Friday, September 11, 2009

IBM Study: Pharma Executives Concerned About Supply Chain Safety

Supply chain executives at pharmaceutical and life sciences companies are increasingly concerned about the risk of counterfeit drugs and contaminated medications amid the complexity of global manufacturing, according to an IBM study.

In a September 9th, press release by IBM, the company describes how they conducted a study which surveyed executives at pharmaceutical, biotechnology, medical device and consumer health care industry companies who are responsible for planning, logistics, procurement and coordination throughout the life of a drug or medical device. Here are some of the key findings from the study:

  • Reducing the risk of counterfeit drugs and contaminated medications amidst the complexity of global manufacturing are among the top concerns of the pharmaceutical and life sciences industries today.
  • Tracking every step of how drugs are manufactured and distributed are key priorities for more than 70 percent of companies.

  • Monitoring risk to prevent counterfeiting, drug and device recalls, or even the loss of intellectual property, is a priority for 75 percent of executives, as margins become slimmer and supply chain complexity rises. Three-quarters have risk and performance initiatives such as surveillance programs, anti-tamper devices and specialized labeling, but with mixed results.

  • 46 percent consider vendor-managed inventory for their customers extremely effective but only 4 percent use it to ensure they are precisely meeting customer demands for products.

  • Compared to 18 other key industries, the life sciences business is one of the most highly globalized, particularly in the area of Research and Development. From a supply chain perspective, the industry is not as advanced. In general, global sourcing brings with it challenges including daunting capacity, quality, lead times and delivery issues.

  • For the life sciences industry, seventy-six percent of respondents suffer quality issues linked to global sourcing while nearly fifty percent reported increased sales from their globalization efforts due to the growing population of consumers in rapidly developing markets.

  • "As the industry faces a time of transition, supply chain executives are outsourcing more business processes, turning to emerging markets and becoming more globally integrated, all while actively managing risk," said Dr. Philippe Cini, IBM Global Business Services, Life Sciences Supply Chain Management Partner.

  • Counterfeiting is one of the biggest risks facing the pharmaceutical industry today. According to the World Health Organization, approximately 10 percent of the worldwide drug supply is counterfeit. To combat such risks, sophisticated simulations and data models help companies calculate risk, and building intelligence into products and packaging such as barcodes, RFID tags and other smart devices, supply chain executives can prevent theft. This type of new intelligence along with e-pedigree and track-and-trace capabilities also enables the entire supply chain to respond quickly in the event of a recall.

The study -- "The Smarter Supply Chain of the Future: Life Sciences Edition" -- was developed by IBM Global Business Services' Supply Chain Management Practice in conjunction with the IBM Institute for Business Value, which develops fact-based strategic insights for senior business executives.

While XStream endorses this study, much of IBM’s conclusions regarding the solution to supply chain safety center on taggants and smart track and trace solutions. XStream acknowledges that these are a part of the overall solution but also believes that it is also crucial for the entire supply chain to incorporate materials authentication and verification into an entire suite of solutions to monitor quality, handling, fraud and counterfeiting. Sophisticated supply chains not only require knowing where a product has been, but what is in package.

To view the press release visit:
To learn more about XStream Systems’ solutions, visit:

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