06 Apr Thomas Merle gets serious about serialisation
As published in the Engineers’ Journal 5 April 2016
Now that the dust has settled since the publication of the EU Falsified Medicine Directive (around serialisation implementation), we took half an hour with Horizon Life Sciences Group’s Thomas Merle to discuss the implications of the directive.
The deadline for serialisation completion has been confirmed as February 2019. What are the major implications for the pharmaceutical industry in Ireland?
Firstly, it’s very welcome that a clear and definite directive has been published. Companies can now take action confident that the goalposts will not move again over the next three years. My advice to companies would be to execute plans now, drive the necessary change required and adopt the mandatory process changes. Big pharma – the tier one players in the market – are in a better position to do this but may not necessarily be on track to meet the deadline.
The real challenge will be for smaller drug companies, as well as CMOs and CPOs, who won’t necessarily have the capital to conduct the type of investment that serialisation implementation will require. There are multiple elements in the change process such as investment in consulting, in engineering and in internal resources to modify and adopt the current process. Additionally, investment in equipment procurement and integration is needed. Serialisation may be one of the biggest operational challenges – impacting the whole supply chain – that your company has ever faced.
In order to meet the regulation deadline, how well prepared are Irish pharma plants today?
I think big pharma giants are ‘well’ prepared; however, I anticipate serialisation implementation will have a knock-on effect causing delays in projects. There is still a lot of work to do to meet the deadline for different geographical markets. I predict that these tier one players will have 50 to 60 per cent of their products ready by the deadlines and that they will focus on their ‘blockbusters’ products for their key geographical markets.
Based on market feedback, my assessment of smaller pharma companies, is that they are facing additional barriers such as lack of capital stability, cash flow challenges and limited expertise – which makes these companies more risk adverse and less capable to change fundamental processes. This in turn means there is an exponential need for investment, skills and knowledge to deliver serialisation implementation and readiness on time. I estimate that approximately 30 per cent of the Irish pharma market (tier three and below) will be ready for the 2019 deadline, but hope I am proven wrong.
What are the cost implications associated with implementing a serialisation solution?
There are two key elements: one is the capital investment itself, the other is the ‘soft costs’, i.e. the adaption of the operation – know-how, capability and engineering resources.
Allocating resources to equipment procurement can also be tricky – it will depend on the level of automation the line requires. Should the line be fully automated or is there an element of labour intensiveness to it? What data management solution is needed? The answers to these questions will dictate a lot. To implement serialisation on a line the investment cost will range between €300,000 to €1,500,000.
A typical plant may have anywhere between three to 20 lines, so when you extrapolate these figures, smaller companies are looking at a minimum investment of €1 million, whereas larger companies will need to invest anywhere from €6 million to €30 million in equipment alone, to comply with serialisation regulation.
The time frame for serialisation projects is generally two to three years. Below is a really simple infographic from SeriCode which highlights the implementation timeline.
Serialisation Timeline Implementation
It’s been commonly accepted that adding a serialisation process to a line will reduce OEE significantly. What are your thoughts on this and are there any solutions to mitigate the loss in OEE?
We would expect to see a 10 to 25 per cent slowdown in overall equipment effectiveness (OEE) in the final six months of implementation, before adjustments. Naturally a slowdown in efficiency results in reduced finished product for distribution which then puts market pressure on the pharma plant. As an example, if a plant has five lines it would need to invest in a sixth line to recover capacity, due to a 20 per cent loss in OEE. It’s crucial to improve and adjust the OEE, but it’s unlikely to ever return to a 0 per cent loss in efficiency.
Another obvious impact of serialisation implementation is integration, which increases the complexity of manufacturing and disrupts current production. Our advice is to start implementation with high volume product streams and key products lines to maintain market demand. For the operation itself we suggest avoiding changeovers – focus on high-volume monoproducts as a starting point. Once these lines are fixed, and your process has been identified and proven it’s time to move to low batch volume, and usually high-value, products.
The benefits associated with serialisation in regards to patient safety, protection against piracy and brand protection are widely recognised and welcomed. Are there any additional benefits to serialisation?
Additionally, serialisation assists in aggregation. Aggregation increases visibility and traceability from raw material through to product and to patient. Once observed this will enhance efficiency and accuracy for the whole supply chain process resulting in decreased interventions.
Although aggregation has not been universally adopted as part of track and trace regulations, serialisation is a part of the full aggregation solution. Aggregation is the relationship between the parent and child allowing the recipient to scan one code and ensures visibility on the entire shipment i.e. the cases, bundle and individual cartons.
Another benefit of serialisation will be the ability to optimise the management of recalls – accessing established and related communication streams and the actual recalls themselves will be much more efficient. Therefore, we see the increased security of the patient as being very valuable.
Serialisation is a strategic change. A change, which will impact and challenge financial, technical and operational processes for a manufacturer. For me, serialisation is more than just putting numbers on bottles and packets – it will be one of the biggest challenges your whole supply chain and your company will ever face.
How can SeriCode support the implementation of serialisation in a pharmaceutical manufacturing company?
At SeriCode we are ready to partner with companies at any stage of their serialisation strategy. Process modification of production lines for the implementation of serialisation is a specialist area for us.
On the initial phase our experts can assist you with:
- feasibility, concept design and process modification;
- making the correct decisions about whether to invest in new production lines, or will an upgrade suffice;
- equipment specification and identification through to FAT and SAT.
Our engineers specialise in integration and CQV for these types of projects, and can provide support during the live operation with engineering capabilities.
Additionally, we can now offer clients an outsourced serialisation solution, which brings further value to our customers. For the short term it is an intermediate and immediate solution to allow our customers to overcome time slippages, fulfill market demands and, therefore, helps secure their market position. Long term, SeriCode enables our customers to improve their efficiencies, running their production lines in a highly efficient and optimised way, through removing low-volume products, which disturbs current manufacturing.
Thomas Merle is an executive director at Horizon Life Sciences Group and CEO of SeriCode. Thomas brings over 25 years of experience in project management across international, large and complex CAPEX projects, as well as high value technology and production solutions for local companies, start-ups, large pharmaceuticals, corporations and global players. Prior to joining Horizon, he was director and group CEO at FrymaKoruma. He holds a master’s degree in process engineering from the German University of Applied Sciences, Stuttgart and speaks five languages. Additionally he completed the international senior management programme by St Galler Business School in leadership, strategy, finance as well as business in Asia.