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

Organizational 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 organization'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 endeavor....

It is a process that requires proper planning and careful consideration of a number of aspects (Samson and Bevington, 2012). The organization 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

It is imperative for the strategic change to build on Cure's strengths. The organization 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. These strengths provide a vital foundation for strategic change.

Despite these strengths, there are a number of weaknesses that cannot be ignored. First, Cure is a small organization, meaning that financial constraints can be a major challenge. The firm may not have adequate resources to fulfill 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 wholesalers 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 organization's strategic goals and objectives.

2.2.2 Trends and External Forces -- Opportunities and Threats

Cure has embarked on expanding its operations into emerging markets. These markets present a significant growth opportunity for the organization, particularly due to their higher incidence of disease compared to developed markets. 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). This trend has important implications for Cure.

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

Source: Ascher et al. (2015)

Capturing the opportunities presented by emerging markets, however, will not be a straightforward undertaking for Cure. The organization must effectively deal with the threat of counterfeits. The World Health Organization (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 problem is particularly more prevalent in developing markets largely due to lack of strong laws and regulations (WHO, 2011). The problem of counterfeits in the pharmaceutical supply chain centers on not just revenue losses, but also patient safety (David, 2011; PRNewswire, 2015).

As a player in the industry, Cure has a responsibility to protect consumers by eliminating counterfeits in its supply chain. The firm can rely on anti-counterfeit technologies such as RFID and bar code printing. These technologies have increasingly become commonplace in the pharmaceutical industry, with the anti-counterfeit drug technology segment being one of the most rapidly growing segments of the industry (Shah, Prajapati and Agrawal, 2010; Bansal et al., 2013; PRNewswire, 2015). Incorporating anti-counterfeit technology presents an opportunity for Cure to not only address the threat of counterfeits, but also improve its competitive advantage in the marketplace.

Improving competitive advantage is a particularly important priority for Cure. The pharmaceutical industry, locally and globally, is characterized by intense rivalry. The industry is dominated by powerful firms; such as Glaxo-Smith-Kline, Gilead Sciences, and Astrazeneca. Compared to the small firm Cure, these firms boast extensive operational history, immense financial strength, state-of-the-art infrastructure, and robust research and development (R&D) capabilities. In fact, Cure can be likened to small fish in an ocean full of sharks. Without remaining aggressive, Cure's share of the market can readily be lost to the sharks.

On the whole, despite the constraints it faces as a small firm in a highly competitive industry, Cure has what it takes to implement the anti-counterfeit technology. The organization has the necessary technical, human, and financial resources to integrate the technology into its supply chain. Implementing the technology will improve the firm's competitive advantage as it bolsters its operations in emerging markets.

2.2.3 Stakeholder Influence

It is also important to consider stakeholders when planning and implementing strategic change. Indeed, stakeholders comprise important enablers and obstacles of change. They can either accelerate the implementation of change or hinder it. Therefore, an important step in change management entails identifying and addressing the needs and concerns of key stakeholders. In fact, the success of a change initiative is in large part dependent on how effectively stakeholders are engaged (Hayes, 2014). As per stakeholder management theory, stakeholders are…