In late 2006, a Norwegian company Kezzler AS arrived in India and began introducing the concept of serialisation to Indian pharmaceutical companies. At the time, the mere idea was novel, to the point where pharmaceutical executives wondered out loud why this company was asking them to put a number on their medicines. Although item-level serialisation had been common in many products such as electronic hardware, software, currency notes, and even cars, each have their own serial number, the benefits of uniquely coding each medicine pack remained unclear to many industry stakeholders.
Fast-forward to 2014, and we find an entirely different scenario - the very idea behind product serialisation and unique identification (UID) coding of medicines is no longer a debated issue. In fact, some Indian companies are now rushing to find the best solution providers and deploy hardware and software systems to serialise across all package levels. What happened during the intervening seven-year period? There were two major developments. First, pharmaceutical companies came to realise that protecting their brand equity and protecting their consumers in India against the relentless onslaught of counterfeiters was a morally responsible undertaking as well as a wise business investment. Early adopters such as Roche, GSK, and MSD - among others - began to empower their consumers by allowing validation of a unique identification code on their pharmaceutical products to ensure authenticity, either by way of SMS or mobile internet at the point of sale.
The second driver behind the serialisation move was governed by emerging regulations, both in India and abroad. Even reluctant brand owners now have little choice but to comply with a set of regulatory demands that impose strict requirements, with the threat of severe penalties and loss of market access in case of non-compliance. This obligation in turn has created major challenges. The failure to be adequately prepared for external regulatory demands and a failure to deploy the right technology to meet those demands will produce unforgivable consequences for Indian pharmaceutical exporters. These two critical issues are examined in the remainder of this article.
Getting prepared
The drive toward pharmaceutical serialisation in India saw a colossal uptick over the past two years due to the announcement in early 2011 by the Directorate General of Foreign Trade (DGFT), an administrative arm of the Ministry of Commerce, that all export drugs had to be barcoded and serialised. The rule imposed upon pharmaceutical exporters ensured that a unique identification code was incorporated at multiple package levels, with each level having a different deadline. The motivation behind this move was to combat the alarming increase of counterfeit drugs in various countries, notably in Africa, with a 'Made in India' label.
The Directorate General of Foreign Trade rule was borne out of a sincere government effort. The Ministry of Commerce undertook a thoughtful review of the best technologies in the marketplace by engaging with industry, consultants, and stakeholders. To its credit, the government refused to be swayed by the intense lobbying efforts of one influential solution provider that wanted to have its own proprietary technology imposed upon the Indian pharmaceutical industry. The ensuing decision by the Directorate General of Foreign Trade to create a mandate based on serialisation meant that India was harmonizing its own requirements with those from the outside world. The next and final Directorate General of Foreign Trade deadline of July 01, 2014 will require unique identification coding at the primary level (monocarton, bottle, vial, etc.), bringing to finality a mandatory serialisation requirement across all exported package levels.
Indian pharmaceutical exporters now face two distinct challenges. The first is to ensure that their products get out of the country by ensuring compliance with the Directorate General of Foreign Trade rule. The second, and far greater, challenge is to ensure that their medicines get into a country, especially if that happens to be a regulated market. As an example, the European Union has created a harmonized serialisation requirement, known as the Falsified Medicines Directive (FMD), that will require serialised medicines be checked at the point of dispense. A growing number of countries outside the European Union have also introduced serialisation requirements on pharmaceutical products. The Directorate General of Foreign Trade rule can therefore be regarded as an important step toward complying with these various regulations because the underlying necessity of serialisation is in any case being imposed on all export products.
A far more serious mandate is the new Federal law in the United States requiring supply chain traceability (aka track & trace) of all medicines through the entire distribution network, starting with the manufacturer. The goal is to establish a full chain of custody record in electronic form, which is known as the ePedigree. The replacement of the California ePedigree law by United States Federal law has led to a more relaxed time frame, but one that nevertheless imposes upon companies to act now in order keep in step with their competitors and retain access to global markets. Consequently, pharmaceutical companies worldwide are rapidly proceeding to evaluate, pilot, and even implement serialisation on their lines.
There is an emerging realisation among Indian pharmaceutical companies that exporting to a patchwork of regulated markets with varying requirements means that exporters must now get this done right. Back in 2006, the question raised by Indian industry with regard to serialisation was 'why'. The question that now dominates the industry is 'how'. And more explicitly, how to make the right investment so that they are in compliance with external mandates and that their global markets remain protected in the future.
About technology
The announcement of the Directorate General of Foreign Trade rule created an interesting but predictable outcome - a sudden explosion of technology providers. India is filled with entrepreneurs who are capable of finding creative solutions to address market-driven opportunities. The DGFT ruling created that opportunity along with a plethora of new entrants to the field. Some were start-ups who peddled unlimited unique identification codes for a small fixed price - basically a PC with a random-number generator and a simple database - whereas others were established companies in allied technologies, such as vision systems, industrial printers, or system integration. These companies suddenly found a new calling in the battle against counterfeit drugs and began to populate the market with so-called "track & trace" solutions.
The lack of domain expertise combined with a rush to capture a market can however lead to serious consequences. The oft heard remark that 'anyone can create a serialization system' or 'where is the difficulty in generating random numbers' created a mindset that in some cases failed to take into account critically important issues related to data security, retention, retrieval, longevity, system performance, code uniqueness, and adherence to international norms and standards. There are anecdotal accounts of one Indian company sending batches of serial codes on a CD to its pharmaceutical clients, another sending self-adhesive labels with barcodes through the mail, and another one offering large-scale duplication of barcodes, and yet another installing code generators that spew out duplicate numbers on a regular basis and whose vision system is of such poor quality that the high rejection rates cannot be reconciled with industry good manufacturing practice (GMP) standards. As observed by the author, rejected cartons at one manufacturing facility were simply returned to the line.
Many pharmaceutical companies tolerated (and even embraced) these practices as long as the objective was to minimally meet the DGFT rule. After all, it allowed them to get their products out of the country at the lowest possible cost. However, that mindset is now changing. Indian companies have begun to take a serious look at the long-term picture, especially in conjunction with the approaching DGFT deadline at the primary level. The goal now is to ensure that any line-level investment in technology will provide long-term recovery by protecting their global access. Companies need to ensure that they meet the overseas mandates so that their products can get into the country. Serialization now is no longer about somehow just putting a number on a product but more about protecting themselves from the oversight of serious global regulators.
As a result, major Indian companies (and even small ones that take this matter seriously) are carefully reviewing their options. Gone are the days when a start-up can simply proclaim that they are a "track & trace solution provider". It is now clear to industry that ”rack & trace” is a serious undertaking that involves multiple layers - serialization, package aggregation, shipment tracking, and report generation (the ePedigree). A mere code-generating company can no longer get away by claiming to be a “track & trace” provider when in fact all they provide is only the first of layer (i.e., serialization). Another important realization taking hold is that true “track & trace” is all about the technology and that maturity, experience, interoperability, and an international presence are important credentials that a worthy vendor must possess. And finally, it is now clear that attempts by Indian hardware companies to provide a full ‘end-to-end’ solution was an illusion. They simply do not have the expertise to suddenly create validated software systems that meet global serialization and traceability standards.
Concluding thoughts
The two most pressing requirements for the Indian pharma industry in the beginning of 2014 are the following. First - it must move quickly and forcefully in creating an enduring serialization program that will meet global acceptance. And second, companies must find the right solution provider to deploy technology with the view to expanding the programne into a true “track & trace” offering. The good news is that after experimenting for a couple of years, it now appears that Indian companies are carefully assessing their needs in terms of the global picture.
A recent monograph by Ranga Iyer, former managing director of Wyeth and past-president of OPPI, contained a set of questions that companies should use in assessing technology providers. The article, which was published in Pharmabiz and other journals, has helped to clarify the due diligence process. The best recommendation is that pharmaceutical companies should short-list one or two vendors and then undertake pilot studies, ideally on each product category (e.g., blister, bottle, etc.).
The bottom line is simply this - Indian pharmaceutical exporters must now get this done right in order to ensure long-term compliance with current and rapidly emerging regulations in the global pharmaceutical marketplace.
(The author is senior director and chief business officer
at Kezzler AS, Norway).