Laura Ramos Vice President Forrester Research


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Laura Ramos Vice President Forrester Research

  1. 1. November 2, 2005. Call in at 10:55 p.m. Eastern Time Laura Ramos Vice President Forrester Research ePedigree In Pharma — RFID Delays Mean More Work Lies Ahead
  2. 2. Theme However uncertain, the path to ePedigree compliance — and benefits — starts now.
  3. 3. Agenda <ul><li>RFID overview and pharma market perspective </li></ul><ul><li>State of ePedigree adoption in pharma </li></ul><ul><li>Benefits and road blocks </li></ul><ul><li>A word about RFID vendors in pharma </li></ul><ul><li>Processes likely to benefit in the future </li></ul><ul><li>Best practices </li></ul>
  4. 4. The RFID market is still very new . . . Base: 210 North American and European decision-makers “ During 2005, will your company purchase RFID technology?” Source: Forrester’s Business Technographics® November 2004 Benchmark Study Retail and consumer products 25% Public sector 22% High tech 14% Other (nine industries) 39%
  5. 5. . . . And suffering its share of disillusionment <ul><li>Perception that RFID is “that Wal-Mart thing” </li></ul><ul><li>Limited understanding of RFID </li></ul><ul><li>Belief that other types of data offer more near-term ROI </li></ul><ul><li>Concerns — true and unfounded — about RFID and privacy </li></ul>
  6. 6. Pharma definitions <ul><li>Pharmaceutical pedigree: record of a drug’s chain of custody, from the point of manufacture to the point of dispensing. </li></ul><ul><li>ePedigree: electronic version of record. </li></ul>
  7. 7. Why ePedigree? <ul><li>Counterfeit drug activity is rising sharply. </li></ul><ul><li>State laws require pedigree starting in mid 2006 (ePedigree in 2007). </li></ul><ul><li>FDA favors it. </li></ul><ul><li>Consumers demand safer drugs. </li></ul>Source: “Combating Counterfeit Drugs: A Report of the Food and Drug Administration ” FDA annual update, May 19, 2005
  8. 8. Firms united on safety, not drug pedigree Base: 13 respondents from top pharmaceutical and life sciences companies Source: September 21, 2005, Market Overview “Pharma Won’t Meet ePedigree Deadlines”
  9. 9. Many factors affect ePedigree adoption <ul><li>Accelerators: </li></ul><ul><ul><li>Regulation compliance </li></ul></ul><ul><ul><li>Quality control </li></ul></ul><ul><ul><li>Law enforcement </li></ul></ul><ul><ul><li>Inventory mgmt process improvements </li></ul></ul><ul><ul><li>Need for real-world awareness </li></ul></ul><ul><li>Inhibitors: </li></ul><ul><ul><li>High cost </li></ul></ul><ul><ul><li>Technology issues </li></ul></ul><ul><ul><li>Weak business case </li></ul></ul><ul><ul><li>Accepted use of parallel trade </li></ul></ul><ul><ul><li>Lack of standards </li></ul></ul><ul><ul><li>Conservatism </li></ul></ul>
  10. 10. Industry progress lags behind <ul><li>No full warehouse or data system in production </li></ul><ul><li>$10B+ pharma firms can spend $60M on setup </li></ul><ul><li>Wholesale distributors = $10M to $20M per year </li></ul><ul><li>Falling back on paper </li></ul>Base: 13 respondents from top pharmaceutical and life sciences companies
  11. 11. Asymmetric cost/benefits impeded progress
  12. 12. RFID benefits expected Base: 13 respondents from top pharmaceutical and life sciences companies Any expected Most expected 12 10 9 9 4 2 2 1 3 5 3 2 Supply chain visibility Greater safety/security Regulatory compliance Less theft, loss of product Process improvement Reduce compliance costs Faster clinical trials/FDA submission Lower cost of drug logistics Which benefits expect to gain from ePedigree?
  13. 13. Future RFID uses under consideration Base: 13 respondents from top pharmaceutical and life sciences companies 6 6 4 4 3 2 2 1 1 0 0 Inventory and replenishment planning Transportation management Demand planning and forecasting Order management and fulfillment Long-term advert. and merchandising Trade promotion management Consumer segmt/retention mktg Prod dev and new-item intro Other (Submitted: cold chain management) Pricing and revenue management Assortment planning For which other processes are you considering RFID use?
  14. 14. Technical, cost, and complexity concerns dominate the pharma conversation Base: 13 respondents from top pharmaceutical and life sciences companies Rate the extent you agree or disagree with:
  15. 15. Greatest challenges: data, cost <ul><li>Data: </li></ul><ul><ul><li>Data management and providing or receiving access to data collected </li></ul></ul><ul><ul><li>Finding a way to manage and use all the data it will provide </li></ul></ul><ul><ul><li>Getting good, solid, usable data (Reference to RFID read accuracy) </li></ul></ul><ul><ul><li>Translating low-volume pilots into high-volume production </li></ul></ul><ul><li>Cost: </li></ul><ul><ul><li>Cost, people resources, and acceptance in industry. </li></ul></ul><ul><ul><li>Determining how costs for implementation will be footed both internally and externally. </li></ul></ul><ul><ul><ul><li>Internally, should it be funded by marketing or supply chain departments? </li></ul></ul></ul><ul><ul><ul><li>Externally, how should costs be split between manufacturers, distributors, etc.? </li></ul></ul></ul>
  16. 16. Greatest challenges: cooperation <ul><li>Cooperation: </li></ul><ul><ul><li>Getting the wholesalers and retailers involved in the sharing of product information through the supply chain. </li></ul></ul><ul><ul><li>Getting agreement amongst trading partners on access to and use of data. </li></ul></ul><ul><ul><li>Getting agreement from customers to accept and share data downstream. </li></ul></ul>
  17. 17. No one vendor provides full solution SupplyScape, T3Ci, Cyclone Commerce SAP, Oracle 3M, CCL, Northern Apex, Symbol, Tagsys, Texas Instruments, West Pharmaceuticals Intel, Manhattan Associates, MeadWestVaco Accenture Capgemini HP IBM Unisys Pedigree apps Software platforms RFID middleware Hardware: tags, readers, labels
  18. 18. Look at authentication as intermediate step Source: August 19, 2005, Quick Take “ TI, 3M, And VeriSign’s Rx For Drug Fraud ”
  19. 19. Beyond ePedigree compliance <ul><li>RFID benefits pharma distribution chain processes: </li></ul><ul><ul><li>Lot-level inventory management </li></ul></ul><ul><ul><li>Controls to support regional markets and pricing </li></ul></ul><ul><ul><li>Support recalls </li></ul></ul><ul><ul><li>Clinical trials supply management </li></ul></ul><ul><ul><li>Adverse drug interactions warnings/notification </li></ul></ul><ul><ul><li>Integration with bedside dispensing to generate clinical data </li></ul></ul>
  20. 20. Pharmacy: reducing dispensing errors
  21. 21. Medical device, hospital management
  22. 22. Patient compliance? Prototype AutoID computers on a dime
  23. 23. Pharma RFID tipping point by end of decade Source: September 21, 2005, Market Overview “Pharma Won’t Meet ePedigree Deadlines”
  24. 24. Withstanding current RFID environment <ul><li>Break down communication barriers </li></ul><ul><ul><li>Establish timelines for serialization </li></ul></ul><ul><ul><li>Review contracts </li></ul></ul><ul><ul><li>Demonstrate authentication value </li></ul></ul><ul><li>Limit exposure to diverse state regulations </li></ul><ul><ul><li>Specific warehouses for FL </li></ul></ul><ul><ul><li>Don’t mix RFID with non-RFID </li></ul></ul><ul><ul><li>Top counterfeit products </li></ul></ul><ul><ul><li>Fall back to paper </li></ul></ul>
  25. 25. Withstanding current RFID environment <ul><li>Experiment now, not later </li></ul><ul><ul><li>Be prepared to throw away initial projects. </li></ul></ul><ul><ul><li>Don’t wait for partners or vendors to lead. </li></ul></ul><ul><ul><li>Anticipate system validation work. </li></ul></ul><ul><li>Build business case </li></ul><ul><ul><li>Capture RFID specific costs </li></ul></ul><ul><ul><li>Bring actual costs from pilots/regional centers to bargaining table </li></ul></ul><ul><ul><li>Look for labor savings first </li></ul></ul><ul><ul><li>Best outcome: authentication cost sharing in 18 months; ePedigree in 3 to 5 years </li></ul></ul>
  26. 26. Recommendations <ul><li>Expect states and FDA to sharpen focus on ePedigree. </li></ul><ul><li>Focus on data mgmt m’ware and business rules. </li></ul><ul><li>Work to even out distribution cost burdens. </li></ul><ul><li>Put compliance effort/$$ back into business. </li></ul><ul><li>Support local law enforcement — and pharmacies </li></ul>
  27. 27. Selected bibliography <ul><li>September 21, 2005, Market Overview “Pharma Won’t Meet ePedigree Deadlines” </li></ul><ul><li>August 19, 2005, Quick Take “ TI, 3M, And VeriSign's Rx For Drug Fraud” </li></ul><ul><li>July 7, 2005, Trends “Authentication, Not RFID, Will Make Drugs Safer” </li></ul><ul><li>March 16, 2005, Forrester Collection “RFID: The Complete Guide” </li></ul><ul><li>December 15, 2004, Trends “FDA Pushes RFID Agenda on Pharma” </li></ul><ul><li>December 6, 2004, Best Practices “What Does The Bar-Code’s Past Reveal About RFID’s Future?” </li></ul><ul><li>September 28, 2004, Trends “How RFID Adopters Buy Technology” </li></ul><ul><li>March 1, 2004, Market Overview “RFID At What Cost?” </li></ul>
  28. 28. Thank you Laura Ramos [email_address] +1 408/327-4330 Entire contents © 2005 Forrester Research, Inc. All rights reserved.
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