Feb 06, 2006This article was originally published by RFID Update.
February 6, 2006—ABI Research of Oyster Bay, New York, today announced bearish prognostications for the near-term pharmaceutical tagging market. In a just-released report entitled "The RFID Healthcare and Pharmaceutical Markets", ABI estimates that the pharmaceutical industry will only start tagging about ten drugs in 2006. This stands in stark contrast to predictions of just last year, when life science tag shipments were predicted to more than triple from 2005 to 2006.
The pharma-tagging market is tied closely to legislation in the US that mandates certain anti-counterfeiting practices like pedigrees. An early attempt at legislation all the way back in 1988 with the Prescription Drug Marketing Act was unrealistic in its demands and was ultimately stayed so that companies did not have to comply. That stay will finally end in January of next year, at which point PDMA regulations will become enforceable. In the meantime, legislators in states around the US -- Florida and California, in particular -- have taken the initiative to combat the ever-increasing counterfeit of pharmaceuticals with regulations of their own.
But Sara Shah, ABI's industry analyst for RFID, doesn't see this as an absolute driver of demand, especially since the regulation timelines are uncertain. "There is a potential that the market will slow more if state pedigree laws are pushed back," she says. Shah is so reserved in her near-term outlook that she calls earlier pharma predictions for RFID "irrational exuberance", a phrase coined by ex-Fed chairman Alan Greenspan and subsequently used to describe the attitudes that drove the stock market bubble of the late nineties. In addition to uncertainty about legislation, she cites cost as a leading impediment to wider RFID adoption by the pharmaceutical industry. She also cites companies' desire to conduct tightly-defined RFID pilots rather than moving ahead aggressively with full deployments.
Despite all this, Shah doesn't believe the impact will be too damaging to RFID vendors serving the pharma market since most of them also serve the retail market. ABI's findings contradict the expectations of many, who predict pharma will be one of the biggest RFID stories of 2006.
Read the announcement from ABI Research
