A Strategic Approach to CMO Serialization Compliance

Cognizant 20-20 Insights | January 2018
Executive Summary
Serialization compliance timelines across the
globe are fast approaching, pushing pharma-
ceuticals companies to quickly meet compliance
requirements. Contract manufacturing orga-
nizations (CMOs) have, over time, become an
important component in the pharma manufac-
turing ecosystem. In fact, CMOs are expected to
generate $79.24 billion in revenue by 2019.1
Given
this codependency, pharmaceuticals companies
need to collaborate closely with their CMO part-
ners on serialization to avoid compliance-related
supply chain disruptions.
Since pharma companies generally deal with
multiple CMOs across different markets and prod-
ucts, CMO serialization is much more complex
than internal enterprise serialization. Implemen-
tation of a CMO serialization solution is also more
challenging given that teams from two different
organizations need to align and collaborate within
an established framework and the processes of
their respective organizations to ensure that the
“integrated” solution works seamlessly across
organizational boundaries.
A Strategic
Approach
to CMO
Serialization
Compliance
Pharmaceuticals companies must
address the risk of supply chain
disruptions related to products
requiring serialization to meet
impending regulatory mandates.
This means closely collaborating with
contract manufacturing organization
partners and jointly implementing
compliance solutions.
COGNIZANT 20-20 INSIGHTS

Cognizant 20-20 Insights
2A Strategic Approach to CMO Serialization Compliance |
A strategic approach to CMO serialization covering
all phases of program implementation is needed to
ensure that the solution landscape is comprehen-
sive, effective and efficient.
This white paper describes a strategic approach
for CMO serialization, covering all the aspects
a pharma company needs to consider when
undertaking CMO serialization programs. The
framework describes an execution approach (in
various phases) to structure CMO serialization
activities and addresses in detail the factors to
be considered in each phase. This paper also
identifies key outputs in each phase and provides
recommendations for each phase to guarantee
successful CMO serialization, thereby ensuring
regulatory compliance and product supply.
THE SERIALIZATION CHALLENGE
By 2020, approximately 90% of prescribed med-
ications worldwide are expected to be serialized.2
Pharma companies are in various stages of imple-
menting serialization across their supply chain to
meet emerging regulatory mandates. As regula-
tions across the globe are still evolving, a standard
approach to serialization with well-established
ways of working is still in progress.
Beyond packaging, serialization also impacts busi-
ness processes in supply chains, manufacturing
operations, quality, inventory management and
regulatory reporting. Integrating all these organi-
zational components is an arduous undertaking for
most companies. Serialization implementation is
further complicated when a company engages or
outsources manufacturing and packaging to CMOs.
A global pharma company will typically engage
with multiple CMOs across geographies; each CMO
is likely to have different approaches and strate-
gies to comply with serialization regulations. This
puts the pharma’s whole serialization initiative at
significant risk, a risk that rises with the volume of
products outsourced to CMOs.
Based on our experience with CMO serialization,
pharma organizations need a structured, proactive
and strategic approach that ensures successful
CMO collaboration. Our CMO serialization frame-
work (explained in the following section) provides
the required structure and covers the dimensions
thatpharmacompaniesmust considerwhenunder-
taking CMO serialization.
A CMO SERIALIZATION
FRAMEWORK
Our framework provides a structured approach
to ensure successful CMO serialization collabora-
tion, and enables a pharma company to approach
CMO serialization in a logical sequence. Pharma
companies also need to implement serialization
across their manufacturing units. So our frame-
work considers the existing serialization stack as
an important input to all CMO serialization activ-
ities and recommends alignment with internal
serialization initiatives.
The framework’s execution approach has four
distinct phases covering the CMO serialization
journey (see Figure 1, next page). It addresses the
different factors/dimensions that need to be con-
sidered during the different phases. All phases
in our execution approach, as well as input fac-
tors/dimensions, are geared toward two primary
objectives: ensuring product supply (no supply
disruptions) and regulatory compliance.

1
Cognizant’s Framework for CMO Serialization
Figure 1
We now will take a deep dive into the four phases
of our execution approach, including relevant con-
siderations and key outputs and recommendations.
PHASE 1:
CMO SERIALIZATION STRATEGY
The first and arguably most important phase is
understanding the overall impact of CMO seri-
alization and devising a strategy that enables a
pharma company to successfully collaborate with
CMOs. And a first step in grasping the effect of
CMO serialization is to know how many products
and CMOs are impacted. Most pharma compa-
nies have relationships with numerous sizeable
CMOs. One director of external supply at a major
pharma company, for example, said his company
has hundreds of CMOs globally.3
Understanding
which CMOs will be impacted by serialization will
help to determine the overall scope of the CMO
serialization initiative.
The company also needs to align its long-term
product supply strategy in various serialization
markets. This will enable the pharma to assess
whether an investment in a CMO serialization
solution may or may not be warranted – partic-
ularly if some products do not figure into the
business strategy for a specific market. Because
regulations can vary greatly market to market
(i.e., labeling requirements, country-specific
reporting, etc.), it is important to know if the CMO
partner is capable of navigating the regulatory
landscape. Strategic evaluation of the CMO and
its capabilities is also required to make a decision
on long-term relationship potential and continu-
ing investment on a joint serialization solution.
Parallel to understanding the scope of CMO serial-
ization, the pharma company at this stage should
also be thinking about broad CMO serialization
solution options. Alignment with the existing or
planned enterprise serialization solution stack
is a must; beyond this, the company should
identify broad solution options and business
processes for exchanging serialization data with
CMOs. Options to consider include automated
business-to-business exchange mechanisms, net-
work integration solutions and semiautomated
data exchange mechanisms to integrate with less
sophisticated CMOs.
CMO
Serialization
Strategy
ProductSupply
RegulatoryCompliance
CMO
Landscape
CMO Serialization Framework
Execution Approach
Serialization
Solution Stack
Data Exchange
Standards
Enterprise Data Security
and Governance
Serialization
Regulations
Supply Chain
Strategy
CMO
Supply Team
Enterprise Program
Execution Methodology
CMO Engagement
and Implementation
Planning
CMO
Solution
Design
CMO
Program
Execution

4A Strategic Approach to CMO Serialization Compliance | 1
Alignment with the existing or planned
enterprise serialization solution stack is a
must; beyond this, the company should identify
broad solution options and business processes
for exchanging serialization data with CMOs.
We also urge companies to undertake a risk
assessment exercise at this stage. Serialization
by itself introduces significant risks concerning
good manufacturing practice and good distri-
bution practice (GxP) related to IT solutions and
business processes. According to U.S. Federal
Drug Administration (FDA) guidance,4
each party
performing manufacturing tasks is responsible for
ensuring compliance with current good manufac-
turing practice (CGMP) related to those activities.
Enabling serialization with a CMO introduces addi-
tional risks, and companies should understand
these additional risks and document potential
mitigations. According to one study,5
enterprises
should apply standard GxP quality management
principles and requirements immediately after
identifying the serialization approach.
Finally,itisimportanttounderstandthecommercial
aspects of enabling CMO serialization. According to
a recent study,6
a primary and critical question con-
cerning CMO serialization is who pays for enabling
serialization on the packaging lines? Serialization
is quickly becoming the cost of doing business for
both the CMO and brand owners, depending on
how the costs are shared contractually. Upgrading
a packing line to enable serialization with aggre-
gation capabilities ranges between $250,000 and
$1 million, depending on the level of sophistication
required. Packaging lines that utilize manual pack-
ing are at the low end of the price range but have a
greater probability of error.
Cost factors to take into account include soft-
ware licensing fees, monthly/annual subscription
fees, serial number/transaction-based fees, stor-
age costs, internal systems integration and the
cost of validating these systems. It is important
to evaluate the differences in functionality and
cost between a single-tenant architecture and a
network-tenant architecture to address specific
business needs. Companies must study the pric-
ing and profitability implications in each market
in order to effectively negotiate with CMOs.
Key outputs of this phase:
• Understanding of overall CMO scope.
• Supply strategy for serialized products manu-
factured by CMOs.
• Broad CMO serialization solution options and
business processes.
• GxP risks and mitigations related to CMO
serialization.
• Commercial considerations and negotiation
strategy.
Recommendations for this phase:
• Create a multidisciplinary team to draw up a
CMO serialization strategy. Include business,
quality, supply chain, manufacturing oper-
ations and solution architects. Involve and
educate supply chain/manufacturing opera-
tions teams responsible for CMO relationships
about serialization.
• Evaluate product portfolios in every market

2
and look at supply option strategy afresh in
light of serialization.
• GxP risk assessment is critical. Conduct a
workshop to tease out the risks associated
with CMO serialization; construct a mitigation
plan with the internal quality assurance team.
• To engage CMOs and provide guidance, it is
helpful to define the commercial constructs
related to serialization and finalize a negoti-
ating strategy.
PHASE 2:
CMO ENGAGEMENT AND
IMPLEMENTATION PLANNING
Once an organization has readied its CMO strategy,
the next phase is to engage CMOs and jointly pre-
pare individual implementation plans. In order to
select key focus areas, it is helpful to construct a
three-dimensional matrix covering timelines for reg-
ulatory mandates, product portfolios in particular
markets and contributed revenues. To greatly facil-
itate such activities in this phase, we recommend
using the existing organizational channels (teams)
that manage and monitor CMO relationships.
It might be necessary to prioritize CMOs, depend-
ing on how many CMOs the pharma company
engages. A leading CMO typically manufactures
products for 48 of the top 50 pharmaceuti-
cals companies.7,8
This means the CMO must
work with numerous pharmas to comply with
the serialization regulations during roughly the
same timeframe. Depending on the influence
the pharma company has on the CMO (based on
volume and revenue), it might be a challenge to
align on timelines and solutions.
Another aspect to consider is documenting CMO
requirements. Detailed IT requirements should
be documented, based on the broad IT solution
options identified in the previous phase. Consider
documenting the required artwork requirements
for each logistical level in all the markets. This
document will form the baseline for discussions
with CMOs and help to define implementation
timelines more realistically.
Finally, a pharma company must think through
and finalize all serialization enablement elements
such as timelines, the serialization solution stack,
quality requirements and costs. Current commer-
cial and supply agreements should be leveraged
to include all the necessary serialization elements.
• A well-defined CMO engagement approach.
• Documented IT and artwork requirements.
• Jointly-agreed-upon implementation plan.
• A draft of commercial and supply agreements
covering serialization activities.

3
Pharma companies should work with the CMO
to build the framework for the aggregation of
serialized data into their strategies to ensure
a fully-functioning traceability architecture for
upcoming regulations.
• Educate CMO supply teams on serialization
and ensure they are aligned with the overall
strategy, timelines and requirements.
• Engage early with CMOs. It took approxi-
mately a year for one of our pharma clients
to agree on the requirements and develop
a solution with a CMO. Since the company
engaged with that CMO far ahead of the
compliance timeline, it had enough time to
manage requirements, undergo negotiations
and prepare for impending regulatory shifts.
• Document CMO requirements.
• Review existing commercial agreements with
CMOs, and modify as necessary to include
serialization. This generally takes much
longer than expected as many rounds of
negotiations may be required.
PHASE 3:
SOLUTION DESIGN
This phase establishes common understanding
and leads to finalization of both technical aspects
and business process aspects of the CMO serial-
ization solution. As a first step, pharma companies
and their CMO partners need to clearly scope out
serialization activities and each entity’s associ-
ated responsibilities. This sets the requirements
for technical and procedural elements of the solu-
tion required and agreed to by both entities.
To illustrate the above point, a recent study reveals
that the question of which party generates serial
numbers is among the top concerns for CMOs and
pharma companies.6
A serial number can be gen-
erated by the authorization holder and supplied to
the CMO, or the CMO can generate the serial num-
bers on behalf of the authorization holder. Either
way, the two entities should exchange the serial
number and serialization batch data for reporting
purposes. The two should agree in advance on the
data exchange format, including serial number
format requirements and the corresponding
master data requirements.
Companies should give due consideration to the
aggregation requirements and the capabilities of
the CMO to provide aggregation data. Pharma
companies should work with the CMO to build the
framework for the aggregation of serialized data
into their strategies to ensure a fully-functioning
traceability architecture for upcoming regula-
tions. Although aggregation may not be required
to comply with the regulations in markets such as
the EU, Korea and Saudi Arabia, a pharma com-
pany may decide to implement aggregation as a
standard and may expect CMOs to follow suit.
Another key aspect requiring agreement between
the CMO and pharma company concerns data
standards, security and governance. While it may
appear to be an additional requirement to share
serialization-related information over and above
the commercial information (which may already
be shared electronically), the downstream
implications of how and where the product and

serialization information is used in the CMO and
pharma company make things quite complex. We
strongly recommend that mechanisms to ensure
alignment on data standards, security and gov-
ernance between CMO and pharma company be
established early to address design and opera-
tional issues on an ongoing basis.
As part of the solution design exercise, compa-
nies also need to evaluate or design current/
future mechanisms of sharing information/data
in a scalable manner to meet requirements in a
serialized environment. We have seen solutions
ranging in sophistication from e-mails to elec-
tronic data exchanges to cloud-hosted solutions
used by CMOs and pharma companies. Various
options need to be evaluated, depending upon a
number of factors such as existing data-sharing
mechanisms, data volume, long-term supply chain
strategy, the number of CMOs for integration, etc.
• Design of CMO serialization solution.
• Clearly identified roles and responsibilities of
the pharma company and CMO.
• Evaluation of network integration solutions
and a mechanism to securely exchange seri-
alization data.
• Finalize the serialization activities scope first
with the CMO.
• Reach agreement/alignment on data stan-
dards, security and governance with CMOs.
• Investing in a network integration solution
may make sense given serialization data
exchange requirements. A cost-benefit anal-
ysis may be required.
• One design may not fit all. Two or three
variations of the solution may be needed to
address all CMOs, given the expected vari-
ability in their capabilities and integration
requirements.
CMO Serialization Solution Landscape
Scope Definition Solution Design
Regulatory Needs Organizational Capabilities Data Exchange Mechanisms
Serialization Strategy CMO Capabilities
Data Standards, Security
& Governance
• Serial Number Generation
• Serial Number Application
• Serial Number Reconciliation
• Serial Number Sharing with Supply
Chain Partners
• Regulatory Reporting
• Exception Handling
• Business Process
• Order Processing
• Serial Number Reconciliation, Exception Handling
and Sharing with Supply Chain Partners
• Regulatory Reporting
• Technical (Software) Solution
• Data Exchange
• Exception Handling
Figure 2
Conceiving and Building a Serialization Solution

4 PHASE 4:
PROGRAM EXECUTION
Integration projects across organizations are
among the most intricate software missions.
This is because they involve agreement and
alignment between organizations that often have
their own methodologies, applications landscape,
data standards and governance practices, as well
as IT or business constraints. We have worked on
many projects that require two or more organiza-
tions to join hands and move successfully toward
the goal. All the tenets of strong program/project
management are applicable to serialization, with
the following being especially critical.
• Overall execution/project plan to enable CMO
serialization.
• Established governance structure and escala-
tion mechanism.
• Change management process to cope with
the dynamic nature of serialization.
• Consider establishing a program office to
undertake CMO integrations if the number of
CMOs is large.
• Develop a couple of standard execution
approaches and supporting templates that can
be replicated across CMOs based on various
solution designs. This can increase efficiencies
in delivering projects as it avoids rework and
provides clarity to execution teams.
• Project/program governance should ensure
that knowledge is shared or carried across
projects, and that project execution metrics
are established and tracked to ensure improve-
ment with each integration in an agile fashion.
• Consider running a pilot CMO implementation
project to understand which areas of the busi-
ness and IT capabilities require additional work.
We also recommend that pharmas develop
a business-as-usual process as part of the
pilot project that maps all activities (engage-
ment, documentation, IT connection, business
change) required to enable CMO serialization.

LOOKING FORWARD
Complyingwithmandatoryserializationregulations
across geographies is a herculean undertaking. The
complexities of serialization implementation and
regulatory compliance increase when pharma
companies have CMOs that supply a variety of
serialization-impacted products. It is essential
for pharmas to take a holistic view of the process
and develop a CMO serialization strategy as a
first step to ensure that the company and its CMO
partners successfully scale up organizational
capabilities to meet serialization challenges.
Our OneSerial framework can accelerate your
serialization road map. After an initial assessment
of your organization’s supply chain landscape, the
OneSerial framework can be deployed to define
and document user and architectural require-
ments, regulatory requirements, implementation
plans, process flows, road maps, business cases
and project lifecycles. In addition, the framework
includes a suite of templates to streamline the
serialization process in the supply chain. The
OneSerial framework also provides guidance on
vendor selection, program management, orga-
nizational change management, and testing and
validation services.
Given approaching regulatory deadlines, ensuring
the success of CMO serialization initiatives requires
proper planning, internal alignments across teams,
early engagement with CMOs, flexible architecture,
investment in integration solutions and robust pro-
gram/project management.
While other components of the serialization solu-
tion stack pose unique challenges, determining
CMO serialization scale and scope is the most com-
plex step in the serialization solution landscape,
requiring significant efforts to overcome. It might
be tempting to wait until all the uncertainties
surrounding regulations, technological solutions
and supply constraints are sorted out. However,
pharma industry decision-makers must bear in
mind that serialization is mandatory, not optional.
Moreover, delaying serialization poses a real risk
of product disruptions in key revenue-generating
markets and potential for financial setbacks.

Madhukar Saboo
Senior Manager, Cognizant
Business Consulting
Karthick
Venkatachalam
Senior Consultant, Cognizant
Business Consulting
Madhukar Saboo is a Senior Manager within Cognizant Business Con-
sulting. He has nearly 17 years of experience in consulting, project
management, and solution design and business development within
the life sciences industry. Madhukar specializes in regulatory affairs
and compliance, quality assurance, manufacturing and supply chain
within the life sciences industry. He holds a bachelor’s degree in chemical
engineering and an M.B.A from Indian Institute of Management, Kozhi-
kode. Madhukar can be reached at Madhukar.Saboo@cognizant.com |
LinkedIn: www.linkedin.com/in/madhukar-saboo.
Karthick Venkatachalam is a Senior Consultant within Cognizant
Business Consulting, focusing on manfacturing and supply chain
challenges. He has 10-plus years of experience in business consult-
ing and IT transformation. In his current role, Karthick works as a
serialization business consultant for a global top-10 pharma com-
pany. He holds a bachelor’s degree in computer science engineering
and a pan-European master’s degree in IT management. Karthick
can be reached at Karthick.Venkatachalam@cognizant.com | Linke-
dIn: www.linkedin.com/in/karthickvenkat.
ABOUT THE AUTHORS
FOOTNOTES
1 “Pharmaceutical Contract Manufacturing World Market to Reach $79.24bn In 2019, New Visiongain Study Predicts,” www.
visiongain.com/Press_Release/761/%E2%80%9CPharmaceutical-Contract-Manufacturing-World-Market-To-Reach-79-24bn-I
n-2019%E2%80%9D-New-Visiongain-Study-Predicts.
2 Dirk Hendrik Kneusels, “The CMO Serialization Threat,” Antares Vision Germany.
https://themedicinemaker.com/issues/0116/the-cmo-serialization-threat/.
3 “For big pharma, ten is the magic number of CMOs says ex-GSK Director,”
www.outsourcing-pharma.com/Contract-Manufacturing/For-big-pharma-ten-is-the-magic-number-of-CMOs-says-ex-GSK-Director.
4 “Contract Manufacturing Arrangements for Drugs: Quality Agreements,” FDA, November 2016,
www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm353925.pdf.
5 Dana Buker and David Loy, “Serialization – A worldwide challenge,” www.ispe.org/pharmaceutical_engineering/12so-buker.pdf.
6 “Top answers for Strengthening Serialization Collaborations, Tracelink,” http://go.tracelink.com/Brand-CMO-Q-and-A-eBook.html.
7 “CMOs: Pharma’s Heavy Lifters,” www.pharmamanufacturing.com/articles/2015/cmos-pharmas-heavy-lifters/.
8 www.catalent.com/index.php/about-us/.
ACKNOWLEDGMENTS
The authors would like to acknowledge the support and inputs from Pari Sanghavi and Adam Barlett, a Senior Director and an
Associate Director, respectively, within Cognizant’s Life Sciences business unit, for helping to shape this point of view.

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