Serialization and related track and trace regulations are quickly becoming business as usual for companies across the global pharmaceutical supply chain. Propelled by growing threats from drug counterfeiting, concerns over supply chain diversion, requirements to improve government reimbursement activities and other governmental needs, laws governing unique product identity, supply chain traceability, verification and government reporting are rapidly being formalized across the globe. By the end of 2018, over forty countries representing over 75% of the world’s drug supply will be under one or more of these regulations.

For contract manufacturing (CMO) and packaging (CPO) organizations, and their pharmaceutical customers, this means a strategic transition. With the level of outsourced pharmaceutical production exceeding forty percent by several estimates, CMOs and CPOs are now a strategic part of the global supply process. Yet in many cases, the relationship between supply partner is still viewed tactically, with planning, technical infrastructure investment and business process coordination often postponed to the last minute and done piecemeal. From today’s environment where selected products or production runs may be tapped to meet new track and trace regulations in individual markets, companies will instead need to transition into an environment where virtually all products and supply relationships need supporting systems and processes to meet a complex and diverse set of regulations. This mandates a different way of approaching serialization and related traceability requirements. While the tendency is to wait until the customer comes knocking at the door to start preparing for serialization, for many CMO and CPO firms, that will be too late.

This article will review learnings from initial serialization deployments to highlight key actions that CMO and CPO supply partners should be taking today to help prepare them for the upcoming rush of track and trace regulations.

Serialization, Track and Trace is Becoming Standard Operating Procedure
The global drug supply is rapidly falling under a complex web of regulations governing the identity of drug products and the traceability of their movements and changes of ownership across the supply chain. Major markets such as the United States, the European Union, China, Brazil, South Korea and India either have laws currently in force or regulations being implemented. These are joined by dozens of smaller, yet strategic or fast growing markets such as Mexico, Taiwan, Jordan, Russia and Australia that have initial regulations coming online or are drafting regulations for upcoming implementation. The net result is that as a supply partner to pharmaceutical companies, if you haven’t been asked to prepare your lines, sites and infrastructure to meet these requirements, you will shortly. Since this will become business as usual, you should plan for it like a strategic initiative that impacts your entire organization, not just a technical project with a focus on the packaging line.

Diversity is the Norm for Serialization So Embrace and Plan for It
Complicating your preparation is the great diversity of coding and serialization requirements being implemented by regulators across the globe, creating a very complex data business process and data management challenge. Contract supply partners, in working with their pharmaceutical customers, need to contend with diversity across:

• Coding: 2D data matrix and linear barcodes are used across countries and across different packaging hierarchies incorporating global GTINs or country specific national trade identifiers (NTINs).
• Serialization Formats: GS1 standards predominate while China’s EDMC and Brazil’s IUM differ significantly in length and format.
• Sources: Manufacturers can create their own serial numbers except in China they must be requested and generated through the China government.
• Attributes: Serial numbers may be randomized or sequential and uniqueness may be required within a product line or across all products.
• Packaging hierarchies: Serialization may be required at multiple different levels of packaging ranging from primary, secondary, tertiary and at intermediate levels including bundles.
• Aggregation: The creation and maintenance of aggregation relationships may be a legal requirement under a regulation or may become a trade requirement to help facilitate operational efficiency as serialization regulations are implemented.
• Master data: Company or product master data related to serialization requirements varies widely from country to country and across different pharmaceutical customers.

So, unless your company will only serve pharmaceutical customers in a single market, it is critical to understand the timing and diversity of the serialization regulations and how they potentially impact your enterprise IT architecture, your operational processes and your readiness to serve your customers when and where they need you.

In addition, the regulatory requirements or supporting industry data standards may evolve after the first draft regulations are published. Many serialization regulations are phased in. Sometimes coding requirements start and serialization requirements follow. Sometimes tertiary, case-level serialization is the first step then secondary, or unit-level, serialization follows. Associated requirements for things like aggregation or government reporting which impose new data management requirements at the supply partner may even be implemented after the law first “goes live”. This puts a premium on buffering your business from change and implementing an infrastructure that is agile in meeting both planned and unplanned data management requirements.

Serialization is a Strategic Change, Not Just  Putting Numbers on Bottles
Serialization impacts the entire systems architecture at the supply partners, at the pharmaceutical customer and at the network connections points between them. For the serialization system as a whole, there are multiple interconnected levels of systems which must synchronize together, including the network, enterprise, site-level, line/warehouse, and device-level systems.

The tendency is to start at the bottle or package and focus first on the engineering of putting a barcode on the drug. A better way is to start from the top-down, looking at all of the external requirements you’ll have to meet, the systems that you’ll have to integrate to and the data flows that you’ll have to manage. The top-down, network-in approach will help you to quickly understand the total information architecture you need to support all of your current customers, understand changes needed when reviewing prospective new customers, and understand potential conflicts between customer requirements that your infrastructure cannot resolve.

The external network of your pharmaceutical customers and their serialization requirements is the key thing that you cannot control. So it pays to thoroughly understand those needs, build an approach and system design to meet the requirements and provide need flexibility, and then filter them down to the parts you can control, like what line management system you use and how you implement it.

A detailed business process review should also to be undertaken. Quality activities such as sampling will have to be understood in the context of the new regulations. Now, sampling activities may trigger compliance activities in the serialization system such as disaggregation/reaggregation or can result in new government reports being prepared and submitted by your pharmaceutical customer. Exception management is another area which requires careful study. Packaging errors, damage, data communication errors or other exceptions will also impose new data management requirements for you and your customer under evolving serialization regulations.

Be Proactive in Engaging with Customers for Key Requirements
Getting started now to understand the investments and changes that you’ll face is crucial. If you wait for your customers to come to you, chances are that you will receive new requirements that are impossible to meet in the timeframe required or are in conflict with the requirements that you’ve already implemented to meet other customer needs. Several leading pharmaceutical companies have executed detailed surveys across their external supply network to understand current serialization preparedness. There is no reason that you cannot do the same, with both current customers and future prospects.

Here is some key information that you need and questions that you should proactively reach out to customers to understand:

• Target markets. What markets are customers targeting today with their products? How will that change as new regulations come online? Will they withdraw certain products from a market or divest them because it is no longer viable to serve that market? Are they planning new product introductions or line extensions into a market? This will now require extra lead time due to serialization setup requirements.
• Regulatory requirements. What are the interpretations of your customers with respect to coding, serialization and product/event data exchange and are they the same as yours? Do different customers for the same target markets have conflicting interpretations and requirements, particularly when it comes to serialization data management and event capture across lines, packaging sites and warehousing facilities?
• Technical integration and validation requirements. What serialization systems are your customers using and what integration requirements do they impose on you? Do they have a standard interface that you can leverage or will you be faced with custom integrations for each one? What are the validation processes for your customers and how are these being modified by new serialization, traceability and reporting requirements? Since the regulations and customer interpretations continue to evolve, can you isolate parts of the process and infrastructure to enable required agility while minimizing validation churn?
• Commercial agreement provisions. Serialization upgrades at the line are costly and time consuming yet customers expect you to have the capabilities ready when they need them. For dedicated lines, will customers pay for upgrades or expect you to as a cost of doing business? If they will fund upgrades, will they pay upfront when the upgrade is performed or expect to pay only when commercial production starts? For shared lines, who will pay for what and when?
• Project plan timelines and resources. Previous serialization projects have clearly demonstrated that implementation of serialization across existing sites/lines or even for green-field facilities takes longer than expected. A common rule of thumb is to plan for nine months from design and implementation to integration, validation and go-live testing for each line and its supporting infrastructure. Since not all resources or funding will be available to take a “big bang” approach and perform serialization readiness projects across all lines and systems in parallel, a phased or staged approach must be taken. Yet, pharmaceutical customers may assume that no resource constraints exist at their supply partners, so they may assume that they can wait until the last moment to communicate serialized product packaging requirements and orders.

Take a Network-Centric Approach to Your Serialization Infrastructure
Starting with a clear view of your customer regulatory requirements and the systems and data exchange requirements that you’ll have to support, you can then focus on building a network-centric serialization infrastructure that minimizes connections and maximizes reuse of resources across your diverse customer base. A key learning that the industry has gained in the downstream distribution supply chain is that customized, point-to-point integrations are not only costly and time-consuming to build the first time, they are fragile in an evolving regulatory and standards environment as companies learn and adapt. With a focus instead on creating a network infrastructure that supports a diversity of network-facing connections with multiple customers while presenting a common interface to the internal packaging line and site systems, you can buffer your business. Instead of connections taking months each to design, implement and test, you can build a single connection to your network system. As pharmaceutical customers evolve their requirements, from data formats to connection methods, it will help to buffer your internal systems from change, a key benefit when deadlines get close and the rush is on.

There is Still Time to Get Ahead of the Curve
While global serialization requirements across both major and minor markets are fast approaching, there is still time for contract manufacturers and packagers to build a comprehensive serialization strategy and an agile serialization infrastructure. Being proactive in analyzing your requirements and putting your serialization plan into place, even if you postpone certain requirements based on your risk assessment until customer demand is locked in, will help you reduce cost and risk across your business. CMOs and CPOs even have an opportunity to influence the outcome. By voicing out best practices and establishing well documented common standards in areas like serial number and serialized product event exchange, it may give some of your pharmaceutical customers a guide path when they are just starting out and looking for answers. According to a recent poll, 95% of pharmaceutical companies are concerned about the readiness of their contract partners. It is pretty simple: If you are not ahead of the curve, you are behind and at risk of losing business to competitors who are just waiting to say “I am ready.”  

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Brian Daleiden is vice president of industry marketing at TraceLink, a company focused on helping pharmaceutical manufacturers, distributors and dispensers deliver safe prescription medicines to patients everywhere with the largest track and trace network in the Life Sciences industry. In this capacity, Brian leads the company’s thought leadership, global regulatory analysis and market education programs that help industry stakeholders understand and respond to emerging regulatory, business and technical requirements.