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Mhmonline Com Images Archive Images Story 4 B7 A3510 F929 4 F40 Af09 B55 F6 B52 Bb92 Graph Rfid
Mhmonline Com Images Archive Images Story 4 B7 A3510 F929 4 F40 Af09 B55 F6 B52 Bb92 Graph Rfid
Mhmonline Com Images Archive Images Story 4 B7 A3510 F929 4 F40 Af09 B55 F6 B52 Bb92 Graph Rfid
Mhmonline Com Images Archive Images Story 4 B7 A3510 F929 4 F40 Af09 B55 F6 B52 Bb92 Graph Rfid

Pharma To Drive RFID and POS Growth

July 1, 2004
Use of passive radio frequency identification (RFID) tags for product tracking is one of the major issues in today's manufacturing supply chain. Many

Use of passive radio frequency identification (RFID) tags for product tracking is one of the major issues in today's manufacturing supply chain. Many RFID tag and reader manufacturers are already part of the gold rush surrounding the Wal-Mart, U.S. Department of Defense, and other mandates, while numerous CPG, food, beverage and other manufacturers who supply these customers continue to struggle to justify the use of RFID on their products. Pharmaceuticals, however, possess many characteristics that make RFID an attractive solution for manufacturers, and ARC believes this segment could represent another potential RFID gold rush after the original mandates take flight.

Tracking and tracing capabilities are vital to pharmaceutical manufacturers for a variety of reasons, many of them regulatory. These increasingly necessary capabilities can be used to track pedigree or facilitate product recalls or other actions that necessitate the ability to track the product through the channel. RFID is particularly well-suited to one of the regulatory issues currently looming, anti-counterfeiting, and the U.S. FDA has already recommended that RFID be part of a layered approach to counterfeit prevention that includes RFID, tamper-proof packaging, bar codes, and other forms of security such as hidden inks.

While the early portions of the FDA timeline stress cases and pallets, by late 2007 it is likely that most item-level pharmaceuticals will be tagged as well. Chantal Polsonetti, ARC vice president and author of the report RFID Systems in the Manufacturing Supply Chain, explains: "The RFID market potential in pharmaceuticals is huge, with more than 12 billion units as candidates for item-level tagging in the United States alone. Unlike the experience with retailer-driven mandates whose business value is distributed unequally throughout the supply chain, pharmaceutical manufacturers can easily justify using passive tags all the way down to the item level on the basis of tracking and tracing requirements. Pharmaceuticals also have a higher price tag and margin relative to retail products that could only accommodate item-level tagging at a tag price of five cents or less."

ARC's analysis of the market for RFID Systems in the Manufacturing Supply Chain cites the profound pull inherent in this customer-demand-driven supply chain phenomenon. It also recognizes the counterbalancing effects of passive RFID's technological shortcomings, current lack of interoperability across vendor products, and continued struggle by manufacturers to arrive at an internal business case. The report provides strategic information including RFID tag, reader, and other hardware market size and potential, leading suppliers, key factors that contribute to market growth, market dynamics, and strategic issues that suppliers will face.

Meanwhile, Venture Development Corporation reports that global revenues for point-of-sale (POS) application software are expected to grow at a compound annual growth rate (CAGR) of 9.8 percent between 2003 and 2008. VDC goes so far as to predict double-digit growth over the near term due to compliance requirements such as those of Wal-Mart and the DoD. This growth is projected even without widespread item-level RFID tagging. Other drivers of this market include Sunrise 2005, GTIN compliance and UCCnet's GLOBALregistry, which will all affect pharmaceutical, grocery, department, specialty, convenience and hospitality environments.

The leading technology developments driving POS applications include two-dimensional (2D) symbologies, wireless/mobile solutions, and even RFID, although POS applications for RFID will largely remain limited to automatic payment and access control in the hospitality sector. In traditional retail environments, RFID's immediate contribution will be to tracking pallets throughout the supply chain.

The pharmaceutical industry was one of the early adopters of 2D symbologies for POS applications, as it will be for item-level RFID. 2D applications will also drive POS developments in the retail, electronics and automotive industries. The reason is the promulgation of compliance standards and the need to store greater amounts of information on items. Although software vendors admit that inquiries about 2D symbologies have increased sharply among end users, few are racing to implement/adopt 2D code symbols.

For more information on ARC's RFID market study, go to www.arcweb.com/res/rfid. VDC's report on POS systems can be accessed at htttp://www.vdc-corp.com/autoid/reports/02/br02-42.html.