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RFID's Next Stop? Pharmaceuticals, Says New Study

Mandates from Wal-Mart, the U.S. Department of Defense and others already have forced manufacturers who supply these entities to explore the use of radio frequency identification (RFID) solutions. The next big segment that could get caught up in the "RFID gold rush" is pharmaceuticals, says ARC Advisory Group in a new study. One big reason is regulatory requirements for tracking and tracing of pharmaceuticals, points out the Dedham, Mass.-based consulting firm. "The RFID market potential in pharmaceuticals is huge, with over 12 billion units as candidates for item-level tagging in the United States alone," says Chantal Poisonetti, ARC vice president and author of the report, "RFID Systems in the Manufacturing Supply Chain." "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 5 cents or less." ARC says it does not believe the supply chain RFID tag market will reach the 5 cent price point by 2008, adding that some suppliers may be able to reach it through a combination of high-volume contracts and low-cost form factors. The complete RFID study, which examines the market through 2008, is available for purchase at the ARC Web site.

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