Impact of Pharmaceutical Serialization on Pharmaceutical Manufacturers and CPOs

In recent past, the issue of counterfeit drugs has become a global challenge. Track and trace, and Serialization of drugs have become mandatory in most of the developed markets, and the deadlines for implementation are fast approaching. Therefore, pharmaceutical companies are trying to get their entire products serialization ready within the stipulated deadlines, however, not without facing several technical and supply hurdles. Major hurdle is the huge technology investment in an area that is not tried and market tested. The progress of in-house serialization technology had been rather slow across pharma players. On the other hand, the only firms that have actually made considerable headway towards serialization implementation are the large CPOs, who almost claim serialization ready facilities across developed markets

The pushing deadlines, coupled with technical hurdles are likely to put large pharma players in the mercy of these large CPOs. As a result, many pharmaceutical firms would be forced to outsourcing their packaging requirements to CPOs in order to have their drugs compliant to serialization regulations. This is likely to affect the dynamics of packaging procurement in pharma companies, as it would add to the cost pressures the players are already reeling with. Further, this would also result in supply challenges, as a lot of pharmaceutical companies would have to largely depend on very few CPOs for their serialization requirements. This article explores the short-term and long-term implications of these factors and the scenarios that might develop in the next 5 years.

Introduction

According to estimates by Interpol, counterfeit drugs make up about 1% of the total drug sales in developed countries to about 30% total drug sales in the developing countries. More than one million people die each year as a direct result of these counterfeit drugs. According to the World Health Organization (WHO) reports, nearly 10% of the total pharmaceutical products in the US may be contaminated and about 2% of the drugs manufactured are diverted or stolen. As a result several countries have adopted or announced regulations that mandate anti-counterfeiting measures to be incorporated in pharmaceutical products.

Author: Vishnoo V