Cold chain boost for RFID market

Cold chain mandates are driving RFID uptake in Asian supply chains. Lee Adendorff, in Byron Bay, Australia reports

DHL has launched an RFID-fitted thermal shipper called the Cool Green Cell in Australia

Increasingly stringent regulations governing the cold chain transportation of medicines for human use are tipped to become a major driver for the uptake of radio frequency identification (RFID) technology by pharmaceutical suppliers in the Asia-Pacific region.

According to a recent report by industry analyst Frost & Sullivan (F&S), the US and Europe currently divide the biggest slice of market share in the global market for cold chain RFID. Its researchers showed that US revenues in cold chain RFID solutions totalled US$166m in 2012, with Europe close behind at $157m and the Asia-Pacific region trailing at $38m. These figures are set to increase dramatically, according to the report, which predicts a growth rate of 29% between 2012 and 2017, with a total global market for cold chain RFID solutions worth $1.2bn by 2017.

This will come as no surprise to RFID observers. Cold chain management represents an ideal environment to leverage RFID’s specialist capabilities, with tangible benefits. The per-unit cost of an RFID tag is still determined by raw material costs and the tag must have an antenna to function.

RFID has been widely applied in sectors where it can add significant value to supply chain visibility and integrity

Although there are some exciting developments in low-cost printed electronics, RFID tags are still not as cheap as a barcode for low-cost high volume goods but RFID has been widely applied in sectors where it can add significant value to supply chain visibility and integrity. While RFID is already used extensively in the healthcare services industry in Asia, with countries such as South Korea and Singapore providing cutting edge solutions for monitoring patient needs and assets, RFID growth in cold chain monitoring has been slow until now. Even in one of the biggest pharmaceutical markets – Japan – manufacturers use their own appropriate methods to monitor and ensure temperature during distribution and no particular technology is mandated for cold chain management, according to Japan’s Pharmaceutical Manufacturers Association.

Yet, as companies in Europe and the US move to comply with European Union (EU) and US good distribution and cold chain technology guidelines, the use of RFID in the pharma segment could increase significantly, according to F&S. Asian manufacturers are well-placed to service this demand. India-based F&S Senior Research Analyst Nandini Bhattacharya says: ‘Asia is slowly emerging as one of the key manufacturers of RFID in the world, with many local players in China, Taiwan and South Korea among others. As such, there has been an increase in both manufacturing and use of RFID by Asian end users across verticals.’

The new GDP guidelines are driving a lot of interest to the cold chain monitoring solution

Government mandates and guidance, internationally, are having an important effect on this growth. Stefano Coluccini, Chief Marketing Officer at Italian RFID tag and reader manufacturer CAEN RFID, says that revised EU Good Distribution Practice guidelines (published in March 2013) had acted as a catalyst in Europe. ‘The new GDP emphasises the importance of cold chain monitoring for pharmaceutical products. These new guidelines are driving a lot of interest to the cold chain monitoring solution and hence to our products,’ he says.

Although the EU guidelines do not mandate RFID as a solution, it has become one of the most popular methods for compliance. In the US, federal legislation for harmonised track-and-trace systems appears to be not far behind, while many US states have already either enacted legislation or are in the process of doing so to guarantee a medicine’s distribution and cold chain integrity. California has adopted one of the most rigid – the so-called e-pedigree legislation – that comes into force from January 2015. Although designed principally to prevent tampering and counterfeiting, the legislation will force manufacturers to adopt an automated product ID system with serialisation for all products by 2016. Although no specific technology is mandated, RFID or barcodes are the two recommended solutions.

Asian markets too are set to play an important part in RFID uptake, especially with the planned consolidation of the Association of South East Asian Nations (ASEAN) economic community in 2015 creating a more unified regional market. The standing ASEAN Mutual Recognition Agreement (MRA) on pharmaceutical products is based on the good manufacturing principles set out in the International Pharmaceutical Inspection Co-operation Scheme (PIC/S).

The introduction of a national ‘pharmaceutical and information technology convergence strategy’ could see 50% of all medicines in South Korea tagged with RFID by 2015

According to Bhattacharya, further regulation is likely in the near future. ‘The governments and industry associations in ASEAN and other Asian countries are looking forward to creating guidelines or best practices for industry participants to follow. We may see some of those guidelines formed by early 2015,’ she says. Rampant counterfeiting has already led some Asian nations to implement regulations as rigid as their EU and US counterparts. According to South Korean distributor Hanmi, for example, the South Korean government’s introduction of mandatory pharmaceutical tagging this year with either RFID or barcodes and the introduction of a national ‘pharmaceutical and information technology convergence strategy’ could see 50% of all medicines in South Korea tagged with RFID by 2015.

Increasing prosperity and demand for medicines in the region must also be taken into account. According to figures from Indonesia’s ministry of health, the country’s pharmaceutical market is tipped to reach $8bn by 2017, an 11% CAGR rise.

Many technology companies are already positioning themselves to service these markets-in-waiting. Stars Microelectronics, a Thai technology specialist, joined Japanese company Sinfonia Technology in a manufacturing subsidiary launched in July 2013 with an expected production target of 500 million RFID tags in the next five years. Bhattacharya confirms this trend: ‘International RFID companies headquartered in the US or Europe are setting up their units in Asia. Many have done so in the recent past and the rest are planning to do so as there are significant opportunities for RFID in Asia across all industry segments,’ she said.

Keeping pace with legislation and demand has meant a constant evolution of the technology

Keeping pace with legislation and demand has meant a constant evolution of the technology. There is now a plethora of tags and readers on the market. Companies such as Intelleflex, Motorola, Asian Pallet Pooling, Alien Technology, Xterprise and Zebra Technologies have achieved extensive reach in the Asian RFID market, according to Bhattacharya.

Some of the most innovative solutions are now integrating the technology where it makes the most sense. Global logistics giant DHL has offered its cold chain services for many years to pharmaceutical producers. The service has had a recent boost with the introduction of an RFID-fitted thermal shipper called the Cool Green Cell.

The service launched in July 2013 and for the moment operates solely in Australia. It uses a patented re-usable polyurethane thermal shipper with an RFID tag permanently moulded into the polyurethane. Each Cool Green Cell shipper is tracked through the supply chain thanks to the RFID tag and a web-based reporting portal that is linked to the logged data. Cool Green Cell maintains stable temperatures at 2°–8°C for up to 60 hours. DHL’s Vice President for Life Sciences and Healthcare, Saul Resnick, said that around 3,000 shipments had been completed in the five months since the launch of the service and that interest was growing exponentially.

Australia presented a perfect environment to trial this technology, according to Resnick, as it has a mature infrastructure and the possibility of constant quality checking. ‘There are unique challenges in Australia, there being vast distances to cover and extreme climatic conditions. This would also be suitable for countries with large distances to cover like China and India but other factors, such as infrastructure, also play a part,’ he said. Resnick said the service would be extended to other areas but it was too early to tell which would be first.

Initial rollout of RFID tags with proprietary systems was plagued by a lack of standardisation and poor backward compatibility

The road to RFID-monitored temperature-critical transportation for products such as biologics has not been smooth. When the US Food & Drug Administration (FDA) developed its initial guidelines on the use of RFID in the pharmaceutical supply chain, there were doubts raised about the non-thermal effects of RFID radio frequency on biologics in transport. These were somewhat appeased by a comprehensive study published in 2012 by researchers from the University of South Florida’s RFID Centre for Applied Research, who exposed a wide variety of biologics to radio frequency radiation at different frequencies with no detectable effect.

Initial rollout of RFID tags with proprietary systems was also plagued by a lack of standardisation and poor backward compatibility, but the more sensible products on offer today are based on standards developed by the International Organization for Standardization (ISO) and EPCglobal, a group of industry and government partners. Combination temperature loggers and RFID tags are now the size of a credit card or even smaller, with many manufacturers pushing the battery powered passive or semi-passive RFID format that can provide an enhanced capacity for data capture and longer life with lower power requirements than its active RFID sibling.

Logger casings must also withstand very cold and often humid environments. The Intelleflex temperature logger, for example, like many others, can operate in environments from -30°C to +70°C.

The CAEN RFID easy2log RT0005 semi-passive UHF logger tag can monitor temperature-sensitive products

The biggest innovation for many analysts, however, is compatibility with existing distribution systems. ‘Standards are fundamental,’ said Coluccini, who added that the CAEN RFID Easy2Log temperature loggers were developed to be compatible with the standard adopted in supply chains and retail, enabling loggers and standard RFID labels to be read with the same devices. ‘This, unlike many proprietary solutions, allows the implementation of infrastructure for multiple vendors, and can reduce costs related to competition and product availability, reducing also the risk related to a single vendor technology and, probably the most important thing, permit interoperability between different companies,’ he said.

Interoperability is key for global operations that may outsource manufacturing to Asia, as is the possibility of integrating cold chain management with supply chain management and companies are also finding a solid case for return on investment in this equation. ‘Typically in pharma industries the cold chain is under control of the quality management group while the supply chain is controlled by the logistic management. This can cause problems and inefficiencies due to the coordination between the groups but, most important, due to the different goals they are looking for: quality on one side, efficiency and cost saving on the other,’ said Coluccini, adding that in many cases RFID achieved these two goals with a single investment.

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