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European Pharmaceutical Contractor

Bigger Data

For pharmaceutical companies, big data is about to get a whole lot bigger. This is because countries are scrambling to put in place vast systems to keep tabs on the manufacturing and distribution of prescription drugs. Faced with global counterfeiting syndicates that pump billions of dollars of bogus pharmaceuticals into the market each year, governments are responding by establishing strict serialisation measures that mandate tracking the drug pipeline from start to finish.

Cost of Compliance

Serialisation involves undertaking a number of complicated measures, and many of the most prominent pharma giants are waiting to see how the development of regulations plays out before taking action. The reason for this stalling is due to the staggering cost of compliance. Experts reckon it could take a pharma company millions of dollars to meet the various guidelines across the global markets. Also adding to the uncertainty is the fact that no one professional body will oversee a new set of global serialisation guidelines. Currently, each country is putting in place its own rules, and global firms are faced with the challenge of meeting each set of serialisation guidelines within every country they operate.

Whether you are sitting on the sidelines or busily creating a program that addresses serialisation, now is the time to use this trend as a reason to refine your approach to your supply chain expectations. Serialisation is much more than a compliance issue. First and foremost, it is about reaping supply chain benefits. For as long as most of us can remember, pharma companies have structured their inventory cycles on a monthly basis. The act of re-organising that cycle to be weekly instead of monthly has plenty of benefits, not least of which is how a quicker turnover can whittle down operating expenses. That is because enterprises are reducing their inventories as well as responding to potential shortages before they happen.

Stock Control

Serialisation is also about having the technological capabilities to ensure that legacy systems, the core enterprise resource planning (ERP) software, and the cloud come together and operate seamlessly to provide global traceability of all products. These functions, of course, are not entirely unconnected to inventory – rather, they are extensions of it. Pharma businesses know well the travails of produce wholesalers and retailers. Getting the right amount of stock to a store shelf to meet demand is tricky enough, but even more challenging is not allowing so much as one bottle of pills to sit on those shelves beyond its expiry date.

A pharma company must account for every last ‘ineligible’ pill that has passed its expiry date. Serialisation ensures that manufacturers can identify overstocks in advance and, if necessary, begin the reclamation process more efficiently. Indeed, serialisation improvements bring transparency to the manufacturing process. On a ‘return day’ in the US in the spring of 2012, companies collected some 556,000lb of expired drugs. Being able to address changes in the demand side of the product pipeline, as well as to trace the products, will help companies cut down on the enormous amount of drugs that wind up classified as ineligible.

Faster Recall

Likewise, serialisation is about being able to recall drugs quickly, if need be, and save millions of dollars. A manufacturing glitch plagued a major pharma company three years ago to such an extent that it had to recall no less than four of its most popular products. By some Wall Street estimates, this sweeping recall resulted in $750 million in lost sales and a hit to annual earnings by as much as 30 cents a share.

Assuming nothing could have been done to anticipate or quickly fix the production line delay, if the company had instituted sufficient serialisation measures, it would have had data readily available that showed where the batches were distributed and how extensively its recall process worked. Furthermore, class action lawsuits would have been averted because stale and ineffective drugs would not have been sitting on pharmacy shelves with the potential to do more harm than good.

Return on Investment

The key mandate, therefore, is for companies to look upon serialisation as an opportunity to derive a substantial return on investment. Enterprises can achieve this both by lowering costs and improving visibility along a secure supply chain. Indeed, the business benefits of serialisation might just outweigh the results of compliance-mandated improvements. Implementing a serialised manufacturing and distribution network improves shipping accuracy, product recall, pricing accuracy and the firm’s short supply situation. Because experts predict that serialisation data will double every 18 months, all companies should have a rigourous system in place to handle big data – both structured and unstructured.

Drug Counterfeiters

Counterfeiters cost the global economy billions of dollars a year. The most serious counterfeit operations threaten the health and welfare of patients and involve items such as spare aeroplane parts and pharmaceuticals. Who wants to take a life-saving drug that turns out to be nothing more than a conglomeration of sawdust and sugar? And who wants to fly on a commercial jet that has been repaired using counterfeit mechanical parts?

Production Efficiency

Beyond just counterfeiting, a certain amount of drugs manufactured by legitimate firms need to be recalled because of inefficiencies in the production process. Automating tracking and tracing of prescription drugs through serialisation measures could save the industry as much as $16 billion a year. In the US alone in 2013, pharmaceutical product recalls totaled $7 billion and averaged $10 million per incident.

Serialisation Programmes

Make no mistake: the serialisation journey can be a long and complex one. Therefore, the time to start planning with a prefigured track and trace solution is now. A large pharma company can have numerous packaging lines and distribution channels, so implementing a serialisation program from scratch can take between four and eight years.

But the potential business benefits are enormous. An enterprise will see a mountain of potentially costly regulations reduced to nothing as the compliance-friendly serialisation program takes hold. Then the organisation’s inventory controls will receive a boost, operational efficiencies will become more apparent, and patients at the end of the chain should become more satisfied and loyal to the brand. Finally, no company can deny that reducing its pricing and recall issues is not a welcomed development. All of these changes are the result of a robust serialisation program.

Big Data

What is most promising about serialisation is its manifestation of big data and the best practices that go with it. Up until recently, pharma companies used traditional data analysis to establish direct relationships between different pieces of data. From pricing to inventory, organisations would attempt to track and connect the causes and influences of a particular value chain. Today, with big data and its expanding scope, there exists ample opportunity to uncover correlations – data that may seem unconnected, but in fact relate to specific events. Consider the traditional method of tracking an outbreak of the flu – various hospitals and physicians’ offices would report their data to a central source, which would then analyse the information and disseminate it weeks after the initial outbreak. Today, internet search engines can track terms like “flu symptoms”, almost in realtime, and accurately report the spread of the virus. Who needs a report two weeks on when authorities can act on such immediate information?

We hear a lot these days about the promise and potential of pervasive computing. This is certainly a broad topic that can apply across many businesses. One thing we do know, however, is that heightened information technology that affects all of our business functions translates into increased efficiency. A direct result of big data’s newly discovered connections, for instance, is the serialisation of prescription drugs. The pharma industry is fully aware of the benefits of information technology investment throughout the supply chain, and the decision to move forward with serialisation means a business enterprise will be enabling a surprisingly accurate and cost-saving compliance program.

Next Steps

No-one knows exactly how a global system and protocol for serialisation will play out. But woe to the pharma company that does nothing but wait and watch its competitors accept the new serialisation reality. Armed with more accurate and immediate data – having changed the inventory cycle to a weekly schedule – a firm can transform into a leaner, more nimble pharmaceutical enterprise. That is a prescription that all stakeholders can live with.

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Ramesh J Chougule heads the software and applications (SAP) services business of Infosys in the life sciences sector and is responsible for defining go-to-market solutions, delivering SAP programs and pre-sales consulting. He has been advising clients on ERP implementations for more than 16 years and has been instrumental in guiding clients to define their ERP roadmaps. Ramesh has published multiple articles on life sciences industry trends and the application of ERP to solve a variety of challenges. He is a Mechanical Engineer with postgraduation in Industrial Engineering and Management.
Ramesh J Chougule
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