Integration of Anti-Counterfeit Technology in the Pharmaceutical Supply Chain Organisational Background

Rationale for Strategic Action Plan

Strategic Aims and Objectives

Levers and Obstacles

Analysis of Internal Capabilities -- Strengths and Weaknesses

Trends and External Forces -- Opportunities and Threats

Stakeholder Influence

Strategic Action Plan

Key Actions, Actors, and Responsibilities

Timeline and Milestones

Cost Analysis

Risk and Barriers

Mechanisms to Track Progress

Organisational Background

The organization, Cure Pharmaceutical (Cure), operates in the pharmaceutical industry's drug delivery technology segment. Cure is considered a small pharmaceutical company with revenues of one hundred and fifty million. A technology designed by the firm enables patients to take medications without water. This patented Oral Thin Film Technology (OTF) is small, light and occupies much less space after packaging. The technology can be shipped in single dose form or in bulk rolls to the site of patient care. Cure's core business integrates generic drugs that are an effective treatment for a multitude of diseases into its proprietary OTF technology.

Since Cure has a unique delivery system, it distributes OTF both in bulk form and in individual dosing units utilizing authorized and private brokers. Due to this, the implementation of anti-counterfeit technology presents a major challenge. In addition, since some product is cut into dose form from bulk rolls at the site of patient care, simple tracking devices inserted into packaging may not suffice. Furthermore, Cure is a small company with not much redundancy in its manufacturing process; thus, finding a solution for preventing counterfeit drugs without disrupting its operations so that it can continue to supply medicines to the needy is crucial. It is also pertinent to adapt a strategy that allows for Cure's mission in keeping medicines affordable for everyone in need. Counterfeit drugs have a tremendous impact on not only business sustainability, but also social sustainability.

As we continue to grow in emerging markets, the threat of counterfeit infiltration of our brand and value chain increases. For Cure to grow in these markets, the company must rely on independent brokers and secondary wholesalers often controlled by small private entities with little security and control over their distribution chain. This increases the organisation's vulnerability to the risk of counterfeits. Since entering emerging markets, Cure has seen a five percent increase in counterfeit products infiltrating its distribution channels over the last eighteen-month period. Despite the risk, emerging markets offer strong growth potential, and are critical to Cure's overall mission of distributing affordable essential medicines to populations in need. This report provides a strategic plan of action for integrating anti-counterfeit technology in the firm's supply chain. Attention is particularly paid to strategic aims and objectives, levers and obstacles, implementation costs, mechanisms for tracking progress, as well as risks and barriers.

2. Rationale for Strategic Action Plan

2.1 Strategic Aims and Objectives

To address the risk of counterfeits as it expands its operations in emerging markets, Cure will be implementing a blended anti-counterfeit technology consisting of RFID tagging and bar code printing directly on the OTF itself. The RFID technology cure will be utilized both in bulk packing and single dose units. The firm will also be developing an app that allows stakeholders to quickly identify the product via smart phone scan. The overall goal of implementing the anti-counterfeit technology is to eliminate counterfeits from the firm's supply chain, especially with regard to its OTF technology, while at the same time advancing market penetration, promoting patient safety, and ensuring seamless integration. The implementation of the technology will specifically seek to achieve two objectives:

i. To reduce the incidence of counterfeits by 20% by June 2018

ii. To increase product distribution and revenues by 20% by June 2018

The achievement of these objectives will be crucial for building Cure's reputation for delivering authentic, safe drugs to its markets. It will indeed be a crucial source of competitive advantage in the stiffly competitive pharmaceutical industry.

2.2 Levers and Obstacles

Implementing change is often not a straightforward endeavour. It is a process that requires proper planning and careful consideration of a number of aspects (Samson and Bevington, 2012). The organisation must consider its strengths and weaknesses, likely obstacles, external elements, as well as the influence and interests of key stakeholders. These issues will be particularly important if Cure is to successfully implement the anti-counterfeit technology.

2.2.1 Analysis of Internal Capabilities -- Strengths and Weaknesses

First, the organisation has been strongly committed to innovation. The recent introduction of the OTF technology attests to this. The firm has also built a reputation for quality, safe, and affordable drugs. This is an important strength for a pharmaceutical firm. Other important strengths include competent management and personnel, efficient manufacturing, a unique delivery system, impressive financial performance, commitment to social sustainability, and strong relationships with key stakeholders such as suppliers, hospitals, and pharmacies.
Despite these strengths, there are a number of weaknesses that cannot be ignored. First, Cure is a small organisation, meaning that financial constraints can be a major challenge. The firm may not have adequate resources to fulfil its strategic goals and objectives. This is a particularly important challenge given that the firm operates in an industry dominated by powerful and financially strong players with operations all over the world. As simple as it may seem, implementing anti-counterfeit technology may be a costly undertaking for a small firm as the process may often involve modification of the current production processes, resulting in extra costs. Another challenge stems from the firm's supply chain. The firm relies on independent brokers and secondary wholesales to distribute its drugs, which exposes the firm to counterfeit risk as the suppliers lack strong security measures. Pharmaceutical supply chains actually tend to be ideal targets for counterfeiters owing to their inherent complexity (PRNewswire, 2015). Exposure to counterfeits is an even more important weakness as it may more substantially thwart the achievement of the organisation's strategic goals and objectives.

2.2.2 Trends and External Forces -- Opportunities and Threats

There are a number of opportunities Cure can take advantage of to enhance its competitive advantage in the marketplace. One of the opportunities relates to emerging markets. With developed markets increasingly becoming saturated, emerging markets (especially Latin America, Russia, India, Turkey, China, and Africa) have been identified as significant sources of growth for multinational firms wishing to expand their operations across the globe. These markets present a particularly important growth opportunity for pharmaceutical companies given the higher incidence of disease. A recent report authored by Ascher et al. (2015) indicates that emerging markets have significantly surpassed developed markets in pharmaceutical spending. As shown in figure 1, the report further demonstrates that emerging markets will grow more substantially by 2020 compared to their developed counterparts (Ascher et al., 2015).

Figure 1: Pharmaceutical sales growth by region, 2015-2020, $ billion

Source: Ascher et al. (2015)

Technological advancements also present a significant opportunity for pharmaceutical firms. With the rise of counterfeits, anti-counterfeit technologies such as RFID and bar code printing have increasingly become commonplace in the pharmaceutical industry (Shah, Prajapati and Agrawal, 2010; Bansal et al., 2013). The anti-counterfeit drug technology segment is actually one of the most rapidly growing segments of the larger pharmaceutical industry (PRNewswire, 2015). Firms specifically dedicated to authentication technologies have increasingly sprung up. Indeed, technology has provided a valuable solution for addressing arguably the most pressing concern for players in the pharmaceutical industry. By taking advantage of modern anti-counterfeit technologies, Cure can improve its competitive advantage in the marketplace.

Further opportunities emanate from the legal environment. In an effort to curb counterfeits, many countries around the world have enacted legislations aimed at mandating the serialisation of drugs at the point of manufacturing (PRNewswire, 2015). Serialisation has indeed been termed as an enduring solution for eliminating counterfeits in the pharmaceutical supply chain. Pharmaceutical firms can now count on this legal development to address the problem of counterfeits.

In spite of technological advances and legal measures, the threat of counterfeits remains a major threat for pharmaceutical firms and the industry at large. The World Health Organisation (WHO) estimates that 10% of all drugs in the worldwide supply chain are counterfeits, and that the drugs occasionally have toxic elements that can cause death (Abel, 2010). The incidence of counterfeits tends to be particularly higher in emerging markets where laws and regulations for counterfeits are not as strong as in developed markets (WHO, 2011).

Whereas the problem of counterfeits affects virtually every industry, the problem is more significant for the pharmaceutical industry. This is because the problem centres on not just revenue losses, but also patient safety (PRNewswire, 2015). Counterfeit drugs can cause serious public health hazards and critical safety concerns. They can cause secondary illnesses and even death (WHO, 2011). Ordinarily, drug consumers are not in a position to determine the authenticity of drugs as genuine and counterfeit drugs come with similar features in terms of packaging, shape, and size. Therefore, pharmaceutical firms are primarily responsible for protecting consumers. Counterfeit drugs can also result in the loss of confidence in a pharmaceutical firm by key stakeholders and the general public, which can have dire consequences on the firm including loss of revenues and even total collapse (David, 2011).

Another important threat relates to competition. The pharmaceutical…