Post-EU FMD deadline - 'business as usual'?

12 Feb 2019

Partner connectivity will be an immediate and ongoing challenge beyond the deadline and several pharma companies are likely to break agreements with current suppliers through breach of contract clauses.

As the enforcement deadline for the EU’s Falsified Medicines Directive (FMD) passes, Jean-Marie Aulnette, vice president of EMEA sales at TraceLink, discusses the industry’s readiness and what the future holds for serialization.

Post-EU FMD deadline - 'business as usual'?

Industry readiness

"The pharma supply chain is in varying states of readiness regarding compliance with the Directive and we’ve seen a number of patterns emerge over recent months.

"A significant number of contract manufacturers and packers that were initially reliant on their line equipment vendors to deliver partner and regulatory body connectivity have moved to TraceLink during the last 5 months or so. Most realized that their vendor would not make the deadline and could not risk non-compliance - if they were not able to provide serialization, they would have risked losing any contracts they had with pharma companies.

"The cost and complexity of FMD compliance has also led to consolidation among some CMOs that were simply not able to invest in and implement a solution and decided to merge with better-prepared companies as result. There have also been some losses on the pharma side as a number of companies have decided to stop production of RX products because of the cost of regulations and not being able to meet the requirements.

"When it comes to pharma companies, where their incumbent supplier could not deliver a compliant solution in time, many have delayed switching as they do not have the same pressures around losing clients as CMOs and they are under contractual agreements. It is likely that post-deadline, we will see several pharma companies break agreements with current suppliers through breach of contract clauses and switch to other vendors that they know can rapidly deliver a compliant solution. This may take as little as 2 months for some if they have already undertaken steps such as preparing master data and ensuring appropriate teams and documentation are in place."

What’s next?

"Partner connectivity will be an immediate and ongoing challenge beyond the deadline - most organizations established their connection with the European Medicine Verification Organisation (EMVO) first and then began on-boarding partners, prioritizing the more valuable relationships (often decided by revenue, value or volumes). As a result, not all actors in some company’s supply chains are connected. Where these businesses are using TraceLink’s network-tenant solution, these connections should be resolved fairly quickly, but those that are still using a point-to-point approach face a significant wait before being fully connected with all partners.

"Eventually, the industry will move to a state where serialization is ‘business as usual’ and companies will start searching for supply chain efficiencies and opportunities to deliver better services by improving communications with partners and patients. CMOs and serialization vendors specifically will have to deliver additional value and use serialization to create competitive services, otherwise their customers will look elsewhere.

"To date, the collective pharma industry has been very focused on the costs associated with serialization and is yet to see its potential. Ultimately, having all the additional data being created by serialization in data lakes will enable a number of opportunities; for example, the digital transformation of recalls to derive crucial business intelligence. Better supply chain visibility and providing more information to patients are just the first steps – within the next 2-3 years we’ll see truly revolutionary technology such as Artificial Intelligence being used to deliver predictive analytics for supply and demand forecasting."

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