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Analyst Outlines Hurdles to Pharma RFID Adoption

IDC-owned research company Health Industry Insights has released a report analyzing the adoption of RFID item-level tagging by the pharmaceutical industry. Based on a survey of 143 life sciences companies, the report reveals a number of findings about one of the key markets for RFID adoption.
Apr 19, 2007This article was originally published by RFID Update.

April 19, 2007—IDC-owned research company Health Industry Insights has released a report analyzing the adoption of item-level RFID tagging by the pharmaceutical industry. Based on a survey of 143 life sciences companies, the report reveals a number of findings about one of the key markets for RFID adoption:
  • The lack of a standard for item-level tagging is causing hesitation among pharmaceutical end users, to the point that Health Industry Insights identifies it as a leading hurdle to more rapid adoption. "While many pharmaceutical companies are eager to begin their RFID pilot work, we're seeing a freeze on project funding until an item-level frequency standard is established. Evaluations are being hindered by corporate fear of investing in the wrong infrastructure," said senior research analyst and report author Eric Newmark. The other two leading hurdles are RFID's cost and lack of return on investment. Additional hurdles cited by survey respondents include, by order of importance, security/privacy concerns, lack of pressure from Federal Drug Administration, and unreliable read rates.
     
  • Only 16% of surveyed companies are evaluating the benefits of RFID, a surprisingly small minority given the amount of attention paid to the pharmaceutical industry's adoption. Fifteen percent of companies have actually adopted RFID technology in some capacity.
     
  • Health Industry Insights calculates that the average RFID spend across the surveyed life sciences companies is $25,000. Given the small percentage of companies that have actually deployed the technology in some degree, this figure indicates that those few companies have spent considerably more than $25,000, while the remainder have spent none.
     
  • The one positive finding from the survey is a projection for significantly increased spending in the 12 months ahead: the $25,000 average spend is expected to triple to $75,000.
     
  • Lastly, Health Industry Insights found that pharmaceutical pilots are showing stronger read rates from HF RFID than from UHF. Whereas UHF pilots are seeing rates between Three and Four Sigma, HF pilots are achieving Four to Six Sigma and sometimes even better. (Six Sigma is a common standard for rating process performance levels.)
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