The Impact of Serialisation on Operational Efficiency and Productivity in Irish Pharmaceutical Sites

Abstract

AbstractTechnology enabling drug serialisation technology was introduced by regulators to enhance security in pharmaceutical supply chain and protect drugs from infiltration by falsified and substandard medicines. The introduction of systems for serialisation required huge financial outlays manufacturers of pharmaceuticals. This study investigated the impact of serialisation on the operational efficiency and productivity in Irish pharmaceutical sites. A qualitative study was conducted with 11 manufacturing sites in Ireland. The participating companies operated a total of 114 pack-lines, representing approximately 65% of the automated packing lines in the country. The study found that serialisation had a negative effect on packaging production line OEE and line availability and on the individuals cost per unit of packaged pharmaceuticals. The research results estimated that the capital costs of serialisation were four times greater than those estimated by the regulators. There was a 4.1 cents average cost per pack for serialisation with high volume sites reporting an annual cost of serialisation of up to €4.5 m per annum and a 2.7% increase in the average cost of goods sold. A pattern whereby where many pharmaceutical manufacturers are transitioning from smaller batch production and moving toward larger batch production sizes in order to increases efficiencies was identified. The research also proposed the use of a serialisation depreciation factor as a method to determine the impact of serialisation on the cost of goods sold. This is the first study of its kind into the cost of serialisation from a manufacturer’s viewpoint and studying the effects of serialisation on productivity, line availability and operational efficiency.