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INTERNET OF THINGS: OPPORTUNITIES AND APPLICATIONS IN

PHARMACEUTICAL MANUFACTURING AND LOGISTICS

Conference Paper · October 2018

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Proceedings of the American Society for Engineering Management 2018 International Annual Conference
E-H. Ng, B. Nepal, E. Schott, and H. Keathley eds.

INTERNET OF THINGS: OPPORTUNITIES AND APPLICATIONS IN

PHARMACEUTICAL MANUFACTURING AND LOGISTICS
Aniket Marathe, Mohamed Awwad
marathe2@buffalo.edu, maawwad@buffalo.edu

Industrial and Systems Engineering Department

University at Buffalo, The State University of New York
Buffalo, NY 14260, USA
____________________________________________________________________________________________

Abstract
In this paper, we will provide an overview of the advancements in IoT, which can be summarized as framing the
network of smart equipment with sensors that will be capable to collect data in real time and communicate with
other elements of the chain. Further, we propose to explore the role of IoT in overcoming the challenges faced by
logistics in pharmaceutical industry and discuss the modern trends in manufacturing and supply chain logistics with
the latest developments in IoT.
At present milieu of globalization, it is necessary that companies frame integrated supply chain networks
and coordinate their processes to stay competitive. Pharmaceutical industries around the globe are striving hard to
reduce the costs of R&D to augment the investments in logistics in order to stay competitive. This study presents a
framework to articulate implementation of IoT to utilize digital advances to accelerate their speed to market while
abiding to the strict regulatory requirements that often limit technological changes. Some of the major problems
faced by pharmaceutical industries are related to lack of coordination between clusters, high dependency on human
resources, temperature control in facilities, supply chain visibility, etc. Our paper will present the modus operandi in
implementing the IoT to overcome those challenges with focus on specific applications such as acquiring accurate
information across the entire chain at any point and at any location, access to real-time updates, visibility of all
handovers in supply chain, personalized high tech care demands for customers and seamless collaboration between
involved companies.

Keywords
Internet of Things (IoT), Supply Chain, Pharmaceutical Industry, RFID, Cold Chain.

Introduction
In recent years, Internet of Things or IoT is emerging as one of the most promising technologies. Extensive research
is being conducted all over the world to realize the potential of this technology. Most of the researchers have
projected that the IoT will be a driver of the next industrial revolution. The “things” which are capable of being
connected to the Internet are more likely the “things” which could be connected to each other. This network of
connected things: vehicles, industrial components, household objects, electrical devices, perishable products and
other utilities with the internet connectivity and with the help of dynamic data analytic capabilities could altogether
alter our lifestyle. Enormous growth potential can be created for businesses by connecting the previously
unconnected entities, to improve on decision making speeds and correctness. Service called ‘Amazon key’ and
recently launched ‘In-car Deliveries’ from Amazon are the great examples of utilizing the network of connected
devices to deliver more efficient and hassle free services to the consumers. Amazon key is a service provided by
Amazon in which they provide a kit comprising of a security camera, cloud cam and a compatible smart lock, which
will enable the delivery service provider to have access into the consumers’ homes while consumers can remotely
monitor and ensure the delivery of shipment inside their homes. Similar set of equipment can be used at more
personal levels to grant easy access to family members or friends into your house, car, etc. while maintaining the
security of your belongings. Many other companies from different sectors are trying hard to utilize the potential of
this network of things for mutual benefit of consumers and firms; companies from pharma sector for example, are
testing and validating similar services to ensure the safe delivery of medical drugs to the consumers.
This paper introduces the Internet of Things with the definition which relates to the current world scenarios
along with the real life applications. There are endless possibilities of implementation of this technology in almost

Copyright, American Society for Engineering Management, 2018

every sectors. Successful implementation of IoT can revolutionize transportation systems, public safety and urban
planning, logistics and supply chain networks, food and agricultural industry, healthcare etc. Our work focuses on
the application of IoT in pharmaceutical manufacturing and logistics. The pharmaceutical industry is comprised of
complex processes, functions and organizations involved in developing and manufacturing of the drugs and medical
products. Whereas logistics is one of the important driving factors of the pharma industry, there are still many
challenges faced by the logistics industry majorly due to uncertainty in the consumer demands and complexity of
dynamic business models. With the promising technological advances in IoT, it is possible to make major
contribution in solving those challenges faced by the pharma industry with the implementation of solutions from IoT
to overcome the barriers in the current processes.

Internet of Things
The "Internet of Things" term was first was introduced roughly 18 years ago by the founding members of the MIT
Auto-ID Center (Sundmaeker, Guillemin, Friess, & Woelfflé, 2010). There is no unique, universal definition for the
Internet of Things (IoT), the core concept is that everyday utilities can be equipped with identifying, sensing,
networking and processing capabilities that will allow them to communicate with one another and with other devices
and services over the Internet to achieve some useful objective (Cortés, Boza, Pérez, & Cuenca, 2015). Exhibit 1.
shows few of the technologies and devices which constitute the IoT network.

Exhibit 1. IoT and Related Technologies/Utilities.

Rose, Eldridge, and Chapin (2015) defined the Internet of Things as “a global infrastructure for the
information society, enabling advanced services by interconnecting (physical and virtual) things based on existing
and evolving interoperable information and communication technologies.” In general terms, IoT is an extended
internet service model to contain every single utility which eventually could make human activities more
convenient. Xu, He, and Li (2014) forecasted that the IoT will reach 26 billion units by 2020, up from 0.9 billion in
2009, and will impact the information available to supply chain partners and how the supply chain operates. Few
surveys correlate the IoT to a point in time when the number of objects connected to the internet exceeded the total
human population connected to internet.

IoT Enablers
RFID tags and devices, sensors, actuators, software, energy harvesting technologies, machine to machine interface,
etc. represent the building blocks of the IoT technological network enablers. In the realm of endless opportunities,
technological advances such as telepresence and adjustable autonomy, geo tagging and geo sensing, robotics,
augmented reality, etc. are the collaborative technologies which add value to the primary network of things.
The inclusion of these identified enablers of IoT depends on the application requirements. For example, in
case of logistics and maintenance services, depending upon the availability of service information data for
transportation services, a network of devices is integrated. Segregation is done for rough and burdensome
environment’s RFID (Radio-frequency Identification) tag sensors. Depending on the need, auto adaptive sensor

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networks with auto track and traceability-enabled tags are used. Innovative, value added software solutions are used
for end to end data security, configuration control and predictive forecasting. End to end service integration can be
applied on the separate/multiple vehicles’ engines, for enhanced traceability and the current status update of engines.
Further, overview of an applications of IoT in different domain are discussed. Also, Exhibit 2. illustrates the IoT
building blocks and cooperative technologies which constitute the IoT enablers.

Exhibit 2. IoT Building Blocks and Co-operative Technologies.

Layered Architecture
The IoT is framed on three pillars, concerned with the capabilities of smart “things” to be:
1. Capable of being identified
2. Able to communicate
3. Capable of interaction; which could be amongst building blocks of network, or themselves or with consumers,
or with other bodies within the network.
Additionally, IoT consists of layered architecture which is associated with networking, web services,
communications and business structures, data analytics, intelligent interface for objects, etc. It is crucial from the
design perspective that due consideration needs to be given to adaptability, expandability and flexibility amongst the
conglomerate of devices. Based on that IoT is structured into four layers: 1) Interface layer 2) Service layer 3)
Network layer and 4) Sensing layer (Xu et al., 2014). Exhibit 3. briefly describes this layered architecture of IoT
along with its components constituting each individual layers.

Exhibit 3. Layered Architecture of IoT and its Elements.

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Applications of IoT Solutions in Supply Chain Networks
Exhibit 4. illustrates the main identified domains of IoT applications with their characterization and
inclusive examples. Exhibit 4, though not very comprehensive and detailed but, it is a simple representation of scope
of utilizing IoT in various fields. From the extensive list of applications of IoT in almost every sector, such as:
Aerospace, Automotive, Telecommunications, Intelligent Buildings, Healthcare, Individual Wellness,
Pharmaceuticals, Production Processes, Entertainment Media, Environmental Monitoring, Agriculture and
Sustainable programs, etc. Out of them, few applications are briefly discussed in this section.

Exhibit 4. IoT Application Domains, Characterization and Illustrative Examples.

Medical Equipment
In the so-called medical internet of things, wireless sensors are embedded in clinical devices, which are connected to
hospitals, patients and medical equipment (Hu, Xie, & Shen, 2013). Using RFID tags to detect the counterfeit of
medical devices and medicines, constant real-time monitoring of medication storage processes, management of
patient’s medical information such as blood information, efficient handling of medical emergency, telemedicine and
mobile medical care (Hu et al., 2013) etc. are the examples of implementing IoT for improved healthcare services.

Retail and Logistics

If the product manufacturers are aware of the inventories available with the distributors and if they get easy access to
the sales data from each retailer, they can configure their production schedules accordingly to avoid excessive
production or under-utilization of their resources. Moreover, the logistics processes from inter-dependent industries
can benefit from sharing the RFID data. Even at lower levels of supply chain, fast processing solutions such as
biometrics, tracking of out-of-stock materials, detection of adulteration/contamination of the products, selection of
the purchasing list, etc. can be achieved by RFID enabled objects and by the shelves capable of real-time tracking of
goods. These modifications offer great opportunity for increased financial profits and reduced process wastes.
Exhibit 5 represents a similar example of smart warehousing implementing the IoT solutions.

Transportation and Safety

IoT offers solutions for safe transportation of goods or passengers by air, water or road. Thousands of flights travel
all over the world daily, carrying passengers, luggage and cargo. Automated tracking and sorting of the luggage and
cargo can speed up the process with increased security from restricted goods being carried on flights. Moreover, the
real-time updates and monitoring of traffic jams on mobile phones with increased accuracy from IoT solutions can
ease the transportation of materials and public in metropolitan/urban areas. Moreover, if the consumers are willing
to share the live information of their vehicles with insurance companies, that will be mutually beneficial to both the
parties. As a result of live tracking of vehicles’ conditions by means of electronic recorders inside the car, insurance
providers will be able to get involved early, reducing the intermediate steps in process which will eventually bring
down the premiums along with the added security. This information of accidents can also be shared with ambulance
services for real-time updates on where the resources are needed and for covering the maximum area with minimum
resource allocation.

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Traceability of Food and other Perishable Goods
Traceability of foodstuffs with re-organized supply chains with IoT ensures that food can be recalled if the quality is
compromised. Also, real-time status updates of perishable goods will be very helpful in avoiding goods (during its
transit time or idle time in warehouses) expiring before they reach to the consumers. Accordingly, such updates can
be used to alter the production schedule and supply of materials.

Pharmaceutical Supply Chain

Though industry of pharmaceuticals is closely related to medical research and healthcare; manufacturing, supply
chains and logistics play a vital role in this industry. Because of the special requirements of the environment in
which pharmaceutical drugs are to be handled, the supply chain network of pharma industry have few of its
priorities and focus points different from normal supply chain networks. When it comes to medicines and healthcare
utilities, it is as important as anything else that there should not be any alteration in the specifications of the product
while in transition from manufacturing units to the consumers. In that case, remote monitoring and network
optimization analytics are the tools which can be used for real-time visibility of transportation and warehouse
operations. And these tools help companies in maintaining compliance with government regulations and product
quality. Cold chains are important part of pharmaceutical supply chain networks; hence traceability and real-time
condition monitoring of these cold chains is one of the major requirements for improvements in this network.
Exhibit 5. briefly illustrates the steps in the pharmaceutical supply chain. Raw materials are supplied to the
manufacturer where the medicine is produced and packed. Initially the drugs are distributed and sent to local
warehouses. Next there are couple of distribution steps before drugs reach to patients. This distribution is explained
with primary, secondary and tertiary sales in Exhibit 5.

Exhibit 5. Pharmaceutical Supply Chain

High level of security can be achieved by optimizing and digitizing crucial parameters of manufacturing
and supply chain management. Solutions from IoT can be utilized to tackle the bottleneck issues, maintain the
conformity to the specifications and effective expenditure of the resources. In this work, major challenges faced by
the pharmaceutical industry are discussed and convincing solutions from IoT are proposed.

Challenges Faced by Pharmaceutical Logistics

The major challenges faced by the pharmaceutical logistics and supply chain are discussed in this section, so that
appropriate solution approaches can be proposed to tackle those challenges. Exhibit 7 demonstrates the major
obstacles in the smooth flow within the supply chain network.

Supply Chain Visibility

Theft and the counterfeit of drugs during the transit period is one of the major concerns for every pharma
company. If a pharmaceutical organization is not able to prevent such leaks in supply chain, then it will have to face
problems in proving the compliance to the regulations. Hence, the supply chain visibility is very crucial for the
pharma industries. But, the traceability of shipments has some of the challenges which are impossible to overcome

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with existing systems. Exhibit 6 gives an example of smart warehousing with the help of IoT (Macaulay, Buckalew,
& Chung, 2015). IoT solution strategies to tackle this problem are briefly discussed in further sections of this paper.

Exhibit 6. Example of Smart Warehousing with the help of IoT (Macaulay, Buckalew, & Chung, 2015).

Collaboration Issues
Trust deficit, lack of transparency and reluctance to share data is a huge challenge in the pharma supply chains.
Huge conglomerates are involved in the collaboration of this multi-layer supply chain and invariably there is huge
and complex data flow, which is vulnerable and prone to delays, and in this case unwillingness of partner
organizations to share data is an obstacle in the effective collaboration and resilience of the supply chain network.

Temperature Control
Temperature control is the major factor which distinguishes pharma supply chains from rest of supply chain
networks. For most of the pharmaceutical products, it is necessary to maintain certain temperature range throughout
transit and warehousing periods. During the transportation through air, rail, sea or road; drugs or other products are
exposed to various certain and uncertain temperature conditions, in that case maintaining a specified temperature is a
challenge to ensure the confirmation of the products to the quality and regulatory standards. Special care needs to be
taken in case of the pharmaceuticals which are extra sensitive to exceeding temperatures and which start to
degenerate if not taken care of the specified environmental conditions.

Warehouse Management
Owing to the rapid growth in the sales volumes of pharmaceutical products, the need for the increased warehousing
capacities cannot be overemphasized. But, at present scenario, the logistics companies are not yet ready to handle
the surge in demands from the pharma industries because, most of them do not have sufficient infrastructure to cater
the needs of increased visibility and reduction in overall costs. Huge investments are required for such specialized
warehouses with temperature controlled zones. And there are already big companies with more matured setup in this
sector, which makes entry of new companies very challenging. Reliability and confidentiality of the data, knowledge
shared between the drug manufacturers and the logistic companies are another major challenges.

Regulatory Compliance
There are varying regulatory standards and quality compliance guidelines for the medical drugs across the world.
For pharma manufacturers and supply chain networks it is an absolute necessity to adhere to and comply with the
regulations of the respective markets, which brings more complexity in the supply chain networks. Under these
circumstances, there is added pressure to have the maximum visibility of the supply chain, optimum temperature
control and effective warehousing.

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Data Handling
While almost every sector is getting more and more data intensive and deploying resources to maximize the
utilization of the available data for analyzing the trends and accordingly developing the business models. For
pharma industry as well, this is a great opportunity. But, simultaneously it is an equally big challenge. Two major
challenges are, building data centers capable of handling the data and ensuring the cybersecurity from the attackers
who are chasing all kinds of data breach; from intellectual property, commercially critical data to patient’s private
health data from the research labs. Above mentioned obstacles in the flow of pharmaceutical supply chain are
summarized in Exhibit 7.

Exhibit 7. Obstacles in Flow of Pharma Supply Chain

After carefully recognizing the major challenges in the pharmaceutical manufacturing and logistics; it is
observed that while some challenges are similar to other industries’, there are few unique challenges faced by the
pharma industries which consequently require the unique solution strategies. This paper presents some prospective
solutions from the technological advances of IoT, to tackle above mentioned challenges. Proposed solutions, their
implementation and the associated limitations are discussed in next section.

Solution Strategies from Internet of Things

Some of the solution approaches for above mentioned challenges, by the implementation of IoT are discussed in this
section. Though these are termed as the IoT solutions, collaboration with various traditional methodologies are
required for successful implementation of these strategies. And those methodologies can be business models for the
effective operation of supply chain, warehouse design concepts, transportation network modelling and optimization,
etc.

Network of Information Transfer in Pharma Supply Chain

Due to the issue of mishandling and counterfeit of drugs, not only the manufacturers but also the government is
facing challenges in keeping up with the regulatory norms and to ensure the safety of customers’ life. Equipment
and solutions from IoT can be used to record the information of drugs throughout the supply chain. Exhibit 8
demonstrates the application network design model using the IoT solution approach. Outside of the line, RFID tags
with EPC (Electronic Product Code) are attached to medicines. And all the necessary information can be associated
to those RFID tags or EPC-IS (the Electronic Product Code Information Service) database, such as manufacturing
date, chemical composition, SKUs (Stock Keeping Units), expiry date, and safety instructions. Since, medicine’s
batches will be associated with EPC codes, company can use EPC codes as keywords to update and query medicinal
information (Yan & Huang, 2009). By means of this updated network of IoT devices, real-time updates of medicines
can be transmitted to concerned parties. On the other hand, RFID readers and ALE (Analytics and Location Engine)
servers are employed at drug querying counters in the hospitals and local pharmacies. As the medicines with RFID
tags enter into the magnetic field of these counters, connected data will be read and processed. And the information
will be queried at the local and root ONS (Object Naming Services), so that consumers can identify whether the
medicines they are buying are counterfeit or not. This model of IoT in the network of drug manufacturers and
healthcare providers can be roughly drafted as in Exhibit 8, where link between ERP and WMS represents the

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internal information system integration within the Enterprise Resource Planning (ERP) and Warehouse Management
System (WMS). In this way even customers can protect themselves even if counterfeit drugs enter inside the supply
chain network.

Exhibit 8. Network Model of IoT in Supply Chain.

Smart Warehousing
According to the report by (Madhukar Saboo, 2017), warehouse operations are vital part of the pharmaceutical
operations, which costs about 90% of the logistics costs. With real-time updates on inventory, floor space can be
utilized to its maximum potential. Sensors can be used to track and analyze the inventory flow, in that case
information will be captured by the wireless readers and used for the aggregate planning. Embedded sensors on the
forklifts are used to track the asset movement. RFID tags are used to track location and consumption rate.
Inconsistencies in the processes are captures by these sensors and transmitted for analysis. Data from arriving pallets
is also captured with the help of wireless readers. These solutions altogether contribute towards the higher
productivity and maximum floor space utilization. The data of the inventory flow from warehouses can be fed for
the production planning to optimize the inventory levels, reduction in stock outs and improvement in demand
fulfillment.

Real Time Visibility

As discussed in previous sections of this paper, real time visibility is crucial to optimize these operations. With the
help of the IoT solutions, real-time visibility and 3-D view of the ongoing operations in the warehouses, managers
can have access to all the relevant data which in turn enables them to monitor the sensitive zones of medicines
(Madhukar Saboo, 2017). The key idea behind the connection of equipment for real-time updates for improved
process yield is connecting the equipment sensors to back-end database or cloud network. Shop floor visibility, i.e.
visibility across equipment and goods helps in dynamic scheduling of the shop floor activities. Tracking of overall
equipment effectiveness can be achieved by the automated triggering of the incidents by using the ticket
management system. Sensors packs can be added to collect the device information, and to build a back-end platform
using Industrial to IoT platforms like Amazon web services (Madhukar Saboo, 2017) which could be implemented
to reduce the equipment downtime and back-up equipment. Access to the human and machine interaction on the
shop floor can be utilized to determine the causes of variability in the process by conducting the statistical analysis
on the collected data, which in turn would result in increased production yield. Further, utilizing the obtained
information enables technicians to develop machine learning models to perform diagnostic services for firm’s
machine portfolio. Which could be used to increase availability and minimize interruptions in the supply chain
(Madhukar Saboo, 2017).

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 The degree of automation already existing in the company, determines the value addition from the
connected production process and accordingly set of solutions should be recommended for the companies.

Shipment Traceability
According to the report from Freight Watch International Supply Chain Intelligence Center, the pharma companies
have suffered major load loss due to cargo theft. On the other hand, due to the adaption of smart methods of
shipment tracking and data collection, the average loss value of pharma sector in US has dropped by approximately
55% from 2010 to 2012 (Madhukar Saboo, 2017). This clearly signifies the importance of shipment tracking in case
of pharma sector, mainly because of the sensitivity towards the health concerns. Because of the medicines involved,
it becomes even more critical. Bi directional communication and product verification is necessary at every stage of
transit to ensure the integrity and quality of drugs. NFC (Near Field Communication) sensors, 2-D bar codes, RFID
tags with smart labels can be used for packaging. Such IoT enabled packaging continuously tracks the products to
detect counterfeiting or avoid theft as products move through the transportation network. Further, AIDC (Automatic
Information Data Collection) for smart serialization incorporated with electronic chips in packaging help to monitor
the introduction of drugs into the healthcare environments which provides another level of protection to ensure safe
delivery of the drugs. Global positioning system location and condition monitoring also provide real-time, digital
solutions to track the security during transit. Exhibit 9. (Macaulay, Buckalew, & Chung, 2015) illustrates one such
example of real time tracking of the shipments with updates on the temperature and environmental conditions.

Exhibit 9. Real Time Shipment Tracking Portal (Macaulay et al., 2015).

Temperature Control
Biologics are the high-ticket drugs which are highly sensitive to storage conditions. In 2016 alone, eight out of the
ten most selling drugs were biologics. Moreover, the estimated growth of the cold chain pharma products is
expected reach more than $361 by 2019 worldwide (Madhukar Saboo, 2017). Threat of drug expiration or
deterioration can get worse if the degraded drugs go unnoticed and travel into the network. (Madhukar Saboo, 2017)
estimates that 20 percent of the goods were wasted during transit out of $260 billion worth of cold chain market.
To maintain desired storage conditions of such sensitive drugs, environmental sensors are used to collect
data from storage areas to track real-time conditions of the drugs. Log data, which could be active or passive is used
to generate alerts in the events of temperature excursions by comparison with the medicinal thermal stability tables.
This will eventually prevent the untimely expiration or degradation of drugs.
Along with managing the temperature spikes during the transportation, maintaining the drug quality during
the transportation is of paramount importance. Temperature of the drugs being transported can be tracked to ensure
they remain within specified stability range. Environmental sensors are embedded and program sensors are
employed to initiate alert if the drug storage conditions deviate from the designated temperature range. Apart from
reducing the wastage of drugs and assuring the efficacy, these solutions also help to ensure compliance with regional
and International target market norms and regulations.

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Telemedicine
Telemedicine monitoring focuses on improving the diagnosis and medications, to reduce healthcare costs and to
build patient focused system by collection of data from past medical programs and patient’s lifestyle habits (Hu,
Xie, & Shen, 2013). Focus of the implementation of IoT in this program is to enable healthcare providers achieve
continuous improvements in the medical care. RFID tags and sensors can be employed to collect data which would
be beneficial in developing new drugs. Telemedicine has promising implementation into the research for pharma
manufacturers, which eventually will help them to develop new drugs within reduced timeframe and at the same
time adhere to the regulations, speed up the production and to make drugs available at reduced costs to the
consumers.

Recommendations
Though solutions from IoT appear very promising, it is essential that before implementation of these network of
devices, companies must acquire the required security and infrastructure in place. For pharmaceutical companies,
IoT offers visibility and access into every area of production and operation, thus generating huge amount of
vulnerable confidential data resource. Typically for pharma industries, privacy of the data is of paramount
importance, hence strong data security must be ensured to avoid any kind of data breach which would affect not
only the firm’s business but the personal data of the consumers. Trusted collaboration within the partner
organizations is crucial for the successful implementation of the IoT. Any production domain contains a wide
spectrum of utilities, equipment, operators and associated software all of which should be compatible with every
element/sector of the supply chain network. Also, the change management is to be considered and optimized before
implementation of the Internet of Things, to develop business in compliance with the major drivers and stakeholders
of the business with successful transition. To conclude, the scope and overall applications of the Internet of things
are very promising, which in future will bring revolutionary benefits for large population; provided necessary
infrastructure will be there in place for the security and assurance of the people and associated firms.

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