Securing your product at every stage, from manufacturing through to distribution, is an essential part of supply chain management – not least because counterfeiters are keen to target the pharmaceutical industry. Preserving patient safety and brand reputation is a top priority, so the industry has reacted by developing a wealth of technologies to improve tracking and tracing. Jim Banks talks to Merck’s Gianpiero Lorusso about how technology, regulation and good practices protect pharma products.


Product safety has always been on the agenda in the pharmaceutical industry, but in recent years it has moved rapidly up the list of priorities as the threat of counterfeiting has skyrocketed. Spotting the potential of such a lucrative industry, thieves and counterfeiters have devised ever-more sophisticated ways to enter the pharmaceutical supply chain.

The industry has moved to combat these threats with technology, good distribution practice (GDP) and an increasingly tough regulatory regime; however, there is still more to do to win a battle in which the risks are constantly changing.

"Product security is one of the most important things in this industry," says Gianpiero Lorusso, supply chain senior manager at Merck. "It is now considered a ‘must’, whereas ten years ago it would have been considered ‘nice to have’. Back then it was something that people talked about a lot at conferences, but it was nowhere near as high up on the priority list as it is today.

"It is now essential, alongside product quality. In an industry where lead times are getting shorter and shorter, and inventories are becoming lower, there is much more stress being placed upon the supply chain. That means there is increasingly little room for other risks. Any failure in the supply chain, particularly in regard to the quality or the security of a product, is not only a threat to the business, but also to the safety and health of patients," he adds.

A broad remit

Ensuring the security of valuable products is by no means a simple process. There are many risks to factor in and many approaches – be they technological or procedural – to implement in order to mitigate them.

"If all the people throughout the supply chain are fully committed and take maximum care, then that has just as much impact as any kind of technology."

"Product security is a very broad concept, so we have to address many different things," says Lorusso. "We have to look at every stage – production, storage, shipping and distribution; the supply chain plays a crucial role in maintaining product security, but it is not an easy task. It is not like being in a lab where everything can be easily seen and controlled. I am just one part of a much larger set of functions.

"Supply starts in your facility, but then passes through many parts of the chain, most of which are outside your business and lie beyond where you can see. For this reason, cooperation with all other stakeholders is key. You have to build networks with the people in the chain because it is not just about what technology you use. You need to be working closely with the people inside your company, third parties and your customers."

The threat: exposed

The most significant risks to the industry are well known, although new threats are becoming more prominent. Tackling counterfeiting, theft and black market distribution has been the focus of much effort and investment by pharmaceutical companies. Now, more attention is being paid to threats to IP and proprietary data, and to the possibility that acts of terrorism could be carried out through the manipulation of drugs.

"Counterfeiters sell fake products similar to ours and, in doing so, they can put patients at risk," explains Lorusso. "There is another risk still, which is that your products can end up being used without medical authority, as only doctors should prescribe medicines and this is not always the case. Terrorism could be an increasingly important consideration: we read a lot about the potential risks of biological attacks. The misuse of IP and electronic data can cause considerable damage to a company.

"There are many things that the industry can do to combat counterfeiters," Lorusso continues, "particularly by developing technologies for tracking and tracing shipments, but also through traditional supply chain practices. These practices, however, are subject to requirements that are driven by new threats that come along, partly because counterfeiters are becoming more sophisticated all the time. The supply chain has to be able to react to these threats as well as preventing them in ways that have already proven successful."

People and processes

Alongside technological innovation, there is a need to understand the importance of communicating with other parties in the supply chain. Product security is a responsibility that falls on many parties and it is important that they all share this common goal. Commonality of purpose depends on building confidence in the practices and technologies that are used at each stage of the supply chain.

"Typical supply chain activities include devices and infrastructure for storage, for instance," says Lorusso. "Within our facilities, we know that there is strict monitoring and control to keep the product secure. We have cameras, alarms and everything else that we can employ, but this requires infrastructure and depends on building design, access control systems and so on. Here, this is done by default, as it is part of our DNA. There is always more than one level of security, whether it is security systems or guards.

"The industry can combat counterfeiters by developing technologies for tracking and tracing shipments, but also through traditional supply chain practices."

"But we cannot directly control the infrastructure throughout other parts of the supply chain. The qualification and reliability of external partners is essential. We have to ensure that they are doing the same as we are. They must be on board, so it is important to exchange knowledge and procedures. As manufacturers, we have to ensure that they feel as strongly as we do, and that they have the same goals in terms of protecting the product throughout the supply chain. That is not easy in every market," he acknowledges.

Like most pharmaceutical companies, Merck has developed a strict process for the evaluation and selection of its supply chain partners. This rigorous selection process looks far beyond the infrastructure that external parties have in place, and embraces cultural and personal factors, too, as Lorusso explains.

"The selection process cannot be just a technical thing," he states. "You need to look at more than just technologies. Technology is sexy, but it does not provide the full scope of what is needed for security. People are the key: it is essential to meet them, talk to them and make them understand their roles. We have to make it clear to our partners what we must do together to protect our valuable products.

"For a partner, it may at first seem like handling our products is no different to handling a pallet of other goods or equipment, but if we train them then they can understand the extra responsibility that goes along with handling pharmaceuticals. Restoring patient health is the driver – and that makes a real difference. We need the technology as well, but it is really people that make the difference."

Building a safer future

The evolving European regulatory environment has encouraged the adoption of certain technologies to counteract counterfeiting. The 2011 EU Falsified Medicines Directive (EU-FMD), for instance, mandates pack-level safety features and sets a deadline to develop a system (see table, above right). The use of hologram systems for authentication purposes has grown quickly in recent years, as have track-and-trace systems to keep tabs on products in transit.

"There are many ideas on the table, but it takes a lot of effort to stay abreast of the changing risk landscape."

For Lorusso, such systems go hand in hand with technologies that help to guarantee the quality of the product along the supply chain.

"Technology has made a big difference in the last decade and it does help a lot," he says. "For me, product security includes risks to quality, such as temperature excursions. When doing that kind of monitoring, you need the right technology to mitigate the related risks. Protecting the quality of the product is essential. GPS technology is also important for protecting against theft, just like how it is used in cars. There may be issues with operators not wanting to be tracked all the time, but it is very important for us to know where our product is.

"With GPS technology, we could create a map using the data provided by all our transport providers, which shows us where our packages are. We could then intervene if there were any problems. So, technology does play a significant part in what the industry can do, but if all the people in the supply chain are fully committed and take maximum care, then that has just as much impact as any kind of technology."

There is always room for improvement, and it is vital that the industry persists with its strategy of investment in technology and processes to ensure product security in the face of ever-changing threats. The desire to develop new systems and build on best practice is not in question, but deciding what changes to make and where to invest to gain the most advantage is by no means a straightforward task. There are many ideas on the table, but it takes a lot of effort to stay abreast of the changing risk landscape.

"How do we improve product security?" asks Lorusso. "That is the hardest question to answer. Many good things have been done already; for instance, regulations are pushing companies to do more to improve product security, so compliance is a big driver. But there is always more that can be done. Technologies such as RFID are not yet being used to maximum effect.

"It is still just a concept, but there is much potential in using the internet to get a full picture of all the products being tracked. It is possible to bring together all supply chain information into a fully integrated form, and RFID is just one of the tools that could make that a reality. Although I said before that only a small part of the supply chain happens before our eyes, in the future we will have virtual eyes on our product throughout the entire supply process," he asserts.

As long as product security remains at the top of the agenda for supply chain managers in the pharma industry, it is likely that the sector will continue to face up effectively to counterfeiters and thieves. For Lorusso, the key is to bear in mind that technology can only do so much, and it is the relationship with supply chain partners and their understanding of their responsibilities that will have the biggest discernible impact.