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Published on 21 June 2012

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Pharma focus on supply chain to block fake drugs

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Pharmaceutical companies are paying more attention than ever before to their supply chains as they attempt to boost profits and clamp down on fake drugs, states a new report by healthcare industry analysts GBI Research.

The report* examines the growing importance of strategic supply chain management in maximising revenue for global pharmaceutical companies, and how this is prompting the revision of traditional business models.

International pharmaceutical corporations are starting to tailor supply chains to products based on market demand and production costs. While manufacturing is commonly out-sourced to emerging economies where labour expenses are less substantial, branded products are produced closer to customer bases in developed countries as profit margins are higher and transportation costs lower.

These companies are also employing third-party logistics firms to improve flexibility in times of fluctuating demand. When drug requirements drop, pharmaceutical firms can simply reduce the order volume, rather than rendering costly in-house facilities inoperative.

GBI Research’s latest report also explains how developments in transportation methods are combating counterfeit drugs in the pharmaceutical industry – primarily through the implementation of Radio-Frequency Identification (RFID).

In the US, product callbacks have increased steadily over the last decade, with the Food and Drug Administration (FDA) recalling 1742 drugs in 2009 alone. This occurs for a number of reasons including poor quality packaging, defective labelling and contamination.

As RFID devices are embedded in product packs and scanned by special readers, they eliminate human error as well as the need to replace labelling damaged in transit. 

But perhaps the most prominent quality of this technology is the capacity to store comprehensive and encrypted data, therefore reducing the possibility of fake medications entering the supply chain.

Traditionally, counterfeit drugs are manufactured in huge quantities and enter the system with bogus batch numbers and product codes that are identical to legitimate originals. Once in the supply chain these fakes are very difficult to recall, resulting in unnecessary expense for the firm and damaging public opinion.  RFID is an important weapon in tackling this problem.   

GBI Research



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