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Taking the pulse of RFID for pharmaceuticals

Pharmaceutical firms face a different set of realities about whether or not to use RFID than do consumer packaged goods companies.

Pharmaceutical auto-identification and RFID expert Priyanka Gouthaman of research firm Frost & Sullivan cites two diverse differences in how the RFID challenge is viewed within the pharmaceutical sector.

For existing pilots and deployments, such as Pfizer's Viagra and Purdue Pharma's Oxycontin, authentication for anti-counterfeiting remains the biggest driver, she explains. These brands, which are highly prone to counterfeiting, have high price-points and margins that permit absorbing the additional costs of RFID tagging.

Gouthaman points out that the cost factors play a large role in applications that are still considering or evaluating RFID technology. "A case in point is the e-pedigree regulations that are expected to come into widespread effect in 2007," says Gouthaman. "A number of states including Florida and California have adopted their own e-pedigree legislation that can be complied with by using bar codes. The tight e-pedigree deadlines and the option to employ bar codes are likely to shift the momentum away from RFID since bar codes cost only a fraction of the cost of RFID tags."

She feels that is a major cost-differential in favor of pharmaceutical companies who can employ bar coding as an option. And that is expected to slow RFID adoption for companies that can use bar codes instead.

"Given the present disparate rates of adoption, universal deployment of RFID throughout the value chain and the potential payback is likely to take time," Gouthaman says.

In an exclusive Packaging World online survey about RFID conducted in September and October 2006 that drew more than 340 respondents, a high percentage of respondents were unable to comment on their RFID investment payback (47%), and many were unable to realize any payback (37%). Gouthaman was discouraged by the results because "it would have a direct impact on future deployments," she says. The survey, along with expert analysis, will be highlighted in a special report, "RFID reluctance remains," in PW's December issue.

Gouthaman also feels that a lack of standard return-on-investment definitions and a lack of RFID expertise may be key contributing factors. She holds out hope by noting that "RFID pilots with clear predefined and realistic objectives are expected to overcome this challenge."

- By Rick Lingle, Technical and RFID Editor
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