Fraud has a massive financial toll. But in the case of the pharmaceutical industry, it has a human impact as well.

Every year, the worldwide pharmaceutical industry faces billions in losses due to the scourge of counterfeit medicines. To counter this global issue, many national governments have deployed regulatory guidelines, in the form of serialization and track-and-trace requirements, to prohibit the entry of any illegal or fake drugs in the pharma supply chain.

Ultimately, this move is intended to improve public health and restore people’s trust in the pharmaceutical industry.

With that said, the onus of serialization and track and trace eventually falls on the supply chain partners, who now have to ensure compliance alongside daily business operations. Many of the stakeholders aren’t even aware of what serialization and track and trace requirements entail. If you’re one of them, here’s an in-depth primer on what both of these are and their key differences.

But before we get down to brass tacks, let’s lay the foundation.

Serialization – A process of assigning a unique number or identifier to a given product or packaging level.

Track – When you track a product, you’re essentially finding out where the product is in the supply chain.

Trace – Tracing is essentially identifying all the entities that the product has previously been in contact with.



The best way to prevent the entry of fake drugs into the supply chain is to keep a record of all manufactured drugs. But how? That’s where serialization comes in. As discussed earlier, under serialization, every manufactured product will have a unique serial number attached to it.

Different countries have different serialization requirements. Some countries follow GS1 guidelines, while others have their own unique way of product identification. However, the underlying philosophy remains the same – to facilitate identification of all genuine products and enable singling out of products that do not have a valid serial number.

Typically, serialization requirements adhere to the GS1 guidelines to ensure standardization since most national pharmaceutical industries are engaged in global trade. Having a different serialization scheme won’t help with global trade, as manufacturers would have to incorporate two different serialization methods of local and international trade.

The serialization requirements usually require manufacturers to print a 2D barcode or Data Matrix, which encode information such as:

  • GTIN – Global Trade Identification Number
  • Unique serial number
  • Batch or lot number
  • Expiry date

Moreover, guidelines also stipulate the inclusion of human-readable text beside the barcode or QR code. However, many countries have different serial number requirements as well. For instance, Russia requires pharma manufacturers to also include a 44-digit crypto code in the product barcode.

The ultimate goal of serialization is to achieve aggregation. What is it? Basically, it’s a hierarchical serialization scheme involving parent and child relationships between different layers of packaging. Let’s understand this with an example.

Imagine a carton carrying bottles. With aggregation, both the carton and bottles will have their own unique serial numbers. In this example, the carton (upper-level packaging) is the parent, and the bottle (retail unit) is the child. If the carton is stored in the container, the container will play the role of the parent and carton that of a child.

But serialization doesn’t end with generating serial numbers. Maintaining those identifications is also essential to facilitate visibility within the supply chain. It requires collaborative action from the entire supply chain to accurately manage and record data as the products move from the manufacturer to the distributor, and finally, to the dispensing point.

That’s where track & trace come into the picture.



Serialization alone isn’t enough for product verification. You need an end-to-end data sharing and management system to ensure all the product data, along with the serial number, have been recorded and logged. That’s why serialization requirements are almost always accompanied by track and trace guidelines.

But what is track & trace? Well, it’s an elaborate system that allows supply chain members to follow the product throughout its supply chain journey until it reaches the dispensary. Moreover, it also facilitates traceability in the event that a drug is returned.

For this system to work, pharmaceutical supply chain members require an end-to-end data reporting and management system. It requires stakeholders to incorporate new machinery into their production process, along with providing data access to all entities above and below them in the supply chain.

In summary, serialization is the obligatory first step to achieving a track-and-trace system. Whereas serialization is concerned with assigning serial numbers to products, track & trace is oriented toward using those serial numbers to facilitate seamless traceability and investigation of products as they move from one supply chain node to the other.



When implemented correctly, a chain-wide serialization and track-and-trace system could make it nearly impossible to inject counterfeit drugs into the pharma supply chain. In essence, all products will have a unique serial number attached to them, available to all supply chain partners – from manufacturers to dispensaries.

Any product with a serial number that doesn’t have a corresponding entry in the database (possibly counterfeit) will be immediately rejected.

But that’s not where the utility of serialization and track & trace ends.

It also enhances the sense of ownership that you have with your products. You can trace complaints or queries from medical professionals, pharmacy staff, or patients right back to the individual box.

Employing serialization and track and trace requirements will also help companies make their operations more profitable and efficient. There’s no doubt that transitioning to the new system will entail heavy costs, both monetary and downtime, and delays to the production line.

However, the bigger picture is one of enhanced efficiency. Serialization and track & trace will ultimately minimize inventory losses and significantly improve the rate of recalls, returns, and chargebacks.

One of the major concerns around serialization is the amount of time it takes to implement. Well, one way or another, serialization will lead to aggregation. And once that happens, supply chain entities will no longer have to scan every unit to enter the product data into the database. All they’ll have to do is scan the serial number on the parent packaging, for instance, a carton, and all the information associated with the units inside the carton will be automatically entered into the database.

In addition, using serialization and track & trace, you can also increase trust in your brand. According to WHO estimates, almost 15% of drugs in the global supply chain are counterfeit.

Showing pharmacies, medical professionals, patients, and competitors, that you are eager to incorporate serialization is a clear sign that you care about patient safety and welfare, thereby enhancing your reputation and credibility as a business. In the end, it’s all about trust.

From a global perspective, serialization and the track & trace system will also help bring about standardization, in local and global markets.

Lastly, you can also use the track & trace system to run market analytics, find out which products are in high demand, and fine-tune your production accordingly. Inventory management also becomes a piece of cake when you have access to a centralized database.


Serialization and track & trace legislations are going to be made mandatory, which means pharmaceutical supply chain members have two choices: adapt later or adapt now. Due to the cost-related issues and transition-related challenges, many businesses are waiting.

However, early adoption grants you numerous benefits. Firstly, you get to troubleshoot problems early, minimising disruption to your business and stress further down the line. Plus, you can use the insights you gather by being proactive to shape the nuances of legislation and inform industry policy.

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