Many healthcare companies are currently in varying stages of analyzing or implementing serialization. Implementation of unit-level serialization is a complex undertaking, and very few pharma companies have fully functional serialization systems in place today. As a result, established models and approaches are difficult to come by. In order to enable tracking of products across the supply chain and authenticate questionable products wherever they appear, these solutions must go beyond the packaging and also incorporate distribution operations, quality, compliance, and information systems components. Bridging these various groups across the organization can be a challenging task, even for companies that conduct all of their manufacturing internally. However, companies that outsource components of their operations face additional and unique challenges in developing serialization strategies and designs, implementing the solutions across multiple enterprises, and coordinating ongoing management of an operating solution.
Without firm standards or national regulations in place, companies may feel it is best to wait on implementing serialization. While a cautious approach seems sensible, waiting is no longer a viable option, as implementation timelines can be long and require a high level of commitment and coordination to attain success. Add in multiple vendors to the mix, and these issues become even more complicated. Misjudging the zeal of regulators, the risks of piracy, or the drive and determination of competitors could place pharma, medical device and diagnostic products and their brands unnecessarily at risk.
In this article, we discuss the importance of enabling serialization, propose a pragmatic approach to beginning the journey, and highlight several unique challenges faced by companies outsourcing their packaging and logistics operations to Contract Manufacturing Organizations (CMO) and Third Party Logistics (3PL).
Why Serialization and Why Now?
Ensuring the safety and security of the supply chain is critically important to pharma manufacturers, suppliers, patients, and regulators. Public and professional confidence in the integrity of healthcare products has diminished as increasing incidents of theft, counterfeiting, adulteration, contamination and shortages make national headlines. Tighter controls of packaging and distribution are critical to rebuilding and maintaining trust, authenticity, and efficacy.
Serialization helps increase supply chain and product integrity by providing clarity and transparency to individual item-dose product movements from initial packaging to healthcare professional or patient receipt. In addition to providing a unique identifier for each unit of a product, serialization enables both tracking of the chain-of-custody for pharma products (pedigree) and the means for authenticating suspect product in the field. When combined with other techniques, such as tamper-proofing, overt/covert markings, and physical security features, serialization can offer companies a comprehensive, “layered” approach that offers unparalleled, end-to-end product security.
Business Considerations of Serialization
Serialization impacts many business functions — from regulatory compliance to branding and product design. Consider the following concepts and questions when planning your goals, strategy, Resources , approach, and timing.
Internal regulatory and compliance strategies: What is your organization’s tolerance for legal and compliance risks in the face of the considerable regulatory uncertainties surrounding serialization?
Other business drivers: Aside from regulatory requirements, what other drivers may exist — such as product security, brand integrity concerns and reimbursement fraud — to motivate your organization to earlier versus delayed action?
Packaging configurations: Physical space will be required for serial numbers on the product package or label, and will need to be considered for both existing as well as pipeline products.
Packaging operations: The degree of automation and serialization-readiness of packaging operations must be a consideration in setting the timing for a serialization initiative. Also, changes to the operations to incorporate new steps and line-of-sight barcode reading or other means of automatic identification of uniqueness may be required.
Information systems and software: Beyond allocating and applying serial number data on the packaging line itself, capabilities for generating and managing serial numbers are needed for packaging operations. Other considerations include capabilities for associating the serialized data to cases and pallets, transferring of data along the value chain, and integrating serial number data with order management and pedigree information.
Business processes and methods: New business processes and policies will need to be developed for defining serial numbers, allocating them across multiple packaging operations and lines, establishing methods for product-package association and dealing with data-driven exceptions and failures.
Quality and compliance: As with other steps of the manufacturing process, Quality Assurance must approve the serialization process. QA should be involved with validating the effectiveness of the serialization process, determining needed inspections protocol, and ensuring that employees dealing with the serialization system are adequately trained and prepared.
Impact of Outsourced Operations
While the challenges and uncertainties of serialization can appear daunting for any pharma company to consider, outsourced operations add yet another dimension of complexity to serialization plans. The ability to coordinate and manage a serialized product across packaging, quality, regulatory, IT, and supply chain are challenging enough within one organization, and even more so when dealing across two or more enterprises.
For our purposes, we will focus our discussion primarily on outsourced packaging operations. The regulatory requirements for serialization are the same whether a company conducts all of its manufacturing internally or has several contract manufacturers. The license holder must ultimately have serialization in place in all of its packaging operations, both internal and external, if it aims to meet the pending serialization regulations.
Additional complexity and issues that come with outsourcing operations fall mainly into five categories:
- Alignment of strategies and priorities: In many situations, the strategies of CMOs do not always align with their pharmaceutical clients, and this is particularly true for serialization. With multiple customers, CMOs are highly motivated to develop serialization strategies and solutions that will enable them to meet the needs of a broad range of customers. While this may provide a satisfactory solution to many customers, it may not fully meet the needs of any single customer. In addition, CMOs may receive conflicting requests regarding serialization initiatives from their various customers. If a customer has limited influence over its CMOs, its voice and requirements may not carry much weight.
- Purchasing, installing and validating equipment: Agreement on the equipment and line configuration to support serialization is a necessity, with timelines typically ranging from 15-18 months. Companies must purchase, install and validate serialization equipment for each packaging line. The IT infrastructure to support the serialization information constructs pre- and post-lot completion must also be in place at each contract manufacturer.
- Solution architecture: Should you maintain the data repository internally, or at the CMO? If the data are maintained internally, should you do so within or outside of your enterprise business system platform (ERP)? Does your current ERP platform offer a serialization capability?
- Management of production and serialized data across multiple internal and external sites: The generation and storage of serial numbers must be coordinated across all CMOs. IT interoperability across all sites must be achieved to allow data transfer to support serialization.
- Ownership of information: It's important to address a few key questions: How do you best manage the lifecycle of serialized product data? How to standardize syntax, formatting and metadata? Who will have access to the serialized product data? Will event data be rolled up into a single environment? Who will maintain it? For how long will the data be actively available?
The result is a risk that pharma companies may have to deal with multiple serialization strategies from various CMOs across product lines and geographies, in addition to considering their own priorities and strategies.
Serialization Solutions in a CMO Environment
With serialization tools and technologies continuing to evolve, no two solution designs are identical. Regardless of the specific tools utilized, there are common components that all serialization solutions must include:
- Serial number definitions and formats
- Sufficient physical area on product packaging for applying serial number data
- Packaging line technology for applying, reading and verifying serial numbers
- Serial number management systems for allocating serial numbers, managing parent/child relationships, managing conflicts and exceptions
- Interaction with enterprise systems for associating serial numbers with orders, transfers, shipments, or generating pedigrees
- Processes and procedures for handling exceptions, rework, repackaging, returns and other issues that might impact the integrity of the associative parent-child hierarchy.
In a vertically integrated environment, these components often exist within the boundaries of a single company, through a serialization business architecture. Some contract packagers have been slow to move aggressively toward serialization, due to the cost of deployment, uncertainty of regulations, and lack of customer commitment to serialization. Many providers are choosing instead to wait until customer demand spurs them into action. Others are moving more proactively and have begun to develop comprehensive information architectures and serialization-readiness strategies. There are a small number of CMOs that are serialization-enabled on several packaging lines and well positioned to secure new opportunities in the future. Even with this activity, more work is needed for the CMO industry to support the needs of the pharmaceutical and medical device manufacturers.
Recommendations and Next Steps
Whether your company has implemented, initiated or is just beginning to discuss serialization, there are several key recommendations to consider as you move forward.
Develop your own strategy and perspective: Developing a serialization strategy will help to clarify your own business requirements and priorities for a solution. This strategy should consider characteristics of your specific products, their distribution/commercialization environment, regulatory requirements by region, a product security/risk profile, and an assessment of your enterprise business systems (ERP) foundation. Even if your strategy is ultimately to adopt your CMO’s serialization approach, documenting a strategy in this way will arm your team with important information on critical elements and interface points and will highlight the impacts from their strategy or strategies and any gaps that may exist.
Engage early with your CMO: Begin an active dialog with your CMOs to understand their serialization strategy, if they have one, and how far they have progressed in planning, piloting, and implementing serialization capabilities. Conduct a readiness assessment of your CMOs and 3PL partners to determine if and where there may be gaps that you will need to fill. If significant gaps exist, raise the red flags quickly and determine whether the CMO is able to support your needs or if a change is required.
Design your serialization architecture: Together with your CMO, develop a serialization architecture for your product(s), including packaging equipment, serial number formats, key information flows, and application requirements. Select widely used industry standards to encode products in order to ensure future acceptance with major trading partners. Wherever possible, choose configurable solutions and highly-scalable designs to accommodate the high-volumes of serialized data and transactions. Also, create a roadmap of sequenced activities that can be implemented over time, or that will meet regulatory timelines.
Implement opportunistically: Until the technical and regulatory issues are more certain, few organizations are likely to commit significant investment toward broad implementation of a solution. Yet, with extensive implementation timelines and other potential regulatory deadlines approaching, we recommend seizing opportunities to begin implementing the building blocks for serialization. For example, as new packaging lines are constructed or existing lines are retrofitted, make sure that any new equipment purchased is serialization-ready. Ensure that packaging components for all new products are designed with space allotted for 2D barcodes or RFID. Prioritize or accelerate elements of your enterprise IT infrastructure that support management of serial number data and data communications, or other aspects of the serialization business architecture.
Conduct a pilot: Work with your CMO to define the scope of a prototype, beginning with a single CMO and product. Once the scope is determined, update the standard operating procedures and related documents, including labeling. Design the cross-enterprise business processes generating serial numbers, and the serial number provisioning model (parent/child relationships, items to cases to pallets etc.). If possible, to reduce the cost and impact on business operations, leverage existing processes and communication to provide serialization ranges to the contract packager and to receive serialization and serialized container to content information. Define the system for use: who owns the data, how the data are reported, who has access to the data, what errors must be reported, and how they are to be resolved. Then, update procedures and related documents as necessary in preparation for launch of the pilot.
Serialization solutions present a formidable set of challenges to any pharma company, large or small, due to the complexity and cross-enterprise implications of assigning, applying, tracking, and managing unit-level serialized product. These challenges are only heightened for those companies with outsourced packaging and warehousing operations, since working across multiple organizations adds an additional level of complexity to the existing challenges. Additionally, contract manufacturers must meet the needs of multiple customer companies, each of whom may have different approaches to serialization.
These challenges have led many organizations to remain on the sidelines, waiting until the regulatory uncertainty clears or the technology stabilizes, clarifying the path forward. However, while the uncertainty warrants caution in designing and implementing a solution, we believe that the risks of inaction now outweigh the cost and opportunities presented with a deliberate, opportunistic approach. The current reality is that several countries have already established and begun enforcing serialization requirements, and other deadlines are rapidly approaching. Pharma companies no longer have the option to postpone implementation, but must proceed strategically in order to be at a minimum “serialization-ready” when the time comes.
1. “News: Global Pharmaceutical Contract Manufacturing Market to Reach US$40.7 Billion by 2015” Pharma Manufacturing. January 2011. www.pharmamanufacturing.com/industrynews/2011/004.html
Gary Lerner is founder of BrandSure, LLC, and is an expert in the design and deployment of successful serialization and supply chain integrity solutions. Todd Applebaum has more than 20 years of experience in manufacturing, supply chain management, strategy consulting and information technology consulting with leading companies across the life sciences value chain. Jim Dougherty is a director with Clarkston Consulting. He has more than 30 years of experience in FDA regulated industries with a background in quality assurance and regulatory compliance. For more information about this article, please contact email@example.com.