Guest Column | April 30, 2013

Serialization In Life Science: 'A Business Perspective'

By Liam O’Riordan

If you haven’t begun making provisions for your serialization strategy, there are important points to consider…

In 2010, The Centre for Medicines in the Public Interest in the United States predicted that counterfeit drug sales would reach $75 billion globally in 2010, an increase of more than 90 per cent from 2005 based on estimates from WHO. Based on findings from the IMS Institute for Healthcare Informatics, the world pharmaceutical market was worth over $856 billion in 2010, meaning counterfeit medicines accounted for 8.76% of the global market.

The World Health Organization (WHO) classifies spurious/falsely-labeled/falsified/counterfeit medicines (SFFC) as “one which is deliberately and fraudulently mislabeled with respect to identity and/or source”, can “apply to both branded and generic products” and “may include products with the correct ingredients or with the wrong ingredients, without active ingredient, with insufficient active ingredients or with fake packaging”. While estimations have been made, no global study has been carried out and so figures are speculative. However, it has been estimated that in over 50% of cases, medicines purchased over the internet from illegal sites that conceal their physical address1 have been found to be counterfeit. In developing countries it is thought that between 30% and 40% of drugs in supply are counterfeit.2

While the nature of the problem varies from country to country, pharmaceutical companies, governments and health agencies believe that the threat from organized crime can be curtailed by the implementation of serialization.

This White Paper has been prepared to inform the reader of the impact of executing serialization in life science packaging facilities and will cover the following areas:

  • The Threats and Impact of Counterfeit Medicines
  • Market Response
  • Key Business Drivers to Serialization
  • Serialization Strategy
  • Best Practice

The Threats and Impact of Counterfeit Medicines

A more liberalized world economy, more extensive opening of borders, the internet, and the cost and complexity of the manufacture and distribution of pharmaceuticals, has compounded the risk of counterfeit medication entering the world market.

In addition, drugs that are obtained through a seemingly legitimate source have a greater ability to deceive. In 2012 a Canadian internet pharmacy was accused of shipping and selling fake and misbranded drugs between early 2005 and the summer of 2006.

The owner of another Canadian internet pharmacy acknowledged shipping fake cancer medication over the border to the US in 2012.

In countries where demand exceeds supply and where there are pricing differentials between “identical” products, there is a higher propensity to supply counterfeit drugs.

In many developing countries, disorganized, corrupt and underfunded law enforcement allows the proliferation of all types of illegal activity. In these circumstances, where street crime and gang activity are rife, dealing with the falsification of drugs does not receive high priority. This, combined with the complexity of the pharmaceutical supply chain, creates real opportunity for counterfeiting.

SFFC medicine



1. Avastin (for cancer treatment)

USA, 2012

Affected 19 medical practices in the USA. The drug lacked active ingredient1

2. Viagra and Cialis (for erectile dysfunction)

UK, 2012

Smuggled into the UK. Contained undeclared active ingredients with possible serious health risks to the consumer2

3.Truvada and Viread (for HIV/AIDS)

UK, 2011

Seized before reaching patients. Diverted authentic product in falsified packaging3

4. Zidolam-N (for HIV/AIDS)

Kenya, 2011

Nearly 3 000 patients affected by falsified batch of their antiretroviral therapy4

5. Alli (weight-loss medicines)

USA, 2010

Smuggled into the USA. Contained undeclared active ingredients with possible serious health risks to the consumer5

6. Anti-diabetic traditional medicine (used to lower blood sugar)

China, 2009

Contained six times the normal dose of glibenclamide. Two people died, nine people were hospitalized6

7. Metakelfin (antimalarial)

Tanzania, 2009

Discovered in 40 pharmacies. The drug lacked sufficient active ingredient7

The key components in the manufacture and packaging of pharmaceuticals are often sourced from across the globe, and can include several intermediaries – often changing hands up to 10 times. It routinely involves repackaging and re-labeling drugs for certain markets. This activity may be carried out in countries that often do not comply with Good Manufacturing

Practice (GMP) and where the opportunity for falsification increases.

Counterfeit medicines impacts society, business and the economy in several key ways including:

  • Patient Safety
  • Funds organized crime
  • Revenue loss
  • Diversion

Patient Safety

Counterfeit medicines can prove to be ineffective, can exacerbate a condition, prolong treatment or cause death.

Counterfeit medicines also contribute to the development of drug resistance; if a pathogen is repeatedly exposed to a lower amount of the active pharmaceutical ingredient the parasite/bacteria/virus can adapt and become resistant to treatment.

Ineffectiveness or negative health implications may erode patient trust in health care systems, health care authorities and drug manufacturers.

As was seen in the UK in 2012, seized counterfeit erectile dysfunction drugs contained undeclared active ingredients that, according to The Medicines and Healthcare Products Regulatory Agency, posed possible serious health risks to the consumer. In China, anti-diabetic traditional medicines confiscated in 2009 led to the death of two people and the hospitalization of nine people, according to the State Food & Drug Administration.

Funds Organized Crime

In February 2013, the United Nations Office on Drug and Crime (UNODC) held a conference to discuss the production, distribution and trafficking of fake drugs by organized crime networks. Yury Fedotov, UNODC’s Executive Director, said that fraudulent drugs have come to the organization’s attention because they are “one of the very newest forms of global criminal challenges.”3 The high mark up on counterfeit drugs makes the activity a lucrative business for those involved in the international supply of counterfeit products - with Europe and North America providing the best return on investment.4 As the world is gripped by global economic hardship, the market for lower cost medicines increases.  Counterfeit drugs containing little or no active ingredient may lead to more demand, which in itself can encourage the supply of additional quantities of counterfeit medicines.

Revenue Loss

Falsified labeling can have a detrimental effect on the public image of a brand and can lead to caution and distrust in a pharmaceutical manufacturer and consequentially a loss in revenue through brand erosion.


Diversion is the movement of branded goods across international markets, contrary to the wishes and legal rights of the brand-owner. The word ‘diversion’ cannot be used for the unwanted (by the brand-owner) movement of goods within the European Union, as it is legally a single market. Sometimes the word ‘grey’ is used to describe diverted products.5

Market Response

There has been a rigorous international response to counterfeiting from governments, law enforcement agencies, healthcare organizations and pharmaceutical companies.

One of the primary solutions being implemented by pharmaceutical manufacturers is serialization.

What is Serialization?

Serialization is the name given to the process whereby a known and unique serial number is placed on the unit of sale.

The process of serialization has been adopted for many years in other major industry sectors, such as food and beverage, electronics and automotive. Forms of product traceability in the pharmaceutical industry are already in place in China and Turkey. In Turkey, a 2D data matrix coding system known as ITS was introduced from Oct 1 2009 tracking and tracing all units produced in or imported into the country. While this was an important milestone, it does not necessarily mean that the packaging lines are completely ready for serialization. Manufacturers still need to consider if they are compliant. Many companies chose to outsource their serialization activities to local 3rd parties in Turkey - postponing their need to upgrade their existing, in-house packaging lines.

Governments in US, EU and other major pharmaceutical centers have set legislative deadlines by which elements of serialization must be in place by 2015. 

Serialization Types

End to End (European EFPIA Approach)

Otherwise known as the “authentication model”, it relies on item level serialization, (serialization of the saleable unit) recorded at the point of manufacture and verified at the point of dispense to patient. The requirement is based on serialization with tamper evidence and the use of a randomized set of numbers and does not require tracking of the product through the supply chain.


Aggregation is the generation of a packaging hierarchy for each pallet where the item level is linked electronically to its parent multipack (if applicable), shipper case and pallet. This process is often referred to as building a child/parent/grandparent relationship for each pallet.

Pedigree (ePedigree)

According to the California Board of Pharmacy Law Book "Pedigree" means a record, in electronic form, containing information regarding each transaction resulting in a change of ownership of a given dangerous drug, from sale by a manufacturer, through acquisition and sale by one or more wholesalers, manufacturers, repackagers, or pharmacies, until final sale to a pharmacy or other person furnishing, administering, or dispensing the dangerous drug. The pedigree shall be created and maintained in an interoperable electronic system, ensuring compatibility throughout all stages of distribution.6

By Jan 1, 2015 50% of manufactured product entering the California supply chain must meet the ePedigree requirements (100% by Jan 1, 2016) meaning any manufacturer supplying the state must comply.


Tracking involves knowing the physical location of a particular product, at unit level, as it moves through each segment of the supply chain.


Traceability is the ability to generate a detailed transaction history for a particular product including the physical location, the time spent at each location, record or ownership, packaging configurations and environmental storage conditions.

While a number of countries have specified their own serialization data standards, many now conform to the GS1 Global Standard. The GS1 Standard uses a Global Trade Identification Number (GTIN) comprising of a set of identification keys and appropriate Application Identifiers (AI) to specify and separate the unique strings.

Many companies have or are in the process of putting serialization programs in place, have undergone pilots, or have gone live with some product lines.

However, rather than prepare, some companies are lobbying governments to extend deadlines or change current regulations. Regardless of the outcome of this petitioning, companies need to prepare for the inevitable and develop their serialization strategy.

Key Business Drivers to Implement Serialization

While legislative conformity is a key factor in implementing serialization, to gain maximum return on investment, manufacturers need to approach their design strategy from a business and not a technical perspective and see serialization as an opportunity rather than a regulatory necessity.

Serialization aids in eliminating many of the gaps associated with traditional pharmaceutical production and distribution that leave manufacturers susceptible to product falsification. The biggest benefits of serialization are seen in the areas of patient safety, supply chain management and business continuity and brand protection.

Patient Safety

Meeting regulatory requirements allows the continued supply of genuine product to patients. Serialization reduces dispensing and dosing errors. It allows more efficient recalls, thus minimizing patient impact and minimizing financial impact to the company.

Supply Chain Management

Serialization allows the manufacturer greater control of their product and assists by:

  • Reducing shrinkage
  • Providing better expiry management
  • Providing better forecasting
  • Allowing for targeted recalls
  • Providing better inventory management allowing for potentially significant supply chain savings

Business Continuity and Brand Protection

  • Conforming to regulatory compliance will allow manufacturers
    • continue to trade with global markets
  • Reducing the impact of product recalls brings significant savings
  • Any strategy that hampers the falsification of goods aids in the elimination of counterfeiting and thus increases revenue to legitimate sources
  • Protecting the supply chain is critical in protecting a brand

Serialization Strategy

While it may seem like a straightforward exercise to issue a barcode to a label, there are more complex factors that need to be addressed in the process. Often the label must be redesigned to accommodate the barcode and regulators must approve the new label. The packaging line must be revalidated as equipment is added to generate each barcode, link each barcode to product data, apply the barcode to packages and track that barcode throughout the supply chain. That data must be managed, transforming it from data to actionable information.

Employees must be trained to use the new equipment and sometimes the packaging itself needs to change.7

The first step in implementing serialization is to develop a multi-national, multi-operational strategy.

Pharmaceutical manufacturers need to consider the following factors when designing their global serialization plan:

  • A full implementation can take 2 years, and even longer depending on the size &  complexity of the company
  • Stakeholder buy-in is essential, it is important to identify, and involve them from an early stage - particularly at a senior level
  • Requires a global multifunctional, multi-disciplined implementation team (including partners) that represents the entire supply chain. It is crucial to implement a unified, corporate strategy
  • Planning in advance dramatically reduces downtime, and can limit the business impact
  • Significant constraints are made on resources as deadlines approach
  • Thorough vendor assessment is essential as is vendor management, it is important to leverage expertise from suppliers and other sites that have run pilots or full implementations

At site level it is imperative to consider:

  • Getting agreement on OEE and other KPIs at both ramp-up and steady state
  • Maintaining line performance. Understand and measure current line performance and validate that this performance is maintained
  • Planning inventory levels well in advance to allow for line installation downtime
  • Where possible, ensuring fail safe design of data capture and management
  • It is essential to map out and have a full and detailed understanding of the entire supply chain and consider what level of de-aggregation will take place and where

Developing an Implementation Strategy

The make-up of the project team should be cross functional across all departments to obtain a fully interoperable approach where diverse opinions are considered. Their primary requirement is to develop a strategy consisting of three specific phases.

Phase 1 – Strategic Assessment

This phase is to analyze the overall business needs of the company. In essence to consider the desired outcomes and approach the design of the process backwards - to decide what needs to be done and when.

Step 1 – Business Needs

  • Analyze company volumes by market
  • Liaise with in-country regulatory bodies
  • Identify markets and timelines
  • Identify non regulatory business benefits
  • Carry out Business Risk Analysis

Phase 2 - Analysis and Recommendations

Step 2 – Detailed Area Review to Identify Business Impact

  • Packaging
  • CMO Packaging
  • Packaging Suppliers
  • Warehouse
  • Distribution
  • Wholesaler
  • Pharmacy/Hospital

Step 3 – Viable Options Analysis to provide Potential Solutions and Schedule

  • Implementation Options
  • High Level Schedule
  • Vendor and Overall Costing
  • Implementation and Capacity Considerations
  • Implementation Risks

Step 4 – Develop Strategy giving Recommendations

  • Comparison Summary
  • Elaborate on Schedule and Resource Plan
  • Elaborate on Budget Cost for Preferred Option

It is crucial for the project team to conduct a comprehensive analysis during this phase without underestimating the challenge of getting a project of this scope underway and the complexity of serialization.

It is vital to get a clear understanding of the business drivers and constraints (ensuring this is user driven), to map out the business process across the entire organization while having a full and detailed understanding of the entire supply chain and to involve strategic partners in this process. The availability of these partners in the process is a critical component – as deadlines approach, the demand for these resources will increase dramatically.

Identifying and prioritizing countries based on defined business drivers is an important factor- adapting plans according the specific regulatory requirements in each of those countries to allow the overall approach to be tailored as required.

The impact on OEE and other KPIs at both ramp-up and steady state should be considered along with reviewing the impact on packaging as a whole.

It is important to plan packaging line downtime and try to plan pilot implementation on a line with low utilization. Some companies have estimated that changing over packaging lines to accommodate the new barcodes can take up to four to eight weeks.8 For a company with 120 lines, that is between 480 and 960 weeks of cumulative downtime. To help reduce this disruption, companies should, ideally, model changes to their packaging lines off line to minimize unforeseen issues.

Other considerations are:

  • Enterprise Integration
    • ERP/MES à Line Supervisor (Batch Data)
    • Site Supervisor à ERP/MES (Serialized Data)
  • Line Control
  • Existing centralized line control
  • Integration to MES
  • Integration to existing line equipment
  • Implications of Randomization
  • Data Matrix
  • RFID
  • Further Counterfeit Protection
  • Data Carriers

Planning artwork changes early should also be a key consideration as any changes require significant management.

In reviewing the technological requirements, the project team should understand their requirements, including data sharing requirements, while assessing technology capabilities and constraints. The technological design needs to be “future-proofed” to meet existing and potential future requirements. Data integrity also needs to be designed (particularly around aggregation) into the solution as suspect data is worthless.

When considering the impact on any changes to the Warehouse, the following should be factored in:

  • Provisioning of numbers
  • Warehouse functionality is equally as complex as the packaging line. Consider:
    • Movements
    • Picking /Packing/Shipping
    • Batch/Pallet Splitting
    • Scrap
    • Returns
  • Integration to Warehouse Management System
  • ERP or MES management
  • Data Transfer to EPCIS

Phase 3 – Program Approval

Step 5 – Review and Approval of the plan by management

  1. Present Program
  2. Revise Program based on feedback
  3. Approve Program

Best Practice

  • Plan early
  • Serialization requires a global multifunctional, multi-disciplined implementation team (including partners)
  • Anticipate and assess the risks of any expected changes in regulatory requirements and timelines
  • Plan artwork changes early on
  • Ensure readiness of CMOs and distribution partners
  • Choose vendors carefully – be very thorough in vendor assessment, visit reference sites to avoid the implementation becoming an R&D project
  • Vendor management is critical. Timelines will be tight – as deadlines approach there will be pressure on vendors from all clients and there will be a diverse vendor set
  • Do not underestimate the complexity of a serialization implementation.


In summary, serialization should not be seen as a regulatory requirement in isolation but should be approached from a business perspective were commercial benefits can be realized through increased product security.

About the Author: Liam O’Riordan is Serialization Director and Senior Consultant with ESP, providing IT, serialization, and MES consultancy services.  He has 25 years professional experience working across a range of industries.  He has managed serialization projects, in the Electronics, Mobile Phone, Automotive, Medical Device & Pharmaceutical industries. 

About Enterprise System Partners:

ESP - Enterprise System Partners provides support and consulting services globally for manufacturing operations in biotechnology, pharmaceutical, and medical devices. Our unique strength is our people and their collective knowledge of the entire system landscape within the manufacturing environment.  We have a proven track record of delivery to our clients, providing expertise in strategy, planning, vendor selection, design, implementation and validation for lean enabling systems from level 2 to 4 (automation, manufacturing, laboratory & enterprise). We have niche expertise in MES and serialization.

Our offices are located in Cork, Dublin, Boston & San Francisco.

1 Source: Food & Drug Administration, USA

2 Source: The Medicines and Healthcare Products Regulatory Agency, UK

3 Source: The Medicines and Healthcare Products Regulatory Agency, UK

4 Source: Pharmacy Board, Kenya

5 Source: Food & Drug Administration, USA

6 State Food & Drug Administration, People’s Republic of China

7 Tanzania Food & Drug Authority, United Republic of Tanzania

1 WHO: “Medicines: spurious/falsely-labeled/falsified/counterfeit (SFFC) medicines”. Fact Sheet No275. May 2012 available at

2 WHO: “General information on counterfeit medicines” available at

3 The Partnership for Safer Medicines “UNDOC Conference Highlights Fake Drugs Distributed by Organized Crime” available at

4 “A Sick Business – Counterfeit Medicines and Organised Crime”, Graham  Satchwell, 2004 available at

5 “A Sick Business – Counterfeit Medicines and Organised Crim”, Graham Satchwell 2004 available at

6 2013 Law Book for Pharmacy, California Board of Pharmacy, Section 4034

7 Life Science Leader “Planning Serialization for Pharmaceutical Manufacturers”, Gail Dutton available at

8Life Science Leader “Planning Serialization for Pharmaceutical Manufacturers”, Gail Dutton available at