What pharma serialization challenges do SMEs face?
No matter what size pharmaceutical business you are, you are bound to eventually run into certain pharma serialization challenges. These challenges are not only confined to the time during implementation but persist into the post-implementation period as well. From ensuring you meet all of the technical requirements to avoiding vendor lock, staying on top of all these potential problems can be quite costly even for the biggest pharmaceutical giants.
However, these challenges are exacerbated for SMEs. Everything from financial to infrastructure requirements is only made worse for smaller pharma businesses. Although there might be a couple of advantages to owning a small to medium-sized company in the pharma and biotech sectors, making sure that you comply with the serialization requirements of your country and the world at large is certainly not where they apply. Of course, serialization has brought many good things to the pharmaceutical industry. Nevertheless, it remains a challenging endeavor for many SMEs, especially since it has now become all but mandatory to abide by rather strict serialization compliance guidelines, such as the DSCSA regulations.
In the following section, we will list the pharma serialization challenges that hit SMEs particularly hard. After that, some potential ways to resolve or go around these issues will be presented. For SME owners or those looking to start their own pharma business, this will be an invaluable resource on possible issues you might face/be facing and how to solve them.
1. Limited infrastructure, production, and investment capabilities
Like much of the information in this first section of the article, this particular challenge comes to us from a brilliant paper written by Shambhu Sarkar in 2022 on this very topic. This is also most likely to be the most intuitive challenge for most people to wrap their heads around. Basically, smaller pharmaceutical companies, especially those that are heavily involved in producing drugs, often have quite limited infrastructure compared to bigger businesses. They are more focused on the manufacturing and circulation of a specific branded or generic medicine or controlling a particular disease. The lack of breadth in their range of target customers means that they simply do not need large, complex production lines.
However, this leaves them in a tough spot when it comes to product serialization. Many pharma serialization challenges for SMEs appear in the form of necessary infrastructure that they simply lack. Although many of the requirements for a successful serialization system that abides by standard regulations might be a piece of cake for larger companies to invest in (if they already do not possess them), smaller businesses lack the funds to make it happen. Here is a list of just some of the necessary parts to make a serialization system work:
- Additional space in manufacturing units
- Specialized packaging equipment
- Labelling software
- Digital traceability system
- EPCIS software
- AI-based optimization applications
- Label grading system
- Barcode printer and vision systems
This is all assuming that these implementations will work “out of the box,” which is not a guarantee whatsoever. What is more, the staff need to be trained on operating these new additions to the infrastructure. It is best to not even talk about maintenance costs. Needless to say, most SMEs would find these investments challenging.
2. Limited customer base
As we have previously mentioned, many pharma SMEs focus on manufacturing and/or selling very specific medicines to a fairly focused group of target customers. These drugs as sometimes for generic illnesses and are often seasonal allergy medicines which are not profitable all year round.
The way this limited customer base compounds the existing pharma serialization challenges for SMEs is that it makes the costs of aforementioned implementations unfairly disproportional when compared to bigger businesses. Large pharma manufacturers generate a lot of revenue from the many, many patients they sell their wide range of products to. They have reliable profit streams and, despite the fact that serialization systems for their businesses might cost more due to scale, the cost of implementing them is still proportionally affordable when all earnings and expenditures are calculated.
This smaller customer base also means that recovering the funds invested in pharmaceutical serialization equipment becomes an issue, especially if their profits are now lower due to having to pay maintenance costs.
3. Impact on production costs
It would be one thing if a serialization system was implemented and that was it. However, on top of requiring constant storage and system infrastructure maintenance, it also completely alters the way medicine is produced. The updates made to a company’s manufacturing infrastructure mean that the now more complex system makes each batch of medicine cost more to produce. Of course, serialization systems save money in the long run due to the prevention of counterfeit medicines and a more robust supply chain. However, there is often a lack of consideration for pharma SMEs when drafting serialization compliance guidelines.
You might ask, however, why these smaller businesses do not simply charge more for these medicines. The problem lies in their aforementioned small customer bases. Raising prices becomes a risky move if you are trying to retain a fairly limited clientele. This puts SMEs in a precarious damned-if-you-do/damned-if-you-don’t position.
These pharma serialization challenges are somewhat of a systemic issue. As such, it is not easy to find things individual businesses can make to remedy them. However, it would be a mistake to think that the status quo must simply be accepted. We have compiled a list of strategies and things to keep in mind if you are an SME looking to implement your serialization system and maintain it in the least painful way possible.
1. Make sure to optimize connections between various components on the production line
From an interview with Sébastien Sliski, we learn that it is very important to ensure that the different components of your production lines are adequately connected both software and hardware-wise. In some cases, this can even be more important than the components themselves. Bad connections between even high-quality components can cause frequent issues and substantially increase the eventual maintenance costs of your serialization system.
From a hardware perspective, you want to ensure that your different components are compatible with each other (a task sometimes better relegated to a third party). In terms of software, you want to have easy and constant access to your serialized data (like provisioning, exchanging, receiving, sending, and storing). If you make sure the system as whole works well, then you may not need to spend as much on the individual parts. The ultimate goal here is to optimize the system’s functioning and efficiency without sacrificing quality.
2. Do not simply make compliance your only objective
This is one of the most frequent mistakes pharma manufacturers make when it comes to serialization, and SMEs are no exception. It can be tempting to think of serialization as yet another thing you must do in order to comply with regulations. However, to do that would be to focus on pharma serialization challenges and ignore the opportunities afforded by it.
Apart from being a fantastic quality control and anti-counterfeiting precaution, this remarkable tool offers a wide range of other advantages to your business. For instance, being able to track your product’s packaging and distribution helps increase batch yields and reduce product loss. As a result, your bookkeeping will be more accurate, and you will have a better understanding of your income, expenses, and sales. Additionally, you can evaluate which processes are creating bottlenecks and have a better picture of how long it takes to deliver a unit of product. You may increase the effectiveness of manufacturing and transportation as well as build a more effective pharmaceutical company by utilizing the additional organization that comes as a result of serialization. All of this can actually help you generate more profit in the long fun.
3. Simplify your vendor selection
We have warned about the vendor lock issue in our article about serialization post-implementation challenges. When it comes to implementing a serialization system, you must quickly integrate a wide variety of skills, parts, and functionalities. It’s crucial to pinpoint the suppliers who can deliver overall equipment efficiency and compliance. Additionally, they must be able to show that your serialization solution can be integrated into your current IT and packaging infrastructure. Maintaining the speed of the packaging process should be a top priority.
The software and hardware components of pharmaceutical packaging serialization efforts frequently present a conflict of interest. For instance, you will have equipment and device vendors that, as you might imagine, have a solid understanding of physical technology but very little knowledge of the software. The opposite, however, also holds true for software vendors. Therefore, it is essential to look for vendors who can combine the necessary competencies and talents with extensive knowledge to lower project complexity, risk, and delivery deadlines. By selecting the right vendors, you can both reduce initial costs as well as ensure you need to pay as little as possible for maintenance.
4. Future-proof your serialization system as much as possible
Successful implementation is not the end of your pharma serialization challenges. Of course, we have already mentioned the existence of maintenance costs, but if you are careful about initial implementation then they should not be unbearably high. The more important thing is not skimping out on equipment, only to later regret it. The fact of the matter is that serialization is just the tip of the iceberg. Very soon, aggregation is likely to become a requirement for many countries’ pharmaceutical compliance regulations. Once that time comes, those SMEs that have invested in quality equipment initially will have an easier time adapting it to new technologies. A robust, future-proof serialization system is one that is easier and less costly to update.
Small and medium pharmaceutical enterprises face a lot of challenges when it comes to serialization. Of course, all pharma businesses do to an extent. However, due to their limited infrastructure, customer base, as well as investment capabilities, they often have more difficulty navigating these issues.
The good news is that through careful implementation, good vendor choice, and capitalizing on the opportunities afforded by serialization, SMEs can surmount these challenges to similar degrees as bigger businesses.
However, there are many more obstacles that pharmaceutical companies face when it comes to serialization, track and trace, as well as their supply chains. If you are an SME or even a bigger business looking for help with serialization, then you are at the right place. Our services such as Nubinno Evolve, Assessment, and Accelerator are designed to assess where your company is at and devise the ideal way forward. Not only that, but we offer personalized consulting based on unique issues you might be facing, no matter where you are in the world. Get in touch with us and take your company to the next level.