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Serialization Supply Chain Challenges Series: Why Supply Chain Processes in Pharmaceuticals Become Increasingly Complex
Companies in Life Sciences, and in the pharmaceutical industry in particular, are put under great pressure to provide regulators and the public with an immense amount of transparency in their end-to-end supply chain. That comes as no surprise, considering that compliance rules and regulations become stricter on both local and international level to battle all sorts of excesses in the industry. One of those challenges is counterfeit drugs that pose a serious threat to global health. Serialization is a sound way to supply regulators with transparency, and to monitor and control the safety and quality of your drug products. However, it’s also complex and bound to become more difficult in the future. In this blog series, we delve into the topic of serialization. In this first blog, we’ll outline the status quo of the international industry regarding the tracking of products with sGTIN numbers. And we explain why it is vital to implement serialization in your entire internal supply chain.
In the other blogs of this series, we’ll provide you with practical business cases and solutions that show how you can leverage this growing complexity in your pharmaceutical supply chain, while ensuring the safety and a high-quality standard of your medicines. We’ll also explain how to maintain flexibility concerning changes in rules, regulations, and in the global market.
The Global Problem of Counterfeit Medicines
Counterfeit medicines form a huge threat to patient safety. In the Western world, approximately 1% of the products are substandard or falsified. In developing countries this number is even higher, much higher. On average 10% of the medical products that are sold in developing countries are counterfeit. In some countries this percentage is even as high as 40% for some medicines. The consequences of these practices are immense. A falsified medicine might contain no active ingredient, a different active ingredient or a different amount of active ingredient. Taking such a medicine might result in no effect, but it can also result in a deviating effect or an overdose. In countries with the highest amounts of falsified medicines, in addition to the health issues, this also leads to societal issues. Citizens lose their trust in the healthcare providers and health systems and look for alternative (non-scientific) solutions.
What You Need to Know about Serialization: The Basics
Luckily the world is very aware of the issues with counterfeit medicines. Thanks to digitalization we are now serializing the drugs that are produced for an increasing number of countries. Manufacturers of the medicines provide every sellable unit that they produce with a unique serial number. The combination of this unique serial number and the number that belongs to the produced product, the Global Trade Item Number (GTIN), forms a Serialized Global Trade Item Number (sGTIN). The product provided by SAP which is used to enable traceability is SAP Advanced Track and Trace for Pharmaceuticals (ATTP).
How pharmacists in Europe use sGTIN
In Europe, all prescription medicines that are produced are registered by the marketing authorization holder to a database that is regulated by the government. At the moment that the product is sold at a pharmacist, this pharmacy is obliged to scan the sGTIN number that is printed on the pack that is being sold. This scan action checks whether or not the sGTIN number can be found in the regulatory database, and if the number is found it checks if the status is correct. When that is the case, the pharmacist can sell the pack. This will trigger an update in the database for the serial number which is then marked as being dispensed. If the number was not found in the database or if the status is incorrect, it means that the medicine might be falsified. The pharmacist is not allowed to dispense this pack and the producer is automatically alerted that an unknown sGTIN number was verified.
Here’s Where it Gets Complicated: International Requirements
In Europe, all EU countries are governed by the same serialization organization; the EMVO (European Medicines Verification Organization). When manufacturers are producing solely for the European market, the serialization rules are uniform. Things get more complicated when products are sold to countries outside Europe.
Not only are other countries governed by other Medicine Verification systems, but they can also have other serialization requirements. The European market requires the serialization process as mentioned above, where manufacturers are obliged to report serial numbers to the institutional database. This requirement is also referred to as ‘reporting’.
Some markets, such as Russia, China and Saudi Arabia, even require a complete track & trace process. This is because these countries also use serialization to detect cases of corruption, stolen drugs and illegally imported drugs. Instead of only reporting serial numbers in the production process these markets also require reports about which serial numbers are shipped to which customers. In other words, these markets require more serialization related handling throughout the supply chain.
Serialization Aggregation in Pharmaceuticals
In order to enable these track and trace processes, it is required that serial numbers are aggregated. This means that the serialization software knows which serial numbers are included in a box and which boxes are stacked on a pallet. Whenever an order is picked for a customer that requires track and trace; instead of scanning thousands of serial numbers the warehouse operator only needs to scan the pallet identification label (SSCC). This scan action is then sufficient to report all included serial numbers that are shipped to the governmental database.
Different Pick Processes for Different Markets
Since most medicine manufacturers produce for multiple countries, these serialization requirements result in diverse pick processes for the markets that have those ‘track & trace’ requirements. At this moment, only a limited number of countries are requiring these activities. Therefore, manufacturers can still separate the pick processes for these ‘special’ markets from the pick processes for the ‘normal’ markets.
Transparent Supply Chains Become The Norm; opt for Integrated Serialization
However, more and more markets are requiring a more transparent supply chain. As a consequence of this the internal supply chain processes become more complex. When the ‘special’ markets are no longer a small amount of the total markets they become part of the ‘normal’ business. As a consequence, the ‘normal’ process includes multiple scenarios. It is impossible for a warehouse operator to know exactly when which serialization activity is required. To help operators, serialization processes must be integrated in the warehouse solution that is used. For our customers this is often an SAP EWM solution.
Serialization Integration: Relevant for All Warehouse Processes
Another result of the increasing need for supply chain transparency, is that more and more pallets in a warehouse need to become aggregated. This means that when pallets in the warehouse are repacked or consolidated not only the warehouse system needs to be updated, but also the object hierarchy in the serialization system needs to be updated. If these systems are not aligned, it will result in incorrect shipping of serial numbers to customers. So, integration of serialization processes is not only relevant for the picking process, but also other warehouse processes must be taken into account.
Your Supply Chain is Becoming More Complex, Be Ready
That the internal supply chain for producers of prescription drugs is becoming more complex due to serialization requirements is more than evident by now. In our next blog, we will share insights from our day-to-day experiences in the Life Sciences industry. And tell you more about how we optimize serialization-related warehouse processes. Most of the customers we help, are struggling with complying to these strict serialization demands in their warehouse. As adhering to it often comes with tedious – and error prone – manual labor. It is a challenge that can be overcome with an integrated end-to-end solution in which serialization forms an integral part.
Can’t wait until our next blog to find out how you can leverage all this growing complexity in your pharmaceuticals supply chain? We are more than happy to discuss your challenges with you.