RFID Seizes the Drug Market

Written By Luke Burgess

Posted January 13, 2006

You already know how bullish I am on RFID. I first mentioned the technology only two weeks ago in my "Two Explosive Investment Opportunities" article.

Today I want to talk with you about how a drug company is using RFID tags to thwart counterfeiting.

RFID Set to Massively Profit from Drug Market

Last year over 5 million counterfeit Viagra pills were seized by law enforcement officials. We're talking hundreds of millions of dollars in lost revenue for Pfizer.

So in order to combat these offenses, last month Pfizer began putting RFID tags on all Viagra shipments in the United States.

RFID technology will enable Pfizer, as well as other pharmacies and wholesalers, to track and confirm the authenticity of drugs worldwide.

Here's how it works.

Each RFID tag contains a unique serial number called an Electronic Product Code (EPC) and an antenna that is able to transmit data worldwide.

The antenna transmits the EPC over the internet to a secure website. There, drug distributors and pharmacists retrieve the code with a reader and confirm or disprove authenticity.

It has been estimated that Pfizer will spend upwards of $5 million on this project.

The renowned drug manufacture has tapped into two RFID tag companies for help: Tagsys, which specializes in assisting companies tag individual items, and Alien Technology, which was contracted to supply tags for cases and pallets.

Every new bottle of Viagra now has an RFID tag integrated in advance under the label.

Tagsys engineered a process for Pfizer to apply RFID tags on bottles as they move down the production line as not to add time or complexity to supply chain operations.

Pfizer is not the only company in the drug industry working with Tagsys.

West Pharmaceutical Services, which makes caps for vials, also utilized Tagsys for RFID services about a year ago to put tags into seals.

The potential RFID market in the drug industry alone is massive.

About 10 billion units are shipped annually from manufacturers to pharmacies, doctors and hospitals in the United States and Europe.

Now consider this. Even if you only put a 10 cent tag on the 10 billion units that are shipped annually, the size of the market we're talking about here is about $1 billion.

And like I said, that's just revenue from the drug industry alone.

Tagsys and Alien Technology are both private companies. But RFID is one of my main focuses when looking for stock plays right now.

I hope to bring you and other Archimedes' Lever readers a RFID play real soon, so keep reading.

Until next time,

Luke Burgess

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