe, effective and of a high quality is paramount. In 2008, the blood-thinning drug Heparin was recalled because the low-cost active ingredient it contained resulted in patient deaths and severe adverse reactions; and the Wall Street Journal recently reported on fake cancer medications containing mould, water and no active ingredient.

The comprehensive labelling, pre-published transportation routes and auditable ingredient tracing required from serialisation legislation will help tackle the problem head-on.

Complex Supply Chains

Meeting the demands of serialisation remains a challenge for pharma companies. Generally, large multinationals already manage complex supply chains, and routinely grapple with the operational struggles of interacting with an extensive number of suppliers that contribute ingredients and components to a drug’s production. A business may have over 50 manufacturing sites and work with 500 companies or more in the course of manufacturing its products. It may also sell in almost every country in the world.

Added to this, large multinationals are often the result of a series of acquisitions. Inevitably, with each acquired company comes an established set of systems and processes, deeply embedded into the way that organisation manages its business. Integration of these multiple approaches within the four walls of a company itself can be a big enough challenge, let alone achieving a streamlined approach that incorporates all contributors within the supply chain.

A recent GT Nexus report conducted by Supply Chain Insights found that confidence in the ability of enterprise resource planning (ERP) – the system often used to automate processes within a company – to deliver visibility across the extended supply chain, beyond the enterprise itself, is low. In fact, 43% lower than confidence in the visibility the system affords within a company’s own organisation.

Yet, the directives specific to the managed supply of medicines and drugs do require pharma companies to have a complete end-to-end view of their supply chain. The problem is that, within pharma – as in many industries – there is a heavy reliance on traditional ERP and legacy systems to track and manage the movement of goods.

With traditional models, each link in the chain has its own systems for planning and monitoring. These often cannot connect with each other and, therefore, the level of visibility pharma is working to achieve for stringent track and trace will be difficult, if not impossible. The existing patchwork of ERP, portals, spreadsheets and email exchanges in operation today does not afford the holistic and complete view of goods production that is now needed.

Greater Collaboration

Relying on tools and systems that look inwards at the company is consequently insufficient for complete visibility. To comprehensively track and trace the supply of ingredients that go into its medicines, a manufacturing company needs a collaborative system that equips it with accurate information across its entire supply chain, at any point and at any location.

Once the drugs have been produced, the manufacturer needs outbound control and visibility to track and monitor delivery to the appropriate places. They need to be able to prove each step, and this means a comprehensive, accessible dataset that can be mined across the chain.

Serialisation requirements will impact the whole supply chain. Thus, a solution is needed that enables visibility and collaboration across its entirety – one that can provide:
  • Accurate information through the entire chain
  • Instant access to real-time updates and alerts if issues are detected
  • Visibility of all handovers
  • Traceability back to the source of all materials
  • Seamless collaboration between all parties
Naturally, there is a cost implication in realising a solution to manage any process, and companies will be searching for an economical, but effective, way to comply. A high-cost answer could hinder some suppliers from entering or remaining in the market. That aside, it could raise costs for existing players, with an inevitable knock-on impact on costs for customers, and potentially reduced availability of medicines for patients.

A cloud-based supply chain management platform gives all companies access, regardless of their size. It offers them a whole new way of transacting with their trading partners – a method which moves away from systems contributing only point-to-point connections, in favour of a collaborative, networked approach.

The benefits companies stand to gain from this are not unique to only the pharma world, or even to addressing directives specific to transparency for the assurance of quality and security in the supply chain. A virtualised supply chain provides all-round benefits for overall business health. By making a common platform accessible to manufacturers, suppliers and transport providers alike, an organisation can gain access to valuable supply chain information that can be used to improve efficiency and flexibility.

1. International Medical Products Anti-Counterfeiting Taskforce, Counterfeit medicines: An update on estimates, 2006
2. WHO, Growing threat from counterfeit medicines, 2010

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Diane Palmquist is the Vice President of Manufacturing Industry Solutions at GT Nexus. For the last 13 years, she has used software-as-a-service and cloud technologies to find ways to converge ERP and supply chains in emerging markets. Prior to GT Nexus, Diane was General Manager for a systems, applications and products in data partner, specialising in developing products for subsidiary manufacturers in emerging markets. She has an MBA from the University of Minnesota.
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