Product security: a growing concern for healthcare firms

Product security is rising up the ranks among the leading concerns for executives in the healthcare sector, and companies are increasingly investing in technology to tackle the problem, according to UPS.

The logistics specialist's latest annual Pain in the (Supply) Chain survey found that product security was second only to regulatory compliance as the top supply chain concern and for the first time ranked ahead of management of supply chain costs.

Daniel Gagnon, marketing director for healthcare logistics at UPS Europe, told SecuringIndustry.com that healthcare companies -which in the context of the survey comprise pharma, biopharma and medical device companies - that the rise of product security was unsurprising given the survey was conducted shortly after the passage of the Falsified Medicines Directive (FMD) in Europe.

Intellectual property is another area exercising the minds of healthcare executives, especially as the pharma industry starts to target sales growth in emerging markets such as Asia and Latin America, said Gagnon, who added there is "considerable concern" about protecting products from copying and counterfeiting.

Product security has ranked among the top three supply chain concerns for the last three surveys, he noted and this year was cited by 53 per cent of healthcare executives, actually a little down on the 57 per cent rating in 2012.

Delving into the category, it emerged that around half (48 per cent) of those surveyed felt that counterfeit sophistication is growing faster than their company's countermeasures which was considered the biggest challenge. Poor visibility of increasingly complex supply chains was also a factor - cited by 40 per cent - ahead of inadequate law enforcement at 37 per cent.

Interestingly in light of the safety feature recommendations of the FMD in Europe and the passage of the Drug Quality and Security Act (DQSA) in the US, 56 per cent of respondents said they are already investing in serialisation or electronic pedigree technologies and other IT measures to help secure supply chains, and only 28 per cent suggested that IT and bar coding solutions would not solve the counterfeiting issue.

UPS itself helped to pioneer serialisation in the healthcare arena via a project to apply serialised 1D and 2D barcodes to Genzyme's rare disease products, which started at the pallet level and eventually reached the unit (bottle) level, eventually went live in 2010.

A healthy majority (59 per cent) indicated that spending on serialisation and e-pedigree would escalate in the next five years, the most striking increase across all technology categories covered in the survey.

Narrowing in specific geographies, in Europe the emphasis on serialisation and e-pedigree was even more pronounced - with 62 per cent versus 56 per cent globally indicating it was a successful strategy for product security, and while 38 per cent indicated this was a major driver for supply chain costs, 53 per cent viewed it as a strategy to help manage costs.

Meanwhile, in Asia-Pacific product protection concerns were even greater still - with 76 per cent indicating product security was an issue, 71 per cent expecting to invest in serialisation and 68 per cent indicating they would adopt other security-specific technologies. Following the passage of the DQSA it might be expected the 2014 edition of the survey will find increasing appetite for this approach among US healthcare companies as well.

Looking at other security technologies, visible authentication using holograms, security inks and other overt technologies of that type were considered important by 37 per cent of respondents overall, and 41 per cent in Europe, while for covert and forensic feature the rates were lower at 19 per cent and 12 per cent, respectively.

47 per cent of those polled indicated they are focused on in-transit monitoring and intervention - presumably to guard against cargo theft - and 61 per cent are investing in shipment insurance to limit the losses from product security issues, as well as damage and spoilage.