What does serialisation mean for the pharmaceutical industry?

November 23, 2018

LogisticsIndustry Focus

This is the first of a five blog series which reviews the industry and business impact mass serialisation is having within the pharmaceutical supply chain, covering topics such as implementation, business opportunity, labeling and the industry stakeholders.

This article reviews the industry and business impact mass serialization is having within the pharmaceutical supply chain, covering topics such as implementation, business opportunity, labeling and the industry stakeholders.

The pharma industry is characterized by highly complex supply chains between the manufacturer and end consumer.

Over the counter drugs are produced, distributed, repackaged and sold on by a series of entities before reaching the patient, introducing the potential for criminal activity.

From the customer perspective, counterfeit drugs represent a significant risk and can result in deaths. They may be contaminated, contain the wrong ingredient or no active ingredient at all, or contain the right active ingredient but at the wrong dose.

Globally, pharma companies lose around $75 billion every year to counterfeit, grey market and stolen product.

Therefore, safeguarding the manufacturing and delivery of medicines has always been a key priority for the pharmaceutical industry. However, being able to comply with the regulations can raise challenges for Pharmaceutical companies.

Manufacturers and distributors need to start planning and make sure they have the systems to support this transition phase.

What is Pharma Serialization?

Serialization aims to combat these illicit activities by track and trace the journey of prescription drugs through the supply chain from manufacturing to dispensing.

This is done by assigning a unique random serial number on each sales unit of the products, typically through automated, electronic means so it can be tracked back to the source of origin.

Navigating the evolving regulatory landscape

Serialization is already a legal requirement in several countries, such as Argentina, Brazil, India, South Korea, Saudi Arabia, Turkey, but in this post, we’ll be specifically focusing on the impact of two major pan-regional regulations:

1. Drug Supply Chain Security Act
In the US, the Drug Supply Chain Security Act (DSCSA) was initially introduced in 2014 and takes a phased approach.

It requires the adoption of lot-level product traceability, as well as the ability to produce transaction information, history and statements within 48 hours’ notice.

  • Manufacturers have been required to put a unique identifier (National Drug Code and serial number) on drug packages since November 2017, while repackages have been given until November 27th, 2018 to comply.
  • Following serialization, products needed to be verified at the package level by manufacturers from November 27th, 2017 and repackages from the same date in 2018.
  • Pharmaceutical wholesalers must buy and sell only serialized drugs. While, repackages must also serialize drugs.
  • Dispensers of medicines must buy and sell only serialized drugs from Nov 27th, 2020.
  • Ultimately, starting Nov 27th, 2023 unit-level traceability is required (every individual container of a pharmaceutical or healthcare product).


2. EU Falsified Medicines Directive
In Europe, the EU Falsified Medicines Directive (FMD regulation was enforced on Feb 9th, 2019 and has affected manufacturers, wholesalers, distributors and pharmacists.

The legislation required all parties to be able to verify the authenticity of a medicinal product, identify individual packs, and determine whether the outer packaging has been tampered with.

The FMD mandates the use of a tamper-proof security seal and a 2D barcode, serialized with a unique, randomized number.

Ultimately, the purpose of both the EU FMD and the USA DSCSA is to improve patient safety by securing the supply chain.

We can expect to see the emergence of consumer apps linked to the validation system that will enable mobile scanning of the 2D barcode, enabling patients themselves to verify drug safety for extra assurance.

Establishing a standard to mitigate complexity

As pharmaceutical supply chains are complex and global by nature, the industry is looking to standardize on a common identification system.

Pharmaceutical companies need to share a common vocabulary and structure that enables the supply chain partners to share and exchange essential information in a consistent, accurate and interoperable way.

GS1 is a globally recognized and endorsed standard and is based on a foundation of unique identification keys (Global Trade Item Number).

It enables product attributes to be recorded, including batch or lot number, expiry date and unique serial number, and is visualized as a GS1 Data Matrix 2D barcode, which enables a substantial amount of data to be encoded in a small physical space.

The choice of GS1 Standards for Pharmaceutical product identification and making has been driven by a broad number of factors:

  • Patient safety – globally unique codes for certainty of product identification
  • Interoperability – the solution must work across markets, stakeholders and sectors
  • Simplification – a single solution that can be used across all levels of packaging with the option to choose the appropriate symbology
  • Technical suitability – robustness of the data carrier and the ability to print in line
  • Cost-effectiveness of solutions – appropriate to the needs of users
  • Flexibility and future computability – part of an ongoing standard which will not be superseded
  • A proven solution – already used in retail and in other sectors worldwide


By taking advantage of GS1 standards, interoperability of data with contracted partners can be achieved, enabling information to be shared based on four types of events:

  • What products are impacted?
  • When did this time-stamped event occur?
  • Where was the product and where it is now?
  • Why was this observed and at which process step?


The challenge of item-level serialization extends beyond the confines of the packaging hall and implementing serialization across the enterprise involves both digital disruption and business transformation.

Is your business ready to meet impending regulations?

Serialization will have a ripple effect at many different points in pharmaceutical manufacturing and touch multiple departments.

According to a statement released by EMVO in March 2018, only a fifth of pharma companies were connected to the EMVS European Hub, which is at the center of compliance to the EU FMD.

So, for the 2000 or so pharmaceutical companies across Europe that have not yet started the process at the time of writing, there are five key factors to consider when embarking on the path to serialization:

1. Label redesign
Allow space for the 2D barcode and any alterations needed to make the packaging tamper-proof. This may involve changes to the packaging structure or graphic elements and could impact production efficiency during the transition period.

2. Minimizing downtime and maintaining production efficiency
This is likely to require either increased manpower or greater automation.

Organizations will also need to consider that if there is an error in an individual or case serial number, this will impose an additional burden on staff to record and manage by exception.

3. Robust data management
A central requirement to serialization efforts.

This demands an IT structure that can generate, store, capture and transmit millions of serial numbers for multiple supply chains, as well as update analytics to support traceability and recall, meaning that master data quality will only increase in importance.

Forward-thinking manufacturers should also consider how data from linking drug consumption to individual patients can be applied in the pursuit of personalized medicine.

4. Cross-functional team
Assemble a team early on to deal with this multifaceted challenge. Its representatives should span IT, processing and packaging, engineering, labelling, quality assurance, compliance, marketing, finance and project management.

Companies cannot expect their IT department to come up with a solution in isolation that may not meet the realities of business need, therefore the role of this team will be to collectively challenge the status quo, fix what needs to be fixed and explore opportunities for automation, optimization and innovation.

5. Investment

Investment will inevitably be required to achieve compliance, from updating existing equipment, hardware and software to integrating packaging lines.

Companies should focus on retrofitting and IT systems and IT systems integration including their ERP and WMS, on the European Hub and any standalone track-and-trace systems and enable electronic data interchange with supply chain partners.

There will also be costs associated with staff (re)training and change management.

Manufacturers will need to reflect on how these costs will be borne and by whom: can the impact be transferred to the end customer or will manufacturers have to sacrifice margins?

Serialization: An opportunity – not a thread

At a time of upheaval and uncertainty, it pays to reframe perspectives on serialization from “yet another compliance burden” to an opportunity to optimize and innovate within the pharmaceutical industry, given the significant potential business benefits.

it’s also an opportunity to achieve substantial operational gains: combating ineffective product recalls and returns, increasing supply chain efficiency and visibility, and providing a data foundation for analytical tools to predict individual patient behavior and drive innovation

Patient safety and brand protection
Patient safety is the very foundation of the legislative/regulatory process and need little explanation.

Serialization is perhaps the most effective weapon available to fight counterfeiting, safeguard consumer trust and protect revenues. To that end, serialization can play a key role in a robust brand protection strategy by detecting and combating counterfeit products sooner.

Returns processing and financial controls
Serialization can help to ensure refunds are only paid once for the specific drugs that are returned.

Recalls will also become more laser-guided, targeting individual pharmacies or regions rather than widespread national recalls, leaving greater quantities of viable products available to the patients that depend on them.

If faced with a product recall, organizations will be able to respond much faster and limit the risk of reputational damage.

Business and supply chain optimization
Serialization presents a transformational opportunity to review and, if necessary, renew business processes data flows and applications from production through the supply chain, promoting interoperability in the process.

Companies should seize the chance to streamline underlying processes and deliver a single version of the truth, which will improve visibility into inventory at all nodes of the supply chain and help increase the accuracy of sales forecasts.

Serialization calls for tighter in-process controls, documented risk mitigation strategies, enhanced technology and stiffer validation controls, all of which can help to avoid recalls in the first place by revealing labelling errors or defects while the product is still under the manufacturer’s control.

With better visibility of product moving through the supply chain, shrinkage or losses can be reduced. When data can be reviewed with greater ease and frequency, expiry dates can be managed more efficiently through regular stock controls, minimizing the need for costly write-offs.

Innovation is driven by insight, so life sciences companies should jump at the chance to support advanced analytics initiatives to put Big Data into meaningful context.

This might include the ability to track regimen compliance, sending refill reminders based on analytics of prescription and authentication data, or informing the development of precision medicine.

Produmex WMS a fully integrated solution for SAP Business One including wealth of functionality for the regulated industry space.

We can help you connect to supply chain partners, nation specific NMVS and product verification applications, enabling you to trade in an efficient and compliant manner within the pharmaceutical companies’ network.

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