Wednesday 4 April 2012

Pharma companies told to focus on supply chain issues

Europe's largest pharmaceuticals companies have been targeted as among those not paying enough attention to issues surrounding the procurement and supply chain.

A new report from the Chartered Institute of Purchasing & Supply (CIPS) has shone a startling light down on the UK FTSE 100, highlighting the fact that despite a volatile global economy and huge natural disasters seen this year, some of the country's biggest firms are not paying close enough attention to the sector. Click here to read more.

Monday 30 January 2012

Evaluating the Pharma Supply Chain in Emerging Markets


The article examines pharmaceutical market growth, company positioning, and the innovation potential in emerging markets. Read this and other preferred organization articles in this special issue

Emerging markets are an important source of strategic growth for pharmaceutical companies. As companies expand, they must consider not only how to position themselves in specific product markets, but also how they should align their sourcing, procurement, purchasing, and related supply-management groups. Recent activity from the pharmaceutical majors shows the greater importance and their positioning in emerging markets. Also, a pharmaceutical benchmarking analysis reveals the growing role of supply-management organizations in emerging markets, and another survey shows the rising role of China and India in overall economic innovation.

Market potential.The pharmaceutical industry's focus on emerging market stems from strong growth projections, which outpace overall pharmaceutical industry growth. In 2011, the value of the global pharmaceutical market is expected to grow 5–7% to $880 billion, according to October 2010 estimates by IMS Health, improving from 2010 industry growth of 4-5%. Seventeen so-called pharmerging countries, as defined by IMS, are forecast to grow at a 15–17% rate in 2011, to $170–180 billion. China's pharmaceutical market, which is predicted to grow 25–27% to more than $50 billion in 2011, is currently the world's third-largest pharmaceutical market.

Other market estimates are equally bullish. The overall market for therapeutic drugs in emerging markets in 2009 was $131.4 billion and $145.8 billion in 2010, according to a January 2011 analysis by the market research firm BCC Research. The countries and regions included in this analysis are Latin America, China, Eastern Europe, the Middle East, South Korea, India, Russia, and South Africa. These markets are expected to collectively increase at a compound annual growth rate (CAGR) of 8% between 2010 and 2015 to reach $214.2 billion. The Eastern European market was estimated at $32.2 billion in 2010, an increase of 13.4% from 2009. CAGR of 13.4% is estimated through 2015, when the market is expected to reach $55 billion. Russia's pharmaceutical market was estimated at $6.5 billion in 2009 and $7.4 billion in 2010. CAGR of 7.1% is estimated through 2015, when the market is expected to reach $10.5 billion.

Pharmaceutical company positioning.Lured by the potential and the need to strengthen their positions in emerging markets, the pharmaceutical majors are investing in development and manufacturing in emerging markets through several strategies. In some instance, they are making greenfield investments, and in other instances, they are partnering with domestically domiciled firms to access local markets, particularly for established products. A review of recent activity reflects those trends.

For example, in November 2010, Novartis signed a memorandum of understanding with the city of St. Petersburg, Russia, confirming its intent to build a new full-scale pharmaceutical manufacturing plant there. The investment is part of an overall $500-million commitment in local infrastructure and collaborative healthcare initiatives in Russia planned by Novartis for a five-year period. Once completed and approved for commercial production, the facility will produce both branded generic drugs and pharmaceuticals. Construction is scheduled to start in 2011, and the plant is expected to produce approximately 1.5 billion units per year.

In parallel with establishing a manufacturing facility in Russia, Novartis said it plans to continue to expand its investment in research and development (R&D) and public healthcare collaborations with the Russian government. These activities include collaborations with universities and emerging Russian private businesses in various areas of medical science. These collaborations may include out-licensing of Novartis compounds to Russian companies, in-licensing and scouting for promising drug candidates from Russian scientists and universities, and modeling and simulation activities for clinical trials. Additionally, Novartis plans to double its investments in drug development in clinical trials in Russia and expects to enroll approximately 4000 individuals by 2013.

Novartis also is positioning innovator drug products in emerging markets. In September 2010, Novartis announced that the Russian health authority, the Federal Service on Surveillance in Healthcare and Social Development, granted approval for the company's Gilenya (fingolimod) 0.5 mg once-daily oral therapy for the treatment of relapsing remitting multiple sclerosis. Russia was the first country to approve Gilenya. Novartis expects to launch Gilenya in Russia in early 2011. In September, Novartis reported that Rasilez (aliskiren), a renin inhibitor, received regulatory approval in China for the treatment of high blood pressure alone or in combination with other high blood pressure medicines. Rasilez/Tekturna is approved in over 80 countries and was approved in the United States in March 2007, in the European Union in August 2007 under the trade name Rasilez, and in July 2009 in Japan.

Novartis has stated its interest in expanding in emerging markets. In a November 12, 2010, press statement, the company said it "plans to strengthen its commercial position in fast-growing emerging markets and develop significant businesses in China, Russia, Brazil, and India." As part of that strategy, Novartis announced several investments in those markets during the past several years. The company is investing $500 million in a new vaccine-manufacturing facility in Goiana, Brazil, which is scheduled to be operational by the end of 2014.

The company opened a new technical R&D and active pharmaceutical ingredient (API) manufacturing facility in Changshu, China to support the production of Tekturan/Rasilez, which included a $56-million investment in 2009 as part of a $265-million investment in that facility. In November 2009, Novartis announced it is investing $1 billion during the next five years to expand its research center in Shanghai, making it the company's third-largest research institute in the world. The company also acquired an 85% stake in the Chinese vaccine company Zhejiang Tianyuan Bio-Pharmaceutical (1).
sanofi aventis also is positioning in emerging markets.

In November 2009, the company signed a memorandum of understanding with Prominvest, a fully owned subsidiary of the Russian State Corporation Rostekhnologii, confirming its intent to participate in the Pharmpolis Project. The project is part of an overall effort by the Russian government to localize innovator-drug manufacturers in Russia and foster the expansion of the country's pharmaceutical market. sanofi-aventis will use its insulin-manufacturing facility in Russia as part of a pilot initiative in the Pharmpolis Project.

Other investments in 2009 include the acquisition of the Hyderabad, India-based vaccine producer Shantha Biotechnics; expansion of prefilled injection production lines for its insulin product Lantus SoloStar in China; expansion of vaccine production in Shenzen, China; and an expansion and relocation of facilities in Hangzhou, China. The company also invested EUR 100 million ($137 million) for an influenza vaccine-manufacturing facility in Mexico (1). Also, sanofi-aventis (Paris) enhanced its generic-drug portfolio and position in emerging markets during the last several years with several acquisitions of generic-drug companies: Zentiva (Czech Republic), Kendrick (Mexico), and Medley (Brazil).

In 2010, Abbott acquired the Piramal Healthcare Solutions' business (domestic formulations) for $3.72 billion. The deal consisted of an upfront payment of $2.12 billion and annual payments of $400 million during four years beginning in 2011. At the time of the announced acquisition in May 2010, emerging markets accounted for approximately 20% of Abbott's pharmaceutical sales, according to the company. Abbott estimates the combined entity of Abbott and the Piramal business has a market share in India of approximately 7%. Abbott estimates the growth of its Indian pharmaceutical business with Piramal will approach 20% annually and expects it to reach sales of more than $2.5 billion by 2020. Abbott estimates the current Indian pharmaceutical market at $8 billion and expects it to more than double by 2015.

The move followed recent deals by Abbott to increase its presence in emerging markets. In 2010, the company signed a licensing and supply agreement with the pharmaceutical company Zydus Cadila (Ahmedabad, Gujarat, India) for a portfolio of pharmaceutical products that Abbott will commercialize in 15 emerging markets. Under the agreement, Abbott gained the rights to at least 24 Zydus products and has an option for an additional 40 products. Abbott anticipates that the agreement will produce the first product launches in 2012 Abbott also formed a stand-alone established products division that is focused on expanding Abbott's sales outside the United States.

In November 2010, GlaxoSmithKline (GSK) formed an alliance with the Russian vaccine maker JSC Binnopharm to enable local secondary manufacture of several GSK vaccines in Russia. Under the alliance, GSK will supply bulk vaccine and provide technology and expertise to enable Binnopharm to undertake the secondary manufacturing, including filling and packaging, under GMP standards. Binnopharm is responsible for gaining approval of their facilities to allow supply of GSK's cervical cancer, rotavirus, and pneumococcal vaccines under Binnopharm's trademark for the Russian market.

In 2009, GSK partnered with India's Dr. Reddy Laboratories under which Dr. Reddy manufactures and supplies drugs to GSK, which licenses and comarkets the drugs in various countries in Africa, the Middle East, Asia-Pacific, and Latin America. In December 2009, GSK extended its strategic relationship and acquired a 19% stake in the South African pharmaceutical company Aspen PharmaCare to serve emerging markets. Pfizer also has been building its position in emerging markets, particularly in established products.

In 2010, Pfizer formed a strategic global agreement for the worldwide commercialization of biosimilar insulin products with Bangalore, India-based Biocon. The agreement involves Biocon's biosimilar versions of insulin and insulin analog products: recombinant human insulin, glargine, aspart, and lispro. Pfizer has exclusive rights to commercialize these products globally, with certain exceptions, including coexclusive rights for all of the products with Biocon in Germany, India, and Malaysia. Pfizer also has co-exclusive rights with existing Biocon licensees with respect to some of the products, primarily in several developing markets.

Biocon will remain responsible for the clinical development, manufacture, and supply of these biosimilar insulin products and is also responsible for regulatory activities to secure approval for these products in various geographies. Pfizer's deal with Biocon followed other agreements with domestic India pharmaceutical companies and suppliers. In 2010, Pfizer formed a collaboration with India's Strides Arcolab under which Pfizer commercializes off-patent sterile injectable and oral products in the US. The finished dosage-form products are licensed and supplied by Strides, Onco Laboratories, and Onco Therapies, two joint ventures between Strides and Aspen PharmaCare. And in 2009, Pfizer partnered with two Indian pharmaceutical manufacturers: Aurobindo Pharma and Claris Lifesciences.

Under the deal with Aurobindo, Pfizer acquired the rights to 55 solid oral-dose products and five sterile injectables in 70 emerging markets. Pfizer also acquired the rights to 15 generic injectables from Claris Lifesciences. Pfizer also is partnering with suppliers in Latin America. In 2010, Pfizer acquired a 40% stake in Laboratorio Teuto Brasileiro, a Brazilian generic-drug company. Pfizer has an option to acquire the remaining 60% of Teuto's shares beginning in 2014, and Teuto's shareholders have an option to sell their 60% stake to Pfizer beginning in 2015. Pfizer also has the opportunity to register and commercialize Teuto products in Brazil and various markets outside of the country under its own brands, including branded and unbranded generic medicine.

Other companies also are positioning in emerging markets. In March 2010, AstraZeneca signed a license and supply agreement with the Indian drug company and manufacturer Torrent Pharmaceuticals, under which Torrent supplies to AstraZeneca a portfolio of generic medicines for emerging markets. Torrent has two large manufacturing plants. in India. At Chhatral, the company has capacity to manufacture approximately 3000 million tablets, capsules and vials, and 20,000 kilograms of API. The manufacturing plant at Baddi has a capacity to manufacture 3600 million tablets, 150 million capsules, 10 million oral liquid bottles, and 12 million sachets per annum. The capacities are as reported by AstraZeneca in a March 11, 2010, press release. Torrent's R&D Center in Gujarat has a team of over 600 scientists who provide dedicated services in the areas of discovery research, generic-drug development, and new drug delivery systems/value-added generics, according to the press release.

Benchmarking the supply chain.The increased interest in emerging markets also is reflected in companies' need to expand their supply organizations in those markets. CAPS Research, a joint research initiative between the Institute for Supply Management and the W.P. Carey School of Business at Arizona State University, recently conducted a benchmarking study to evaluate supply management and supply-management organizations in emerging markets among pharmaceutical companies. For purposes of the survey, supply management includes sourcing, procurement, purchasing, and other functions assigned to the organization's supply-management group. The study is part of the 2010 CAPS Research Pharmaceutical Industry Supply Management Performance Benchmarking survey, which examined topics selected by a group of pharmaceutical industry supply-management executives. The survey on emerging markets was conducted in July 2010, and the results were released in August 2010.

Presence in emerging markets.The survey found that almost half (45%) of the respondents have supply-management organizations physically located in emerging markets. Of those companies with supply-management organizations in emerging markets, all of them (100%) had organizations physically located in Asia (less China), Brazil, China, Eastern Europe, and India. Eighty percent of the respondents had supply-management organizations each in Mexico, the Middle East/Turkey, and Russia. Twenty percent had supply-management organizations in other regions, which include Africa or Southeast Asia.

Change in leadership.The survey also examined the level of change given to supply-management leadership in select emerging markets to source and procure goods and services locally or regionally during the past year. The survey ranked the level of change on a scale of 1 to 7, where 1 represented no change, and 7 represented significant change. The level of change was moderate, ranging from a value of 3.20 in India to a value of 4.80 in China. The results were as follows: Asia (less China), 3.80; Brazil, 3.80; China, 4.80; Eastern Europe, 3.6; India, 3.20; Mexico, 3.25; Middle East/Turkey, 3.20; and Russia, 4.00.

Growth in emerging markets.The survey also examined to what degree pharmaceutical companies except supply-management growth in emerging markets during the next three years. The survey found that 80% of respondents plan to increase their supply-management organizations in emerging markets during the next three years. A majority of respondents (60%) anticipate this growth being 10% or less. Twenty percent anticipate growth of 11 to 20%, and 20% anticipate higher growth of 21–30%

Innovation potential.Emerging markets, particularly China and India, are expected to raise their position in overall economic innovation. According to the results of a survey of 6000 respondents in six countries conducted by AstraZeneca and released in December 2010, China is expected to become the world's powerhouse of innovation over the next decade, eclipsing the United States and Japan. The survey showed that China will be the most inventive country by 2020, followed by India. The US and Japan will be relegated from first and second place to third and fourth, respectively. Thirty percent of survey respondents currently ranked the US most innovative, followed by Japan (25%) and China (14%).

However, when asked which country will be the most innovative by 2020, China which was projected by 27% of survey respondents to overtake the US as the most innovative economy. India was ranked second, (17%), followed by the US (14%), and Japan (12%). More than half of those surveyed in China and India thought their home countries would be the most innovative in the world by 2020 (57% and 56%, respectively). Americans were also optimistic with 28%, believing their country would hold this position.

Conclusion
Given the market potential of emerging markets, combined with slowing pharmaceutical industry growth in established markets in the US and Western Europe, emerging markets will continue to be an important cog in the growth strategies of the pharmaceutical majors. These strategies entail investing in internal development and manufacturing, partnering with domestic companies, and building supply-management organizations in emerging markets.


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WHO joins debate on counterfeit drugs in the supply chain


The World Health Organization (WHO) has weighed in on the debate of how to control counterfeit drugs in the pharmaceutical supply chain and other avenues across the world.

WHO's working group on SSFFC medicines (substandard, spurious, falsely-labelled, falsified and counterfeit) met at the end of October to draw up a draft resolution, which will be debated at the World Health Assembly in May next year.

It will meet to promote access to affordable and safe medical productions through collaboration among member states and place tighter controls on SSFFC products and activities.

One of its main objectives, the report states, is to "strengthen national and regional capacities in order to ensure the integrity of the supply chain".

 The draft resolution also states that WHO will intensify its measures to ensure "reliable procurement and supply systems" through information sharing and creating awareness. It will also provide technical assistance to countries, ensure national policy development and support product development.

It comes after the organisation reported its estimation that up to one per cent of medicines that are available in the developed world are likely to be counterfeited. However, this rises to ten per cent globally.

SecuringPharma.com recently collated the most recent news from around the world relating to counterfeited pharmaceuticals, which highlights the need for greater controls on the supply chain. It cited an article on petosevic.com, which states that around 2.5 million packages of substandard, counterfeit and unregistered medicines were sold in the Ukraine last year, worth a total $2.5 million.

Work is being done to stop counterfeiting. African website Business Daily reported that the East African Community is calling for common laws to check counterfeit drugs in the region, while in larger economic countries new technologies are helping to control the issue.

John Lewis, market development manager at Cognex Corporation, wrote an article for Vision-Systems.com about taking a new approach to track and trace. He noted that greater regulations on healthcare products have led to many pharmaceutical manufacturers implementing serialised packaging so that they can be traced throughout the supply chain. However, with many costs involved, he said that firms are investing in networked smart camera vision systems over PC-based inspection systems.

"An increasing number of European countries are, or will be, adopting sophisticated tracking and ePedigree infrastructures throughout their supply chains," he wrote. Turkey and France are among the first countries to impose regulations for item-level serialisation, while other countries have a longer-term deadline of 2015.

Mr Lewis explained that conforming to the regulations - including in countries where they have not yet been imposed - ensures improved patient safety, integrity of products and a more secure supply chain.

He added that tracking has added benefits as well, namely achieving greater transparency and being able to isolate quality control problems. It also "reduces the potential for bad publicity, liability, and recalls," he claimed.

Axway is one company working to improve track and trace technology.

"Modern supply chains can be incredibly complex and organisations need complete transparency so that patients aren't put at risk," commented Bruno Cambounet, vice-president of sales and operations in healthcare EMEA at Axway.

Meanwhile, Avantor is providing an alternative way to target the fake drug trade. It is to begin using tamper-evident seals on the outer packaging of its pharma raw material by the end of the year.

Paul Smaltz, executive vice-president in pharmaceuticals and the Americas at Avantor, told in-pharmatechnologist.com that the initiative will reassure clients of the quality of the drug and meet the needs of drug manufacturers.

The pharma supply chain industry can, therefore, expect some major changes and new regulations imposed concerning the issue during 2012.

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Supply chain managers tighten grip on lower tier suppliers

Supply chain managers have been advised to tighten their control on second and third tier suppliers after a major new report highlighted where disruptions in the supply chain are going wrong.

Research carried out by the Business Continuity Institute (BCI) reveals that 85 per cent of global organisations have recorded at least one disruption to their supply chain so far this year, with 40 per cent of these caused from suppliers below immediate vendors.

It questioned supply chain managers in a range of sectors including the pharmaceutical supply chain, financial services and government across 62 countries, uncovering similar areas where things might be going wrong.

Perhaps tellingly, 81 per cent of respondents said they do not analyse the full supply chain to identify the original source of disruption. The BCI therefore stressed the importance of tracking lower tiers to learn from incidents to mitigate future problems.

"The survey result that 40 per cent of disruptions are below tier one also reinforces the importance of driving supply chain understanding to below the supplier tiers with whom the customer interacts directly," commented Nick Wildgoose, global supply chain product manager at Zurich Global Corporate.

While the causes of disruption varied for different sectors, an overview of all sources revealed that adverse weather was the biggest factor, causing problems for 51 per cent of organisations in 2011.

Unplanned IT or telecom outages affected 41 per cent of firms while transport network disruption was the third most common cause, affecting 21 per cent of supply chain issues.

Accounting for one-fifth of issues were the earthquakes and tsunami in Japan and New Zealand. The BCI noted that this is a significant result as the survey interviewed so many different sectors and countries, illustrating just how connected the global supply chain really is.

The organisation called on businesses to place higher priority on developing more resilient supply chains to cope with these unpredictable events, as well as other vulnerabilities.

It said that business continuity management techniques can help companies better understand supply chain risks and manage them more effectively. Indeed, just eight per cent of respondents said all of their key suppliers had business continuity programmes that dealt with disruption.

"Supply chain risk management is gaining more recognition each year, and for good reason," said David Noble, chief executive officer of the Chartered Institute of Purchasing & Supply.

He added that research carried out by CIPS earlier this year supported claims that some sectors are lagging behind on the awareness of this issue.

"So whether it's energy surges, or adverse weather conditions, the planning and mitigation of that risk will help prevent expensive reputation and revenue damage at the very least," he remarked.

The BCI report showed that there are some notable long-term consequences of failing to properly control the supply chain. The most critical of these was sparking concern among shareholders. Almost one-fifth (19 per cent) of businesses cited this as a problem, followed by a damage to reputation (17 per cent) and expected increases in regulatory scrutiny (11 per cent).

It is important to note that one trend rising in the ranks as a major source of disruption is cyber attacks. Malware and IT security issues have caused problems in eight per cent of cases.

Cyber threats have become a major cause for concern and it was reported last month that the number of cyber attacks has increased over the past 12 months. This has led world leaders to gather in London to create a "global, co-ordinated response" to the threat, UK foreign secretary William Hague said, as attacks are affecting government databases and major companies.

Commenting on the report, Ruth Robottom, supply chain development manager at DHL Supply Chain, suggested that as businesses have sought to cut costs in manufacturing and labour, supply chains have become more stretched and vulnerable.

"Risk assessments, and an overall review of the end to end supply chain, can provide insight, improved visibility and highlight potential risks or disruptions," she said, stressing the importance of business continuity programmes in providing insight into how companies can make supply chains more resilient.


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Pharma companies told to focus on supply chain issues

Europe's largest pharmaceuticals companies have been targeted as among those not paying enough attention to issues surrounding the procurement and supply chain.

A new report from the Chartered Institute of Purchasing & Supply (CIPS) has shone a startling light down on the UK FTSE 100, highlighting the fact that despite a volatile global economy and huge natural disasters
seen this year, some of the country's biggest firms are not paying close enough attention to the sector.

It found that over a three year period from 2008 to 2010, FTSE 100 firms had on average increased their focus on the supply chain by 14 per cent, a starkly different percentage from the attention that has been paid to risk management, skills, sustainability and even bonuses.

However, the CIPS stressed that supply chain is closely linked to how fragile the global economy gets and called upon major companies to look closely at the issues that surround the sector in their next annual reports

Encouragingly, businesses in the pharma and biotech sector were among the top to mention supply chain, procurement and purchasing in their annual reports over the three years. However, they were still notably behind the aero and auto sector, food and drink, and utilities sectors, while the retail and consumer industries paid the most attention to the issue.

This, observed David Noble, chief executive of the CIPS, is largely down to the fact that the retail sector's bottom line is heavily influenced on the good management of supply chains.

He noted that some of the increased focus on the supply chain lies down to the natural disasters that the world has seen in the past 12 months.

"Recent disruption caused by the Japanese earthquake and tsunami prompted some urgent refocusing on the resilience of supply chains," he commented.

The report examined the annual reports of AstraZeneca, Glaxosmithkline, Shire and Smith & Nephew and found an encouraging sign from the pharma industry regarding the focus they have put on emerging markets.

It examined other mentions in annual reports of issues away from the supply chain, with firms showing a 114 per cent increase in focus on emerging markets. By far, this was largely down to the strong focus the pharma and biotech sector has placed on the issue, mentioning emerging markets more than 80 times.

Emerging markets is a key issue for the logistics and supply chain, as businesses will need to adapt to the evolving global marketplace.While the CIPS only focused on the search terms in annual reports of FTSE 100 companies, this does not mean to say that companies operating in Europe are excluded from the organisation's call to pay closer attention to supply management activity.

Indeed, commenting on the report, Malory Davies wrote in his blog for Supply Chain Standard that the findings are a surprise considering the global issues supply chain professionals have had to deal with over the past year.

"Looking ahead, it would be a brave person who predicted that anytime soon there would be a significant improvement in the market conditions in which most supply chains have been operating," he wrote.  "It's no time to stop paying attention."

David Noble said that now, as businesses across the world and of all sizes are finding ways to survive economic volatility, they need to become more efficient, reduce costs and address their procurement function within the entire business.

This, he explained, is based on a "deep understanding of the value suppliers add to the reputation and success of the organisation, and the risks attached to the purchases made".

"Now is the time for businesses to start focusing on their procurement processes and getting the right people in the right positions to bring value to purchasing practice," he remarked.

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Friday 27 January 2012

Anti-counterfeiting, track-and-trace, authentication


Counterfeit pharmaceuticals are a major ongoing threat to patients and pharmaceutical manufacturers. Not only do they result in reduced treatment efficacy and sometimes failure, but they also harm manufacturer reputations, reduce revenues, and lower return on investment (ROI) in research and development. In fact, they are responsible for an estimated 2,000 deaths daily worldwide and represent a grey industry anticipated to be worth up to $205 billion touching Europe, America, Japan, and emerging markets. And the problem is worsening.

According to a directive from the European Union, the number of counterfeit medicines seized at its outer border has tripled between 2006 and 2009 to reach approximately 7.5 million items, not including patent issues. The issue of counterfeit pharmaceuticals was previously primarily related to lifestyle medicines, but now innovative and life-saving drugs are increasingly falsified, with dangerous implications for the patients relying on these drugs to survive.
As the counterfeit drug problem continues to grow with widespread media attention, public confidence in public health systems as well as in pharmaceutical brands is eroding. There is an urgent need for governments and pharmaceutical manufacturers to unite to implement programs that protect consumers.
An evolving and threatening black market
Since the 1980s, counterfeit drugs have increasingly threatened the pharmaceutical industry, with various factors contributing to this growth. Due to globalization, regional economies, societies, and cultures have become integrated through communication, transportation and trade, making it easier for counterfeiters to trade and transport falsified drugs. Additionally, the economic crisis had a global effect, leading cash-strapped consumers to find more cost-effective pharmaceutical sources, which served to bolster counterfeiting in the healthcare industry.
The rise of the Internet has also facilitated the purchasing of counterfeit drugs. More than 50% of medicines purchased on the Internet from illegal Web sites that conceal their physical addresses have been found to be counterfeit. However, counterfeit products increasingly find their way into the legal supply chain.
Previously, online pharmacies were traditional targets, where counterfeit drugs were typically sold in small quantities to individuals, resulting in only limited gain for counterfeiters. Now, counterfeiters are switching their focus to pharmaceutical wholesalers supplying medicines worth hundreds of thousands of pounds, euros, or dollars traded in a single transaction, causing more widespread damage and public affliction.
Counterfeiting is greatest in regions where regulatory and enforcement systems for medicines are weakest. In developing countries, one in four medicines sold in a street market is estimated to be counterfeit, according to the World Health Organization (WHO).
Protecting patients and preserving brands 
Already, pharmaceutical manufacturers, industry suppliers, and governments have been uniting to combat counterfeit drugs. While international regulations and guidelines have been developed to combat the availability of counterfeit products, regional and local regulations vary. To address this issue, new EU Serialization will be introduced in 2014 followed by the new FDA/California Serialization standard in 2015. They ware aimed at harmonizing coding and require manufacturers to implement serialization systems.
Additionally, WHO has established the IMPACT (Intl. Medical Products Anti-Counterfeiting Taskforce) initiative, involving a range of stakeholders in collaborative efforts to protect consumers from buying and using counterfeit products. International institutions such as Interpol, the World Customs Organization (WCO) and The European Directorate for the Quality of Medicines (EDQM) are working closely with governments and companies to create a global security system and strengthen regulations.
As globalization has created more steps between production and consumption of pharmaceuticals, manufacturers have implemented various approaches to detect and prevent counterfeit products. A combination of anti-tamper, serialization and authentication technologies can be used to detect real vs counterfeit products, creating several layers of security for original pharmaceutical producers.
Anti-tamper is the first step of a protection strategy, which can be achieved by designing packaging with features like perforated openings.
Serialization is the second layer of protection, relying on printing on each package a unique serial number that is recorded at production in a database. Any subsequent packs with the same serial number will be flagged as suspect.
Finally, authentication serves as the third layer of protection with overt, covert, and forensic methods. Overt methods such as visible holograms or color-shifting inks can be used on product packaging, whereas covert methods like infrared and ultraviolet pigments and microtext can be read with specialized equipment. Products using forensic authentication solutions, such as molecular markers and biological tracers must be tested in laboratories.
Track and trace is one method of serialization to help managers protect against counterfeiting and expiration throughout the supply chain. Its advantage is that it enables the serial number to be recorded at various points throughout the supply chain on a central server or on the product itself, facilitating the discovery of where counterfeit products have entered the supply chain. It also allows full traceability of products on a global basis.
These systems work by printing a unique identifying code onto each product after it has been packaged. Once the code is assigned, it is activated, validated, and entered into a database, where it can be cross checked against all serialized codes throughout the supply chain.
One example is Bosch Packaging Technology's track-and-trace system that uses a Carton Printing System (CPS) module consisting of a printer and camera that automatically prints on each product. To enable tracing of individual products, it prints a unique serial number and expiration date on each package including a batch number and global trade item number (GTIN). The system encodes the data into a machine-readable 2D data-matrix code. Printed tracking data is automatically checked for accuracy by the camera, which reads and verifies each printed digit with the Optical Character Recognition and Verification (OCR/OCV) tool. Within milliseconds, it cross checks the human-readable text with the 2D data-matrix code. All camera-read data are stored in a central database for tracking and tracing.
Manufacturers can benefit from track-and-trace systems as it provides documented proof of what has been produced at the item level and allows tracking and tracing of the product after it exits the factory. Also, the central database can be modified to provide access to regulatory bodies such as the U.S. Food and Drug Administration or the Ministry of Health.
Conclusion
A precise count of the volume of counterfeit pharmaceuticals available in the world's medicine cabinets does not exist. However, it is estimated that 1% of pharmaceuticals in developed nations are counterfeit, with a figure of 10% to 50% in the developing world. As the number of counterfeit products continues to rise, technology is crucial for eliminating the risk. By helping to improve supply chain security, these technologies protect both patients and pharmaceutical manufacturers.
Article contributed by Franz Ludwig, after sales product manager, Bosch Packaging Technology. His main responsibilities include application development and project management. In particular, he is specialized in track and trace systems. Bosch Packaging Services develops and drives after sales service for packaging machines.  
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