Product serialization in the pharmaceutical industry primarily aims to enhance product security, comply with regulations, and improve supply chain efficiency. Implementing the right business processes is crucial to track product distribution and verify authenticity, thus offering benefits such as reduced diversion, improved chargeback accuracy, and cost savings. Ultimately, serialization not only simplifies supply chains but also bolsters brand management and patient safety.

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Product Security
Product security has been the primary objective of product
serialization, driven by the different regulatory bodies around
the world. It is also the most questionable if the right business
processes are not in place. Simply printing a 2D code meeting
regulatory needs and selling in the marketplace does not provide
the necessary authentication. The 2D code can very easily
be copied and counterfeits can enter the marketplace. The
convoluted nature of the United States pharmaceutical supply
chain (as shown in step 3 of the drug distribution models) makes
this easier.
It is necessary to have the right business processes to track
product distribution and verify its uniqueness in the marketplace.
Without this, the entire effort to serialize products with a
unique 2D code is a wasteful expense. Additionally, the benefits
from reduced diversion and parallel trade are evident from the
increased visibility of the supply chain. Chargeback accuracy
from the marketplace is also significantly improved from
this unique ID. Therefore, there are many benefits to product
security, including:
• Reduced diversion/parallel trade
• Improved chargeback accuracy
• Contribution of authentication capabilities
• Supply Chain/Operational Efficiency Improvements
The primary goal of product serialization is to provide visibility
to the product at the item level. You should be able to backtrack
the product from the market to the manufacturing location
and get additional information. This would allow companies to
decrease their costs by conducting their operations in line with
market need and accomplish demand planning more efficiently.
They can also save money through increased accuracy in returns
processing. These savings would provide significant Return on
Investment (ROI). Additional gains would come from increased
service levels with supply chain partners along with business
continuity improvement. This serialized identity also offers the
ability to increase the speed and effectiveness of product recalls,
which has seen an increase in recent years.
There are at least four areas of cost and service improvements
through supply chain and operational efficiency from product
serialization:
• Increased supply chain visibility with streamlined
manufacturing and distribution process accuracy
• Business continuity improvement with closer integration to
supply chain partners
• Increased speed of recalls
• Returns processing with increased accuracy
Brand Management
A significant expense
in the pharmaceutical
industry is marketing.
Marketing expenses are
directed towards consumer
education and promoting
pharmaceutical products
as a key differentiator. The
serialized identity offers
the end user the ability to
contact the manufacturer
regarding authenticity
of the product. It also offers the marketer an opportunity to
engage the end user directly to help with understanding the
efficacy of the product, the way the product is used and what
the unmet needs of the market are. This information from the
direct users of the product provides significant opportunities in
product- and market-development, and grants more confidence
in the execution stage. The marketer can also provide product
incentives and increase brand value with additional service
propositions. This is significant in a marketplace with
challenging drug pipelines. The added advantages are
• increased brand value;
• increased engagement with the end user; and
• differentiation over competitors.
Summary
The product serialization requirements that the pharmaceutical
industry needs to meet will provide significant benefits
in regulatory compliance, product security, supply chain/
operational efficiency, and brand management. It is important
that pharmaceutical companies explore these areas to achieve
significant returns on their investment in implementing product
serialization. A significant outcome from product serialization
may well be the simplification of the supply chain to the models
shown in steps 1 and 2 of the drug distribution models diagram.
This will certainly help close the various loopholes in the supply
chain and improve patient safety with authentic products.
Ultimately, this change in drug distribution within the U.S. may
be the biggest benefit from all the serialization efforts in this
industry.
PRODUCT SERIALIZATION’S IMPACT ON PROFITABILITY - MULTI-INDUSTRY
Narendra Srivatsa assists companies with their product development and marketing efforts, especially as it relates to packaging, anti-counterfeiting, serialization
and supply chain. He has extensive experience in anti-counterfeiting and product serialization, having conducted several serialization pilots and commercialized
anti-counterfeit solutions. More information can be found on his LinkedIn profile at http://www.linkedin.com/in/narendrasrivatsa.
MULTI-INDUSTRY
Product Serialization’s
PRODUCT SERIALIZATION’S IMPACT ON PROFITABILITY
IMPACT ON
PROFITABILITY
by Narendra Srivatsa
Global product serialization is well underway
and many companies are not adequately
prepared for it. The significant capital costs and
lack of knowledge in successful implementation are
keeping them behind.
Serialization as a Regulatory Burden
Most pharmaceutical companies address
serialization as a regulatory burden to meet the
need of selling products in that marketplace, but do
not look beyond it.
This is the main factor for the resistance to the
serialization process - it adds to the cost of goods
sold without the ability to pass the cost increase
onto the consumer. However, serialization provides
significantbenefitsinmanybusinessareas,especially:
• Product Security
• Supply Chain/Operational Efficiency
• Brand Management
Companies need to examine how their businesses
can take advantage of the benefits of serialization.
This article will provide some guidance in areas
where they can achieve significant gains.
“Companies need to examine
how their businesses can take
advantage of the benefits of
serialization.”
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