Pharmaceutical product labelling tips: calculating the true cost of TCO

Selecting a new print and apply labelling system can be tricky, but the choice will determine whether your company is operating as efficiently as possible, says Bob Neagle, Business Unit Manager for Secondary Packaging at Videojet Technologies

With the global anticounterfeit packaging market accounting for US$57.4bn in 2013, and forecast to generate revenue of $142.7bn by 20201, the demand for standardised serialisation of pharmaceutical packaging is a major issue. Around the world, many countries are implementing legislation mandating the coding and marking of pharmaceutical products to ensure reliable product information, fight counterfeiting and protect consumer safety.

Across Europe, for example, the European Union’s Directive 2011/62/EU requires all pharmaceutical products distributed within the EU to have a serialisation number or unique code printed onto each pack. This allows products to be tracked throughout the supply chain and traced back to their origins.

For homogenous case coding, pharmaceutical companies must integrate labelling systems onto their packaging lines that are capable of reliable coding and marking that is easily readable by both machines and people

In the US, the Drug Supply Chain Security Act (DSCSA) was enacted to set federally mandated requirements for the traceability of pharmaceutical products throughout the drug supply chain. By late 2017, this multi-phased plan will require each product to have a unique identifier at the package and homogeneous case level. This unique identifier includes its National Drug Code (NDC) or Global Trade Identification Number (GTIN), unique to the drug, based on chemical composition, as well as serial number, lot number and expiration date. The EU Directive is expected to mirror the specifications of DSCSA.

To do business in these countries, pharmaceutical packaging must be in compliance with regulatory requirements. For homogenous case coding, this means that pharmaceutical companies must integrate labelling systems onto their packaging lines that are capable of reliable coding and marking that is easily readable by both machines and people. While these compliance efforts are mandatory, pharmaceutical companies must also consider the bottom line, specifying cost-effective equipment that allows for increased productivity, as well as consistent coding. That is where calculating total cost of ownership (TCO) comes into play.

Capital and operating cost considerations

TCO is achieved by calculating both capital and operating costs. The capital outlay for a labelling system has a clear and obvious cost – but it’s just the beginning of an ongoing investment. It is also important for manufacturers to consider the costs of running and maintaining the equipment, as well as any potential costs of lost production due to downtime and decreased efficiency caused by repeated 'touches' necessary to operate a labelling system.

To help accurately calculate cost and facilitate smart purchasing decisions, there are a few guidelines to help ensure manufacturers are measuring not just the TCO, but the true cost of ownership. For the purposes of illustrating what to consider when calculating TCO, we will use the Videojet 9550 Print and Apply Labeling System (LPA) as an example for printing on outer case packaging.

Capital costs

The capital outlay to acquire a Print and Apply Labeling (LPA) system represents a significant portion of the TCO. Capital costs include the initial spend to purchase and install equipment, including any back-up units. Also included is any additional material handling. Prices vary among different vendors and are easy to compare on the surface. What’s important to take into account is how the piece of equipment will help you achieve your ultimate goal - getting safe and compliant shipments of your product out of the door.

What’s important to take into account is how the piece of equipment will help you get safe and compliant shipments out of the door

A simple way to evaluate this is use the individual components that make up an Overall Equipment Effectiveness (OEE) calculation:

  • Availability – Will the LPA equipment be ready and able to do its job when you need it to? Any savings in capital outlay spent on less expensive solutions can be quickly negated when the equipment is down and business is lost. With this in mind, consider whether you feel confident enough in the reliability of any one system, or if you should lay out additional capital for back-up units.
  • Performance – Can the LPA equipment run at speeds that match peak labelling requirements or do you have to accommodate its throughput limitations? Direct apply systems, that are coupled with a near-edge print design, such as the Videojet 9550, provide high print speeds – up to 150 packs per minute for typical 4” x 6” GS1 barcode labels.
  • Quality – Can you rely on the LPA equipment to accurately place a label on every outer case? Missing or misapplied labels are not only not in compliance with regulatory requirements, but also cost time and money to rework. In addition, can the system help prevent human errors related to applying the wrong information, often leading to stiff penalties and fines if not caught before the product enters the supply chain?

Consumable running costs

The difference in the total cost of consumables based on what type of LPA system you choose can add up over its useful product lifetime. The biggest consideration is the ribbon, which is directly related to whether you choose a system with a flat-head printhead design, which will use a wax ribbon, or near-edge printhead using a wax-resin ribbon. While wax ribbons tend to be less expensive than wax-resin, this difference is typically offset by the ability of the near-edge printhead to lift between prints and thus eliminate the associated gap i.e. neither the blank space on the label nor label gaps will be printed. Additionally, many LPA systems have the option of running in direct thermal mode, which eliminates the ribbon altogether.

The type of label application method will determine whether or not plant air is required

Ultimately, the type of label application method you choose will determine whether or not plant air is required. Direct apply or ‘wipe’ applicators do not require air, thus eliminating both the installation cost of the air line and the ongoing running costs. Eliminating plant air usage is also typically aligned with many manufacturing facilities’ sustainability initiatives – reducing energy usage, thus lowering carbon dioxide (CO2) emissions.

Service and maintenance

This component of TCO has obvious elements related to repairing a down system and necessary periodic maintenance procedures. This includes weekly or monthly maintenance, as well as unplanned work that could result in unscheduled downtime. In addition, with an LPA system, it is equally important to understand other required interactions. Many models need a series of manual adjustments on a daily basis, which are not only time consuming but can lead to unplanned downtime if not done correctly.

Taking this into account, Videojet developed its labelling system with Intelligent Motion technology, which precisely and automatically controls the label path, ensuring web tension is maintained and thus removing issues of slipping clutches, nip rollers or manual adjustments. In addition, a simple web path and collapsible mandrel enables label and ribbon changes to be completed in less than 60 seconds, thereby reducing operator handling time.

Advanced LPAs are now designed without the mechanisms that frequently cause everyday operational problems

Advanced LPAs are now designed without the mechanisms that frequently cause everyday operational problems, such as label jams. With the LPA directly placing labels onto every pack without the need for a tamp or air blast applicator, the need for spare parts is reduced, as 80% of the potential wear parts are eliminated.

With so many factors to consider, selecting a new LPA system can be tricky, but it is essential to remember that your choice will determine whether your company is operating as efficiently as possible to maintain the bottom line. To make an informed decision, it is important to look beyond the cost of the initial investment to additional material handling, operating and maintenance costs. However, the most important thing to consider is how an investment in state-of-the-art LPA technology will allow pharmaceutical products to be quickly and reliably labelled in total compliance with strict regional regulations. This will allow pharmaceutical manufacturers to operate safely and profitably, across various global markets, increasing the potential to grow your business.



The author

Bob Neagle is Business Unit Manager for Secondary Packaging, Videojet Technologies. His main responsibility is the leadership of printing, coding and labelling solutions for secondary packaging. He has been at Videojet for more than 10 years where he has held a number of business management and planning roles. Neagle has more than 20 years of experience with factory automation products and applications and is listed as an inventor on multiple patents for industrial network connectivity products and industrial marking and coding devices. Prior to Videojet, he held product management and marketing roles at Woodhead Industries, Omron Electronics and Peak Technologies.