TraceLink buy refocuses SupplyScape

Track-and-trace specialist SupplyScape has been bought by TraceLink, a newly-formed company with private equity backing, in a deal that re-unites the business with its original founders.

TraceLink came into being on July 24 and has bought SupplyScape’s portfolio of products and technology, including the E-Pedigree software application, RxAuthentication service and Nexus network collaboration platform, which have been deployed at around 100 customers over the last 10 years.

Brian Daleiden, vice president of marketing at TraceLink, told SecuringPharma.com that the rationale behind the move was to bring in additional capital investment to accelerate development of product and business process traceability solutions and enhance support for existing SupplyScape customers.

“SupplyScape was very successful in creating solutions such as E-Pedigree and RxAuthentication that helped companies in the global supply chain track and trace drug products from manufacture to dispensation,” he said.

“Recently through two things became clear. Firstly, the chief challenges for the industry and the key opportunities for us were at the edges; connecting companies together on a supply network and enabling product and business process traceability. Secondly, the traceability of product movement was just the tip of the iceberg.”

It is no secret that profitability in the pharmaceutical industry is under pressure from loss of patents on key products, a lack of new products coming through the R&D pipeline, and downward pressure on medicine pricing by national healthcare systems around the world. That scenario, coupled with globalisation of the supply chain, has made it more important than ever for companies to achieve greater visibility and control over their supply chains.

“SupplyScape started to address these strategic needs through the launch in 2008 of the Nexus collaboration platform and the initial design of new traceability solutions begun in early 2009, but lacked the corporate focus required to bring these new solutions to market in a timely manner,” commented Daleiden.

The new management team - including president and CEO Shabbir Dahod and other original SupplyScape founders Peter Spellman and Lucy Deus - will give the company the tight focus needed to bring these projects forward, while the investment provided by FirstMark Capital provides the necessary financial resources.

The takeover by TraceLink does have some implications in terms of the company’s strategy and will see the firm move away from the consulting elements of the original SupplyScape business in order to concentrate on traceability software.

“There are great consulting firms out there that we will team with to provide these services to our customers,” noted Daleiden.

TraceLink says it has identified several traceability solutions spanning the “complete global supply chain that incorporates supply, manufacture and distribution operations,” which suggests that it may be looking upstream from the pharmaceutical manufacturer in addition to its earlier focus on the downstream supply chain from manufacturer to dispensing.

Daleiden would not be drawn on specifics, other than to say these could launch over the next year.

Terms of the TraceLink acquisition have not been disclosed, but the company has rehired many of the original SupplyScape team, particularly in the product and services areas, and says it plans to triple the size of them to help accelerate the roll-out of new traceability applications.

Regulatory uncertainty

Changes in the operating environment for companies working in this area - for example as a result of the delay in California’s deadline for implementing full e-Pedigree requirements to 2015 - have also resulted in a change in emphasis for TraceLink.

“Service providers need to focus on the business benefits and not just the regulatory compliance aspects of their solutions,” he said.

“This requires a greater partnership with the customer to understand their overall operating environment and strategic goals rather than just throwing a solution over the wall to address a given regulatory need.”

Even though California has delayed the deadline, other states have some measure of pedigree regulation in force and others are looking at adopting new ones, he added. Meanwhile, outside of California, the focal point for serialization is on the federal level.

“There is little consensus at this point on the technologies, processes and scope that serialisation mandates should incorporate, [so] service providers need to be flexible, commented Daleiden.

“This uncertain regulatory environment significantly impacts our customers and the solutions we provide need to be agile enough to support new regulatory and trade mandates without significant retooling or modification.”


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