What are Authentic Pharmaceuticals Worth?

Abstract

Radio Frequency Identification (RFID) technology is named as a possible basis for future anti-counterfeiting by providing enhancements of existing business processes [Choi & Poon (2008)]. Hereby, the use of unique Electronic Product Codes (EPCs) [EPCglobal Inc. (2010)] for identification improves processing times during goods receipt and enables automated product tracking and tracing. The EPC is used to refer to a concrete item instance in a software system. For example, it identifies a concrete bottle of analgesic that was manufactured on May. 01, 2011 at 07:03 a.m. In contrast, currently used barcodes identify a class of pharmaceuticals, e.g. all analgesics of a certain manufacturer. RFID technology shows prevailing advantages in contrast to barcodes, RFID tags can be read without establishing a direct line of sight, multiple tags can be read simultaneously, and they can cope with dirty environments [Stiehler & Wichmann (2005); White et al. (2007)]. In the following, we refer to an RFID-aided supply chain when dealing with an supply chain solution that build on good’s tracking and tracing functionality by integrating RFID technology [Schapranow et al. (2009)]. In context of the pharmaceutical supply chain, the integration of tracking functionality is widely considered, e.g. two-dimensional data matrix or RFID technology, since this specific industry is confronted with increasing counterfeit rates [European Commission Taxation and Customs Union (2009)]. However, advantages of using RFID technology only apply when all participants of the supply chain seamlessly integrate tracking solutions based on it. Fig. 1 models components within an RFID-enabled company to support anti-counterfeiting using the Fundamental Modeling Concepts (FMC) [Knopfel et al. (2005)]. These components can be established to track and trace goods on item level without media breaks. Since the depicted architecture switch is connected with high monetary investments, costs have to be accommodated by all participants of the supply chain [Schapranow, Nagora & Zeier (2010)]. Different levels of technology acceptance to transform towards an RFID-enabled company can result in exclusion of participants from the supply chain. We expect especially Small and Mid-sized Enterprises (SMEs) to be confronted with financial barriers to participate in global RFID-aided supply chains [Muller, Faust, Schwalb, Schapranow, Zeier & Plattner (2009)]. However, a gap-less integration of RFID technology at all supply chain participant sites is the basis for consistent tracking and tracing on item level in real time. 13