UPS and Genzyme: A Pioneering Drug Serialization Initiative

Few would argue that ensuring drug safety in the supply chain is of paramount importance for the healthcare industry and patients around the world. To this end, much attention has been paid to the issue, with California leading the state effort to develop drug serialization legislation while many in the industry keep an eye out for expected federal guidelines to emerge. Despite the recognized significance of serialization in securing the healthcare supply chain, few companies in the pharmaceutical and biotech industry have undertaken serialization initiatives. The reasons are many: cost concerns in a down economy; the daunting prospect of being first; dealing with emerging technologies; the many unknowns as to how to best execute on serialization; and uncertainty as to what future legislation will look like. For many companies, all of these factors have led to what some would call "analysis paralysis." Companies were waiting to see what would happen and waiting to see who might take the lead before formulating their own plans.

Enter leading biotech company Genzyme and the healthcare logistics specialty division of UPS. Together, Genzyme and UPS recently embarked on an industry first – the development and launch of a serialization solution for Genzyme that went live in 2010. The journey wasn't easy, but the work has paid off. With legislation still years away, the companies are far ahead of the curve when it comes to making serialization a reality. Now looking back, they can share lessons learned and key milestones from their journey to help others in the healthcare industry prepare for the next frontier in supply chain security.

Discovery phase: How it all got started

As one of the world's leading biotech companies with more than 11,000 employees across the globe and 2008 revenues of $4.6 billion, Cambridge, Mass.-based Genzyme is a company willing to make investments in pursuit of innovation. The biotech company's products focus on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease and diagnostic testing. A technology leader, Genzyme was recognized with the President's highest award for technological innovation, the National Medal of Technology, in 2007.

Meanwhile, UPS has long been building its own expertise in the healthcare industry, having amassed more than 30 dedicated healthcare facilities worldwide. This includes a state-of-the-art end-of-runway facility in Louisville, KY, and two recent facility openings strategically located in Puerto Rico and the Netherlands. UPS has also invested in the development of specialty services and offerings for the storage and distribution of high-value and often temperature-sensitive pharmaceutical, biotech and medical device products.

Having worked with Genzyme for more than 10 years handling distribution, fulfillment, new product launches, customer support services and industry-specific initiatives such as the implementation of the HDMA label format, UPS understood the company's commitment to leadership and innovation. That commitment reached a new level at one of UPS's annual Healthcare Forums in 2007, when the vision for the drug serialization initiative was first born.

Intended to foster collaboration around industry issues and challenges by bringing together leaders in the pharmaceutical, biotech and medical device industries, UPS's Healthcare Forum did just that when the topic of serialization emerged at the 2007 event. Following initial discussions at the Forum, UPS went to visit Genzyme in Framingham, MA for one of UPS's "white boarding" sessions to dig deeper into the serialization challenge and explore possible solutions. The result: Genzyme and UPS decided to move from concept to creation and embark on a serialization initiative.

Lessons learned

As with any pioneering initiative, many lessons were learned along the way during the UPS/Genzyme serialization project.

• Technology matters: The first serialization lesson came in the form of what technology to use. While California made recommendations to use RFID technology at the item level, UPS and Genzyme decided to go with 1D and 2D bar-coding and to modify existing EDI interfaces as the mode for communications. The reasons for moving away from RFID were many, but two stand out: the impacts of RFID on sensitive healthcare products are still unknown and the investment is not cost-effective for companies.

• Approach the puzzle one piece at a time: When taking on supply chain track-and-trace visibility, it's important to take things one step at a time rather than trying to solve the whole puzzle at once. Genzyme and UPS adopted a phased approach to serialization, with the first phase focused on sending serialization information for select product line and at the pallet, case and unit packaging levels, confirming receipt of this information and providing confirmation back to Genzyme's database. Lessons learned from this phase were then analyzed and leveraged in planning for phase two, which is integration activity with the downstream recipient to track outbound destination activity.

• Not for those afraid of commitment: Serialization is a big commitment. Doing it right takes time, investment and hard work. Genzyme made investments in people, IT development and resources. UPS also made several investments of its own in learning along with Genzyme. Time investment is critical because of the volume of data being exchanged and the complexity of exception processing; companies must plan for the time to analyze and adapt their solution. The good news for other healthcare manufacturers is that they can take advantage of investments already made and start out ahead of the game.

• Get ahead to keep from falling behind: Perhaps the biggest lesson of all is that companies have much to gain from getting out ahead of legislation. The UPS/Genzyme serialization initiative took more than a year and a half to complete, but the results have been worth it. It's important to remember that there is no "perfect solution" right out of the gate with serialization; this is why companies need to plan ahead and make the commitment now. Taking a phased approach on what companies know today will get them a step closer to the end goal, without taking a large leap into the unknown.

What's next

The result of Genzyme's commitment to patient safety and investment in the serialization initiative with UPS: the company will now be able to tell exactly where its products have been distributed – all the way down to the individual "bottle" level – bringing a whole new level of security to the healthcare supply chain. Serialization will also allow the consignee to validate that product received was manufactured by Genzyme and enable Genzyme to determine origins of any products that appear in a diverted market, further securing the process.

Where are other pharma and biotech companies on the road to serialization? While many companies had begun exploring serialization options within the past 18 months, the down economy led many to postpone or abandon their efforts. The good news is that UPS is now seeing a significant upswing in the number of healthcare manufacturers interested in re-examining their options and planning ahead for their own serialization initiatives. This is promising news for the healthcare industry, all parties in the supply chain and consumers everywhere.