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Serialization, the GS1 Serialization Standard and Benefits to Pharmaceutical Manufacturers

Posted on March 23, 2015 by Malcolm Jeffers, ZT Learning Consultant

What is Serialisation?

In order to satisfy distribution regulations in large markets such as the USA, EU, Brazil and China it is necessary for Pharmaceutical manufacturers to implement packaging production line systems (including print, vision and packaging system technologies) that consistently meet these regulations for high volume production.

One of these regulations relates to what information is printed on each Stock Keeping Unit (SKU) carton (e.g. Batch, Expiry, Global Trade Identification Number (GTIN), Serial number etc.) and in some cases on any other packaging that carton is subsequently placed into (such as a Case or Pallet).

In the case of products destined for markets that require Point of Dispense Authentication (PoDA) – a type of Serialisation where only the packs are serialised and reported – a carton coder on a packaging line will be sufficient.

If the market requires Track & Trace (T&T) – a type of Serialisation where packs, shipper cases and pallets are all serialised and parent-child relationships are created between them – then more sophisticated software and hardware such as bundlers (for bottles), case packers and palletisers may be necessary to print and package the products so any single product can be tracked forwards (and backwards) through the supply chain using unique numbers.

There are many other design and implementation considerations such as integration of the batch run data with Site/Enterprise Resource Planning (ERP) systems but this can be explained in a future article.

What are the potential benefits to Pharmaceutical Manufacturers?

The standards that are specified by organisations such as GS1  assist Pharmaceutical manufacturers (among many others industries) to:

  • Reduce inventory assets
  • Reduce inventory financing and holding cost
  • Reduce produce waste due to obsolescence
  • Reduce the cost of recalls
  • Reduce fraud and recover lost profits due to counterfeit products

The following table is taken from an excellent McKinsey and Company report called Strength in Unity: The Promise of Global Standards in Healthcare Pages 48-49.

The table shows the “benefits and required investment for a representative global pharmaceutical manufacturer – one with 25 packaging lines, annual revenue of $4 billion, and earnings before taxes or $720 million, or 18% of sales… We assume 70% of revenue is earned in developed markets and 30% in developing markets (used to estimate exposure to high-counterfeit markets).”

Serialization2

41 Typical “small” recalls – exceptional and large recalls can cost hundreds of millions of dollars or more

42 Typical range of recalls by pharmaceutical manufacturer, from FDA Gold Sheet 2011

In addition to the need for compliance of product labelling to market specification there are also both direct cost and indirect end patient health benefits to implementing GS1 GTIN standards.

The report states that by “… adopting global standards in partnership with its trading partners, our representative pharmaceutical manufacture might expect a range of benefits worth about $43-62 million annually, which represents about 1-1.6% of base revenue and about 6-9% in earnings before taxes.  In addition, a one-time cash flow benefit of about $90 million would accrue due to reduction in inventory assets.”

There are also some non-quantified benefits that derive from applying standards like GS1 GTIN such as a reduction in medication error due to superior labelling, as well as the accurate, up-to-date and near real-time information exchange between manufacturers and/or national governance organisation databases and the hospitals or pharmacies that distribute the products.

Given that all major manufacturers will need to implement technologies to ensure their compliance to Serialisation regulations the next blog in this series will focus on an important follow on question to this article – what are the best practices in training a workforce in using Serialisation technology?

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