Track and Trace Solutions Market

Governments worldwide have implemented strict serialization and traceability laws to enhance the visibility, integrity, and security of pharmaceuticals, driving the growth of the global track and trace systems industry. For example, the Falsified Medicines Directive (FMD) in Europe mandates serialization and authentication of licensed medicines since February 2019, using a unique identifier and an anti-tampering device verified through the European Medicines Verification System. The US Drug Supply Chain Security Act (DSCSA) requires unit-level serialization and a full traceability plan by 2030, while the FDA's Unique Device Identification (UDI) rule mandates permanent identifiers for medical devices. In China, the NMPA's Drug Information Traceability System aims for 95% of hospitals and pharmacies to use traceability codes by 2025. Meanwhile, India's DGFT recently withdrew its export serialization mandate for over 300 drug brands in favor of a barcode ruling. Other countries implementing similar measures include Brazil, Mexico, Argentina, Saudi Arabia, and Japan.

While technologies such as serialization and aggregation are necessary for supply chain visibility and to prevent counterfeiting, they carry considerable costs. According to the European Federation of Pharmaceutical Industries and Associations (EFPIA), one of the major factors for companies engaged in the track and trace business is the cost and time of implementation. The costly processes involved in product and package serialization, which range from USD 50,000–270,000 per carton line and USD 270,000–470,000 per bottle line with aggregation, along with a typical implementation period of 15–18 months for full track and trace systems (1–5 operational levels), result in high expenditure for software, hardware, integration, employee training, and maintenance. Moreover, advanced technologies like RFID systems are even more expensive because of their infrastructure needs, such as servers and middleware. Such high financial demands, along with the requirement for trained employees, can be seen as barriers to entry into the track and trace market for small and medium-sized companies.

Globalization has fueled strong growth in the pharmaceutical industry. IMS Institute for Healthcare Informatics reported that global pharmaceutical sales reached USD 1.42 trillion in 2021, with growth driven by emerging markets outside North America and Europe. To capitalize on these markets, many pharmaceutical manufacturers are relocating production to regions with favorable costs, tax incentives, and regulations for establishing operations. The Asia Pacific region has attracted pharmaceutical firms, with India and China among the countries in the region with active pharmaceutical industries. India Brand Equity Foundation reported that India exported drugs valued at USD 24.6 billion during the financial year 2021-2022, while the market for pharmaceutical products was valued at USD 28.9 billion in 2020, up from USD 20.0 billion in 2019. A PMMI survey further revealed that almost two-thirds of major pharmaceutical manufacturing firms expect growth in FDA-approved manufacturing facilities in Asia Pacific and Latin America.

The lack of common serialization and aggregation standards globally is hindering the growth of track and trace solutions, particularly in the healthcare sector. While Europe has comprehensive serialization guidelines, the US has only partial regulations in California. Canada has introduced barcode recommendations for vaccines, and France mandates unique serial numbers for pharmaceutical cartons. Although aggregation adoption is low, certain regions like China and Europe require it at specific packaging levels. Successful serialization relies on integration with existing IT systems, which poses a significant challenge for solution providers, as they must add new software components and ensure effective data management to prevent duplication.