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Pharmaceutical Manufacturing and Packing Sourcer

Eyes Wide Open

The fight against the circulation of counterfeit drugs in today’s legitimate and black markets is a global problem, as is the interception of genuine drugs that enter the illegal market or are used as currency. Yet for pharmaceutical companies putting traceability in place – not only of their end products but also the components that go into them – it is not as simple as pressing a button and obtaining the desired information, as there is a lot more to take into consideration.

Creating Visibility

Pharma companies manage complex supply chains, and routinely grapple with the operational challenges of interacting with an extensive number of suppliers contributing ingredients and components to a drug’s production. Implementing and maintaining track and trace is harder than it sounds, requiring a supply chain set-up with visibility in mind; this is a prerequisite to tackling serialisation.

New serialisation regulations require inventory to be auditable as it moves through the supply chain, with track and trace as a key component. The EU Falsified Medicines Directive and the US Drug Quality and Security Act both place demands on companies to be able to trace and validate the origin of medicines intended for human use, including the ingredients they contain.

Meanwhile, Brazil, India, China and other countries are implementing their own approaches.

With serialisation, code-carrying medicine packets can be read by each and every party along the supply chain, providing information on the products’ contents, and their journey from components to complete products and on to retail. Even more important is providing visibility to all parties throughout the chain – and not just as a by-product of serialisation.

Counterfeit Circulation

The large volume of counterfeit drugs circulating in black market channels is a rising problem, posing a danger to health. It is particularly alarming in the developing world where, in Africa and parts of Asia and Latin America, the proportion of counterfeit medicines has been estimated to be as high as 30% (1).

In 2009, the World Health Organisation (WHO) reported that 34 million counterfeit tablets had been taken out of circulation in Europe in just a two-month period (2). Knowing that medicines and the ingredients they contain are safe, effective and of a high quality is of paramount importance. In 2008, the blood-thinning drug Heparin was recalled because the lower-cost active ingredient it contained resulted in patient deaths and severe adverse reactions. Furthermore, the Wall Street Journal reported last year on fake cancer medications containing mould and water.

In order to address the problem headon, there are tough requirements on pharma companies for comprehensive labelling, pre-published transportation routes and auditable ingredient tracing. But the obstacles to making this happen are significant. To address them, companies will need to look hard at their systems and processes, and must ask if they have the right information available to provide parties with the fullest possible picture of the status of products and components making their way through the supply chain.

Managing Complexity

Meeting these needs places pressure on pharma businesses that are generally large multinationals already managing intricate supply chains. A company may have more than 50 manufacturing sites, work with around 500 companies in the course of producing its products, and sell widely across the globe.

In addition, pharma firms have the complexity that comes from achieving organisational size through acquisitions. Each acquired company brings with it an established set of systems and processes, deeply embedded into the way it manages its business. Integrating multiple approaches within the four walls of the organisation itself can therefore be a big enough challenge, without adding to it the need to deliver a streamlined approach that incorporates all contributors to the supply chain.

Traditional Models

To meet track and trace directives, a complete end-to-end view is precisely what is needed. Yet within the pharma sector, as in many industries, there is heavy reliance on traditional enterprise resource planning (ERP) and legacy systems to track and manage the movement of goods.

With these traditional models, each link in the chain has its own systems for planning and monitoring that often cannot connect into each other; therefore, the level of visibility now sought will be difficult, if not impossible, to achieve. The existing patchwork of ERP, portals, spreadsheets and email exchanges in operation across many businesses does not afford the holistic and complete view of the production and movement of goods from start to finish that is now needed.

Companies getting to grips with serialisation should consider if their existing supply chain management systems and processes provide:

  •  Accurate information across the entire chain at any point and at any location
  •  Instant access to real-time updates and alerts if issues are detected
  •  Visibility of all handovers in the supply chain
  •  Traceability back to source of all materials
  •  Seamless collaboration between all parties

If they do not, there is an opportunity to consider the benefits that can be gained by networking suppliers, partners and logistics providers along the supply chain to offer a more comprehensive view of activities.

Encouraging Collaboration

A collaborative system equips companies with reliable information throughout the supply chain. When drugs leave manufacturers they require outbound control and visibility to track and monitor delivery to the appropriate destinations. They need to be able to prove each step, necessitating a user-friendly, accessible dataset that can be mined across the chain. This in itself requires a whole new way of transacting with trading partners – one that moves away from systems only offering point-to-point connections in favour of a collaborative, network approach.

Naturally, this comes with a financial implication. Companies will want a cost-effective way of complying with track and trace responsibilities. Many are likely to be deterred from entering into, or remaining in, a market if it is too costly to on-board suppliers. Aside from this, any raised costs for existing players are likely to result in increased prices for customers and, potentially, the reduced availability of medicines for patients.

A cloud-based supply chain management platform offers visibility to all companies, regardless of size. For a large, multinational pharma business, access to data from all operational regions allows for greater awareness of growth areas, understanding of where hold-ups might exist in the supply chain, and insight into how these might be navigated in order to avoid impact on distribution. Crucially, this can help tracing via serial numbers.

Forward Thinking

The pharma industry is in the business of long-term planning. This means that a hold-up of supply chain disruption by around five weeks has a big impact. On a networked platform of suppliers, logistics providers and retailers – all working together from the same up-to-date information – any kinks in the chain can be identified in advance, then ironed out or worked around.

This is based on a dynamic supply and demand delivery model more generally associated with the retail industry. However, there are useful insights and lessons to be learnt by looking at how other industries with high-volume demand and low margins manage to keep the movement of goods and flow of information operating smoothly.

In this way, it can be seen that the benefits companies stand to gain from improved supply chain visibility – achieved through high levels of collaboration – are not specific to the pharmaceutical world, or even to addressing directives explicit to transparency. Many industries are grappling with the issues of assuring quality and standards in the way their goods are produced, and in their final products. A virtualised supply chain can therefore provide all-round benefits for quality and control of supply.

1. International Medical Products Anti-Counterfeiting Taskforce (IMPACT): 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. Her career has been focused on the manufacturing sector – in particular, creating solutions for new problems and markets. For the last 13 years, Diane has used software as a service and cloud technologies to find ways to converge ERP and supply chains in developing countries. Prior to GT Nexus, she was General Manager for an SAP partner, specialising in developing products for subsidiary manufacturers in emerging markets. Diane has an MBA from the University of Minnesota.
Diane Palmquist
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