Visibility in global supply chains is paramount. But the sheer volume and increasingly complex nature of data involved in international commerce can open the door to fraud, theft and counterfeit goods.

The pharmaceutical sector has come under ever-greater scrutiny in recent years, as more and more counterfeit products infiltrate legitimate supply chain routes and the distribution networks of unsuspecting suppliers. 

According to the World Health Organization, close to $83 billion worth of counterfeit drugs are sold annually. And 10% of medical products sold in low- and middle-income countries have been found to be substandard or fake.

Counterfeit products might contain the wrong mix of ingredients or altogether different components, display forged data on the packaging, or have been produced in conditions that don’t meet WHO’s Good Manufacturing Practice (cGMP).

It's a problem that can literally mean life or death in extreme cases. Global logistics providers have a duty of care to detect fake products as early as possible in the supply chain. 

That’s where transparency comes into play. For supply chain players, a network that offers end-to-end visibility not only builds customer confidence and trust, but also helps them to comply with increasingly stringent regulations.

Serialization

Efforts to regulate the issue of counterfeit pharmaceutical goods in the market have been ongoing for decades. However, inelastic demand for products makes the sector uniquely vulnerable to counterfeiting. Any form of regulation has simply turned into a reactive “Whac-A-Mole” game, rather than proactive measures to pre-empt possible issues.

Recent efforts to combat the problem have yielded positive results. Serialization — the application of a unique serial number to each salable pharmaceutical product unit — has eased the detection, tracking and removal of counterfeit pharmaceuticals from the supply chain to improve patient safety. 

With ingredients and pre-packaged pharmaceuticals coming from overseas suppliers, products are sourced, tested, manufactured and exported across multiple countries and supply chains. Serialization is designed to mitigate these risks by determining the authenticity of medicines and, crucially, facilitating product recalls when necessary. 

However, as with most regulations not designed for enforcement globally, it’s not as straightforward a solution for complex supply chains.

Governments and local authorities have made serialization regulations an essential part of the customs process for pharmaceutical products, and any holdup can have a knock-on effect on the wider supply chain.

Some regions have long been proponents of serialization for pharmaceutical products. The European Union has extremely strict policies in place, including its Falsified Medicines Directive, introduced in 2011. The U.S., meanwhile, enacted its Drug Quality and Security Act in 2013, which mandates manufacturers and trading partners to have operational electronic traceability systems for pharmaceutical drugs from November this year.

Countries in the Middle East have also launched their own serialization systems recently. Bahrain’s National Health Regulatory Authority implemented a blockchain-based end-to-end traceability hub for pharmaceutical products — the first of its kind in the Gulf — while the United Arab Emirates launched Tatmeen, a highly advanced track and trace platform for pharmaceuticals and medical supplies.

Brazil, Kazakhstan and Uzbekistan have also made serialization systems and processes mandatory for pharmaceutical products in recent months.

For logistics partners, understanding and complying with this regulatory maze is crucial to maintaining a high level of supply chain transparency.

Digitalization

As with most challenges facing the logistics and warehousing sector, the effective use of technology and digital systems can make navigating choppy regulatory waters significantly smoother.

Investments in technology that can improve the trackability and traceability of pharmaceutical products can help remove counterfeit products from the distribution network and keep the supply chain moving. 

Crucially, technology can ensure that a standardized and international approach to serialization is achieved. With so many countries imposing their own regulatory framework to combat counterfeit pharmaceuticals, linking serialization data into a centralized database can ensure that countries around the world are compliant with regulations.

With data stored on easily accessible cloud servers, supply chain stakeholders, from manufacturers to logistics providers and distributors, have complete visibility of products’ locations anytime, anywhere. 

Other sectors, such as food and beverage, tobacco and fast-moving consumer goods, are now looking to impose similar legal requirements, so experience and knowledge on managing serialization operations gained from handling pharmaceuticals could support similar types of operations.

Digital platforms enhance the transparency of the supply chains. They allow supply chain partners to maintain customer confidence at a time when regulatory frameworks remain stringent and complex. 

Customer expectations have changed in recent years, particularly since the COVID-19 pandemic. Serialization and digitization are making strides toward ensuring that the pharmaceutical supply chain remains safe, secure and transparent.

Peter Orange is group sales director – logistics with GAC Group.