Last week SAP announced the availability of their brand new software module they are calling “SAP Advanced Track and Trace for Pharmaceuticals”, or ATTP. Pharmaceutical Commerce magazine published an article about it recently that provides the details of what is contained in this new module. The same issue contained a sponsored article from SAP about the module. As long-term readers of RxTrace know, I do not endorse specific products and I rarely even write about specific products. This essay is not an endorsement—at this point I have no idea whether the product works as advertised, or if it is the right product for any given company—but I view this move by SAP to have some significance for the market and I would like to explain what that is.
For quite a few years now, SAP has marketed two modules that could be used by companies wishing to serialize their products based on GS1 standards: Auto-ID Infrastructure (AII) and Object Event Repository (OER). Both modules are able to make use of GS1’s Electronic Product Code Information Services (EPCIS) interface standard with the latter being an actual enterprise-level EPCIS-based repository. Pharmaceutical companies that use SAP as their Enterprise Resource Planning (ERP) application could use a combination of AII and OER as the heart of their solution to meet global serialization regulations, but it wasn’t easy. AII and OER are very generic so, to apply them in meeting the various pharma mandates around the world took quite a bit of extra work. Consequently, other SAP ERP customers decided to bypass the use of AII and OER, either partly or entirely, and chose to use third-party solutions that provided the extra capabilities necessary for meeting global pharma serialization and tracing regulations, and that were designed to integrate smoothly with SAP ERP. Those solutions came from Axway, Frequentz, rfXcel, Systech, Tracelink, TrackTraceRx and others.
What SAP has done in announcing ATTP is to boldly become a direct competitor to those solution providers. Note the “P” in “ATTP”. This module is specifically aimed at pharmaceutical serialization and tracing regulations. SAP says they won’t block the use of ATTP in other industries, but because it is only aimed specifically at helping companies meet the various global pharma serialization regulations, I doubt if you will see any other interest in it—at least until governments begin to mandate serialization in other industries.
The point is, SAP is apparently committing to closely monitor the global pharma regulations so that they can adjust the ATTP product so it can always be used to meet new and modified regulations. This is the commitment that has previously attracted drug manufacturers to the smaller solution providers and away from using AII and OER, which came with no such commitment. Most companies in the pharma supply chain have learned that they need a partner in monitoring these regulations because they change so frequently and new ones are added fairly often. Serialization and tracing regulation solution providers offer that kind of assistance, to varying degrees, as an added value. That kind of service is costly and so those who offer a superior level of it usually charge more for their product.
Now that SAP has jumped into this market, it appears that they are committed to keeping their product current with the growing list of pharmaceutical markets with unique requirements. Along with the announcement of ATTP, SAP announced the availability of four market-specific “add-ons” that customers can purchase to help them comply. These include the E.U. Falsified Medicines Directive (FMD) and Delegated Act (EUDA), the U.S. Drug Supply Chain Security Act (DSCSA), the China Drug Electronic Supervision Network System, and Turkey’s Pharmaceutical Track and Trace System regulations. According to SAP, additional market-specific ATTP add-ons, such as Brazil, South Korea and elsewhere, will be made available as regulations become stable.
This is a significant development because it could cause drug companies who run SAP ERP and have purchased a solution from one of the other providers to switch to ATTP. The business prospects of the other solution providers could be negatively affected. Interestingly, SAP says that its ATTP module does not require the use of SAP ERP to be useful. That even leaves the door open to competing with these other solution providers in non-SAP installations. Effectively, SAP has now become a direct competitor of all of these other solution providers and could take any of their business away.
How can this be? Back when IBM got out of the business a mere three years ago by selling their track and trace product to Frequentz I said that IBM should never have entered the ePedigree market in the first place (see “IBM Divests EPCIS and ePedigree Suite” and “Could It Be The Cloud? More Thoughts On IBM’s Divestiture Of Its EPCIS And E-Pedigree Suite”). I said:
“…the biggest error IBM made was in thinking that a multi-national computer hardware and software mega-corporation could make enough money on an application that has such a niche market. Big corporations like IBM need big markets for their products–preferably products they can sell globally and across multiple industries. Currently ePedigree is only marketable in the United States and only in the pharmaceutical supply chain. That’s way too small for a big company.
E-Pedigree is ideally suited for a “boutique” software company. One that can dedicate the resources to monitor the various state and federal pedigree laws, keep their applications up-to-date and provide the extra help necessary for their customers to use their product to meet those laws.”
SAP is similar to IBM in that it is a multi-national software mega-corporation. So has anything changed since then? Yes, in fact, back in 2012 the industry was only facing regulations in Turkey and California. The China regulation was just getting started and the E.U. FMD was just being developed. After California pushed out their dates to 2009, then 2011, then 2015-2017, it seemed like you couldn’t count on any regulation actually going into effect.
But that’s not the case now. The China requirements are in their last stage of implementation, the DSCSA and the FMD/EUDA are well defined and on track, and new regulations are taking shape in Brazil, Argentina, South Korea and elsewhere. It has the appearance that there will be a government mandated serialization and tracing regulation in every major pharma market in the world before the end of this decade (see “Pharma Serialization: Going Totally Global Soon”).
With the mandates going global, maybe the time is ripe for a multi-national mega-corporation to enter the marketplace. Especially one that already provides ERP solutions to the vast majority of drug companies and even some of the larger wholesale distributors. Maybe SAP is the only company in that group that makes sense to make this move. And it could turn out to be a great investment on their part if serialization is adopted or mandated in the future in other supply chains. But let’s not forget that Oracle, another large ERP vendor, made this investment well before IBM got out of the business, and continues to offer a solution.
Will SAP be successful? It depends on how well their new module helps companies meet the existing and future regulations.