This publication has been discontinued on September 9, 2011.
Abstract
Radio Frequency Identification (RFID) in Pharmaceuticals - Supply Chain
Security Concerns Provide Impetus for RFID Adoption
GBI Research’s report on the market for RFID in the pharmaceutical
industry provides a comprehensive analysis of the applications of RFID
technology in the pharmaceutical supply chain. The market for RFID hardware,
software and services is forecast for seven years and the key factors driving
or restraining the market are analyzed. The analysis of regulations and
mandates provides valuable insights into the key trends that drive the growth
of RFID in the pharmaceutical industry.
Pharmaceutical Industry’s Pressing Need to Regain Lost Reputation and
Revenues Due to Counterfeit Drugs Will Drive the Growth of the RFID Market
GBI Research finds that there is a growing need for the pharmaceutical
industry to secure their distribution channels from counterfeit drugs. RFID
solutions provide the ideal identification method by which pharmaceutical
industry can counter fake drug issues. While pharmaceutical companies,
distributors and wholesalers are on a continuous look out for these fake
drugs, counterfeiters find innovative ways to introduce fake drugs into
legitimate supply chains. The use of RFID solutions can avoid the loss of
investor confidence and a consequent decline in share prices due to such
counterfeiting incidents. Also, increased supply chain security and
operational efficiency will help the pharmaceutical industry improve their
reputation in the delivery of safe drugs. Hence, increasing concerns over the
safety of supply chains and the health of patients have forced companies to
think big and adopt RFID solutions. A steady increase in the adoption of RFID
hardware, software and services in the pharmaceutical industry is expected to
drive the growth of these solutions.
Impact of Counterfeit Zyprexa on Eli Lilly’s Share Prices, October 2001
- July 2004
Source: GBI Research
Lack of Awareness about the Technology and the Lack of Proof-of-Concept
Studies for Return on Investment is Deterring RFID Adoption
GBI Research finds that the pharmaceutical industry is reluctant to adopt RFID
systems in their supply chains due to concerns over the high projected costs
of implementation. Although concerns over high costs of tags have been
alleviated, costs of other hardware and software services are still
prohibitive for most pharmaceutical companies. The pharmaceutical industry is
also uncertain about technology reliability and data overload, which has
delayed implementation. To add to these concerns, there are currently only a
few services to accurately estimate the return on investment (ROI) that RFID
can offer. The uncertainty about the ROI and the necessity of high cost
implementation prevents companies and supply chain participants from adopting
RFID solutions. Therefore, lack of a clear business case for RFID
implementation proves to be the most important barrier that needs to be
overcome to increase adoption rates.
Impact Analysis for RFID Adoption, 2008
Source: GBI Research
Retailer Mandates Act as the Primary Driver for RFID Technology Adoption in
the Pharmaceutical Industry
GBI Research’s analysis suggests that retailer mandates that require
pharmaceutical companies to tag cases and pallets of drugs with RFID act as
the principal driver of technology adoption. The realization of the true
benefits of RFID systems requires complete adoption beginning at the
manufacturer’s site to the point-of-dispense. The mandates of retail
pharmacies are doing thisby forcing the pharmaceutical manufacturers to tag
their packages with RFID. The initial implementation of RFID tags and readers
even at the pallet level will help the industry to gain valuable knowledge and
expertise about the real time functioning of RFID-enabled supply chains. The
expertise gained will then drive the pharmaceutical manufacturers and trading
partners to adopt RFID technology throughout the supply chain.
Radio Frequency Identification (RFID) in Pharmaceuticals - Supply Chain
Security Concerns Provide Impetus for RFID Adoption
Summary
GBI Research, the leading business intelligence provider, has released its
latest research, “Radio Frequency Identification (RFID) in
Pharmaceuticals - Supply Chain Security Concerns Provides Impetus for RFID
Adoption.” It provides key data and analysis of the major factors
affecting the market for RFID in the pharmaceuticals industry. This
pharmaceutical and healthcare report also analyzes the strengths, weaknesses,
opportunities and threats in the RFID market within the pharmaceutical
industry and the key market drivers and barriers to the adoption of RFID in
the industry.
The report is based on proprietary databases, primary and secondary research,
and in-house analysis by GBI Research’s team of industry experts.
The global market for Radio Frequency Identification (RFID) products and
services in the pharmaceutical industry was valued at $112m in 2008 and is
expected to grow to $884m in 2015 at a CAGR of 34% over the same period. The
market for RFID hardware is the largest at the initial stages of adoption in
the pharmaceutical industry. Service providers are gaining market share by
integrating their services with one-stop solutions. The share of hardware in
the RFID market is estimated to be 60% in 2008 and includes tags, readers and
label printers. The share of software and services in the RFID market is
estimated to be 40% in 2008. RFID services include installation, integration,
training, maintenance and IT support.
GBI Research’s analysis suggests that the RFID technology is in the
early stages of adoption within the pharmaceutical industry. The market for
RFID in pharmaceuticals is hampered by low adoption rates due to apprehensions
over high investments and the lack of a clear business case. However,
solutions for the pharmaceutical industry are evolving to address the concerns
responsible for the slow growth. RFID vendors are offering pilot kits for the
pharmaceutical industry to test and evaluate RFID technology so that clients
can understand the technology’s costs and benefits. RFID adoption rate
will be low initially due to budget restrictions in the pharmaceutical
industry as a result of the global recession and subsequent cost cutting
measures. However, the adoption rate is expected to increase rapidly due to
mandates from retailers like Wal-Mart and from regulatory authorities like the
California Board of Pharmacy for the implementation of e-Pedigree in the
supply chain. In essence, RFID is the most promising solution for the
elimination of counterfeits in the pharmaceutical supply chain. However,
realization of the technology’s potential benefits is possible only if
apprehensions about the initial costs of implementation, return-on-investment
and a weak business case are addressed.
Scope
The scope of this report includes:
- Analysis of the opportunities and
challenges for Radio Frequency Identification technology providers in the
pharmaceuticals industry
- Market revenues and forecasts for RFID
solutions in the global pharmaceutical industry from 2008 to 2015
- The
market for RFID hardware, software and services in the pharmaceutical industry
including track-and-trace solutions and e-Pedigree solutions
- Qualitative
analysis of the market drivers, barriers, future outlook and challenges for
RFID adoption in the pharmaceutical industry
- Coverage of key geographies
including the US, Germany, the UK, France, Spain, Italy and Japan
-
Analysis of technology adoption framework for RFID hardware, software and
services in the pharmaceutical industry
- Information and analysis on the
competitive landscape and the leading market players such as Alien
Technologies, SupplyScape, Zebra Technologies Corporation, TAGSYS Inc and
IBM
Reasons to buy
The report will enhance your decision making and will enable you to:
-
Formulate strategies to increase your company’s growth by understanding
the new growth opportunities for RFID technologies within the pharmaceutical
market
- Draft efficient strategies by understanding best practices,
identifying key winners and losers and who is best positioned to take
advantage of the emerging market opportunities
- Overcome regulatory and
technology hurdles by identifying the key trends shaping and driving the RFID
markets in pharmaceutical industry
- Make more informed business decisions
from the insightful and in-depth analysis of the market for RFID in
pharmaceuticals and the factors shaping its adoption
- Differentiate
yourself from competitors and develop new solutions for the pharmaceutical
industry by understanding the current competitive landscape and how it is
evolving to meet the needs of the pharmaceutical industry
Table of Contents
1 Table of Contents
1 Table of Contents 4
1.1 List of Tables 7
1.2
List of Figures 8
2 Introduction 9
2.1 GBI Research Report Guidance
9
3 Radio Frequency Identification (RFID) in Pharmaceuticals -
Overview of the Pharmaceutical Supply Chain 11
3.1 Overview of the
Pharmaceutical Supply Chain 11
3.2 Pharmaceutical Supply Chain Models
12
3.2.1 Traditional Wholesaler Model 12
3.2.2 Limited Distribution
Model 13
3.2.3 Direct Distribution Model 14
4 Radio Frequency
Identification (RFID) in Pharmaceuticals - Overview of RFID Technology
17
4.1 RFID Applications in the Supply Chain 17
4.2 RFID Tags 17
4.2.1 Introduction 17
4.3 RFID Readers 20
4.4 RFID Infrastructure
20
5 Radio Frequency Identification (RFID) in Pharmaceuticals -
Unmet Needs in the Pharmaceutical Industry 22
5.1 Counterfeit Problems Due
to Unauthorized Secondary Wholesalers 22
5.2 Counterfeit Issues in
Parallel Trade 22
5.3 Counterfeit Problems Due to Product Shortages 24
5.4 Counterfeit Problems Due to Repackaging 25
5.5 Counterfeit
Introduction in Drug Re-Importation 26
5.6 Markets for Counterfeit Drugs
27
5.6.1 Costs to the Pharmaceutical Industry due to Counterfeiting 32
5.6.2 High Costs Due to Drug Callbacks 34
5.6.3 Operational Inefficiency
and Costs in Inventory Management 36
5.6.4 Inaccurate Transactions in
Chargeback Management 36
5.6.5 Increasing Cost and High Percentage of
Errors in Clinical Trials 36
6 Radio Frequency Identification (RFID) in
Pharmaceuticals - RFID as a Solution for the Pharmaceutical Industry
37
6.1 Solutions for the Pharmaceutical Industry 37
6.1.1 E-Pedigree
Solutions 37
6.1.2 Track and Trace Solutions 39
6.1.3 Product Callback
Management 40
6.1.4 Authentication of Drugs in the Supply Chain 40
6.1.5 Inventory Management 40
6.1.6 Sample Distribution Management 40
6.1.7 Clinical Trial Solutions 41
6.2 Costs of RFID Solutions 41
6.3
Considerations for RFID Implementation 42
6.3.1 Parent-Child Relationship
for Choice between HF and UHF Frequencies 43
6.3.2 Pilot Phase Execution
43
6.4 Pharmaceutical Industry’s Priorities for RFID Implementation
44
6.4.1 Retailer Mandates for RFID implementation Pushes Pharmaceutical
Manufacturers to Adopt RFID Technology 45
6.5 Considerations for Total
Enterprise Management 45
6.6 Business Process Reengineering for RFID
Implementation 46
6.6.1 Reengineering Packaging Processes 46
6.6.2
Reengineering Tag Placements 46
6.6.3 Slap-and-Ship Applications May Suit
Smaller Enterprises 47
6.6.4 Reengineering Site Processes 47
6.7 RFID
Implementation and Maximization of Benefit 47
7 Radio Frequency
Identification (RFID) in the Pharmaceuticals - Market Characterization
50
7.1 Market Forecasts for RFID in Pharmaceuticals 50
7.2 Technology
Adoption Framework for RFID Solutions 52
7.3 Drivers for the Adoption of
RFID Solutions 54
7.3.1 Increasing Counterfeit Incidents Accentuate the
Urgent Need for RFID Implementation 54
7.3.2 Mandates by Drug Retailers
and Pharmacies Increases Adoption of RFID systems by Pharmaceutical
Manufacturers 54
7.3.3 Harmonization of UHF Standards and the Elimination
of Listen before Talk Protocol in Europe is Likely to Spur Growth 55
7.3.4
Pedigree Requirements in the Pharmaceutical Industry will Accelerate RFID
Implementation 55
7.4 Barriers for the Adoption of RFID Solutions 55
7.4.1 High Cost of Implementation Raises Concerns over Return on Investment
56
7.4.2 Management of Overload in Data Due to Large Scale RFID
Implementation is a Challenge 56
7.4.3 High Costs and Time Consumption of
Mass Serialization Deters Adoption 56
7.5 SWOT Analysis 57
8 Radio
Frequency Identification (RFID) in the Pharmaceuticals - Competitive
Landscape 58
8.1 Value Chain in the RFID Industry 58
8.1.1 Automated
Packaging and Tagging Solution Providers 58
8.1.2 Software Solutions
Providers 59
8.1.3 Providers of Pilot Kits 59
8.1.4 One-Stop Solution
Providers 59
8.2 Pharmaceutical Industry’s Priorities Shape the
Growth of RFID Markets 61
8.3 RFID Systems Compete with Cheaper Barcode
Systems 62
9 Radio Frequency Identification (RFID) in the Pharmaceuticals
- Regulatory Landscape 64
9.1 Regulations in the US Encourage RFID
Adoption in the Pharmaceutical Industry 64
9.1.1 The Prescription Drug
Marketing Act of 1987 (PDMA) 64
9.1.2 California Pedigree
Legislation’s Deadline has been Postponed on Multiple Occasions Due to
the Challenges Faced in RFID Implementation 64
9.2 Regulations in Europe
are not yet Favorable for Rapid RFID Adoption 65
9.2.1 Code Structures for
Unique Identification Differ across European Countries 65
9.2.2
Harmonization of Regulations for UHF in Europe is Expected to Increase
Adoption 65
10 Radio Frequency Identification (RFID) in Pharmaceuticals
- Case Studies 67
10.1 Case Study: RFID implementation in
Direct-to-Pharmacy Distribution Channel 67
10.2 Pfizer 68
10.2.1
Challenge 68
10.2.2 Solution 68
10.3 GlaxoSmithKline 68
10.3.1
Challenge 68
10.3.2 Solution 68
10.4 Purdue Pharma 69
10.4.1
Challenge 69
10.4.2 Solution 69
11 Radio Frequency Identification
(RFID) in the Pharmaceutical Industry - Company Profiles 70
11.1
Alien Technology 70
11.2 Avery Dennison 71
11.3 Blue Vector 72
11.4 Hewlett-Packard 73
11.5 International Business Machines (IBM)
Corporation 74
11.6 Intermec, Inc. 75
11.7 Motorola, Inc 76
11.8
Siemens 77
11.9 SupplyScape 78
11.10 SureID 79
11.11 TAGSYS Inc
80
11.12 Texas Instruments 81
11.13 Toshiba Tec 82
11.14 UPM
Raflatac 82
11.15 VeriSign 83
11.16 Zebra Technologies Corporation
84
12 Appendix 86
12.1 Market Definitions 86
12.2 Abbreviations
86
12.3 Research Methodology 87
12.3.1 Coverage 88
12.3.2
Secondary Research 88
12.3.3 Primary Research 89
12.3.4 Expert Panel
Validation 89
12.4 Contact Us 89
12.5 Disclaimer 89
1.1 List
of Tables
Table 1: RFID in Pharmaceuticals, Share of Parallel Imports in
Pharmacy Sales (%), 2007 24
Table 2: RFID in Pharmaceuticals, Number of
Counterfeiting Cases Opened by the US FDA, 1997-2006 28
Table 3: RFID in
Pharmaceuticals, Number of Counterfeit Cases Reported in Europe,
2006-2008 29
Table 4: RFID in Pharmaceuticals, Number of Counterfeit
Medicines Seized in Europe,
2006-2008 30
Table 5: RFID in
Pharmaceuticals, Share of Counterfeit Drugs Seized in Europe by Country of
Origin, 2006-2008 31
Table 6: RFID in Pharmaceuticals, Number of Drug
Callbacks in the US, 1997-2007 34
Table 7: RFID in Pharmaceuticals,
Global, Revenues ($m), 2008-2015 50
Table 8: RFID in Pharmaceuticals,
Alien Technology, 2010 70
Table 9: RFID in Pharmaceuticals, Avery
Dennison, 2010 71
Table 10: RFID in Pharmaceuticals, Blue Vector, 2010
72
Table 11: RFID in Pharmaceuticals, Hewlett-Packard, 2010 73
Table
12: RFID in Pharmaceuticals, International Business Machines (IBM)
Corporation, 2010 74
Table 13: RFID in Pharmaceuticals, Intermec, Inc,
2010 75
Table 14: RFID in Pharmaceuticals, Motorola, Inc, 2010 76
Table 15: RFID in Pharmaceuticals, Siemens, 2010 77
Table 16: RFID in
Pharmaceuticals, SupplyScape, 2010 78
Table 17: RFID in Pharmaceuticals,
SureID, 2010 79
Table 18: RFID in Pharmaceuticals, TAGSYS, Inc, 2010
80
Table 19: RFID in Pharmaceuticals, Texas Instruments, 2010 81
Table
20: RFID in Pharmaceuticals, Toshiba TEC, 2010 82
Table 21: RFID in
Pharmaceuticals, UPM Raflatac, 2010 82
Table 22: RFID in Pharmaceuticals,
VeriSign, 2010 83
Table 23: RFID in Pharmaceuticals, Zebra Technologies
Corporation, 2010 84
1.2 List of Figures
Figure 1: RFID in
Pharmaceuticals, Structure of a Traditional Distribution Channel 13
Figure
2: RFID in Pharmaceuticals, Structure of a Limited Distribution Channel 14
Figure 3: RFID in Pharmaceuticals, Structure of a Direct-to-Pharmacy
Distribution Channel 16
Figure 4: RFID in Pharmaceuticals, Components of
an RFID System 17
Figure 5: RFID in Pharmaceuticals, Classification of
RFID Tags 18
Figure 6: RFID in Pharmaceuticals, Comparison of Passive and
Active Tags 18
Figure 7: RFID in Pharmaceuticals, Comparison of Radio Wave
Frequencies 19
Figure 8: RFID in Pharmaceuticals, Communication in an RFID
Infrastructure 21
Figure 9: RFID in Pharmaceuticals, Counterfeit Intrusion
in Parallel Trade 23
Figure 10: RFID in Pharmaceuticals, Share of Parallel
Imports in Pharmacy Sales (%), 2007 23
Figure 11: RFID in Pharmaceuticals,
Counterfeit Intrusion Due to Product Shortage 25
Figure 12: RFID in
Pharmaceuticals, Counterfeit Intrusion Due to Repackaging 26
Figure 13:
RFID in Pharmaceuticals, Number of Counterfeiting Cases Opened by the US FDA,
1997-2006 27
Figure 14: RFID in Pharmaceuticals, Number of Counterfeit
Cases Reported in Europe, 2006-2008 29
Figure 15: RFID in Pharmaceuticals,
Number of Counterfeit Medicines Seized in Europe, 2005-2008 30
Figure 16:
RFID in Pharmaceuticals, Share of Counterfeit Drugs Seized in Europe by
Country of Origin, 2006-2008 31
Figure 17: RFID in Pharmaceuticals, Share
of Counterfeits in Pharmaceutical Markets, 2008 32
Figure 18: RFID in
Pharmaceuticals, Impact of Counterfeit Zyprexa on Eli Lilly’s Share
Prices, Oct 2001 - Jul 2004 33
Figure 19: RFID in Pharmaceuticals,
Impact of Combivir Counterfeiting on GlaxoSmithKline’s Share Prices, May
2001- May 2004 33
Figure 20: RFID in Pharmaceuticals, Number of Drug
Callbacks in the US, 1997-2007 34
Figure 21: RFID in Pharmaceuticals,
Impact of Vioxx Withdrawal on Merck’s Share Prices, Apr 2003- Oct 2006
35
Figure 22: RFID in Pharmaceuticals, e-Pedigree in a Pharmaceutical
Supply Chain 37
Figure 23: RFID in Pharmaceuticals, Paper Based Pedigree
in a Pharmaceutical Supply Chain 38
Figure 24: RFID in Pharmaceuticals,
Information Flow in Track-and-Trace Applications 39
Figure 25: RFID in
Pharmaceuticals, Costs of Implementation in Distribution Channels, 2008 41
Figure 26: RFID in Pharmaceuticals, Considerations for RFID Implementation,
2010 42
Figure 27: RFID in Pharmaceuticals, Attractiveness Matrix for
RFID, 2008 44
Figure 28: RFID in Pharmaceuticals, Considerations for Total
Enterprise Management, 2010 46
Figure 29: RFID in Pharmaceuticals,
Maximization of Benefits Through RFID Implementation, 2010 47
Figure 30:
RFID in Pharmaceuticals, Benefits Due to RFID in the Pharmaceutical Supply
Chain, 2010 48
Figure 31: RFID in Pharmaceuticals, Supply Chain Maturity
Due to RFID Adoption, 2010 49
Figure 32: RFID in Pharmaceuticals, Global,
Revenue Forecasts ($m), 2008- 2015 50
Figure 33: RFID in Pharmaceuticals,
Demand for Hardware and Services in the Early Stage of Adoption, 2008 51
Figure 34: RFID in Pharmaceuticals, Technology Adoption Framework for RFID
Technology, 2008 52
Figure 35: RFID in Pharmaceuticals, Drivers and
Barriers for the RFID Market, 2008-2015 54
Figure 36: RFID in
Pharmaceuticals, Impact Analysis for RFID Adoption, 2008 55
Figure 37:
RFID in Pharmaceuticals, SWOT Analysis, 2008 57
Figure 38: RFID in
Pharmaceuticals, Value Chain in the RFID Industry, 2010 58
Figure 39: RFID
in Pharmaceuticals, RFID Solutions Mapping to Implementation Challenges, 2010
60
Figure 40: RFID in Pharmaceuticals, Example of One-Stop Solution -
California Express Solution, 2010 61
Figure 41: RFID in Pharmaceuticals,
Priority of Solutions for Implementation in the Pharmaceutical Industry, 2008
62
Figure 42: RFID in Pharmaceuticals, Comparison of RFID and 2D Barcode
Systems, 2010 63
Figure 43: RFID in Pharmaceuticals, Information
Requirements on Pedigree, 2008 65
Figure 44: RFID in Pharmaceuticals,
Advantage of e-Pedigree in a Direct-to-Pharmacy Distribution, 2010 67
Figure 45: GBI Research Methodology 88
