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2013

     Create energy and fuel from waste material. Create ethanol from wood waste and use it to power vehicles. Produce bottles from plant-based materials. While each of those goals sounds like the stuff of science fiction, I have been interested to see news of each application recently—and to think about the potential impact and cost savings of each for the supply chain.

 

     So for starters, consider Advanced Plasma Power (APP), a U.K.-based company that provides waste-to-energy and fuels technology. The company takes waste material—ranging from municipal solid waste that includes household waste, commercial waste and even hazardous and special wastes—and then uses its advanced gasification technologies to produce a clean synthesis gas directly from the waste. According to APP, use of its Gasplasma technology conversion delivers clean, hydrogen-rich synthesis gas (syngas), which can be used to generate electricity directly in gas engines and turbines to generate power, and it also can be converted  into substitute natural gas, hydrogen or liquid fuels.

 

     The price of converting syngas into hydrogen is lower than the cost of converting natural gas into hydrogen, Rolf Stein, APP CEO, recently wrote in IndustryWeek. Furthermore, in many cases, the overall cost of using a waste-to-energy and fuels plant to generate hydrogen will be significantly lower and more predictable than the cost of using natural gas and steam reformation. The result is that companies will be able to comply with a progressively challenging regulatory environment as well as act on their corporate and social responsibility targets, Stein says.

 

     In other news, The New York Times reports that INEOS Bio, a subsidiary of the European oil and chemical company INEOS, has produced commercial quantities of cellulosic ethanol from wood waste and other nonfood vegetative matter at its Indian River BioEnergy Center in Vero Beach, Fla. If the process can be expanded economically, it has major implications for providing vehicle fuel and limiting greenhouse gas emissions.

 

     The process begins with wastes—wood and vegetative matter for now, municipal garbage later—and cooks it into a gas of carbon monoxide and hydrogen, the NYT article explains. Bacteria eat the gas and excrete alcohol, which is then distilled. If ethanol can be produced at reasonable cost from abundant nonfood sources, like yard trimmings or household trash, it could displace fuel made from oil, and that oil—and its carbon—could stay in the ground, reducing the amount of greenhouse gases in the atmosphere, the article reports.

 

     Finally, the Coca-Cola Company and World Wildlife Fund (WWF) announced new global environmental goals and an expanded global partnership earlier this month. These goals, which complement other Coca-Cola well-being and community commitments, focus on sustainable management of water, energy and packaging use as well as sustainable sourcing of agricultural ingredients through 2020.

 

     There are numerous goals but the one I’m most interested in is to continue to responsibly source material for Coke’s PlantBottle packaging. Traditional PET plastic is made using fossil fuels such as petroleum. PlantBottle, on the other hand, is made with a combination of traditional materials and up to 30 percent made from plants. The end product is still PET plastic, so the PlantBottle package delivers the same performance (e.g. shelf life, recyclability, weight, chemical composition and appearance) but it reduces potential carbon dioxide emissions from PET plastic bottles and dependence on fossil fuels when compared to traditional PET plastic, according to Cocoa-Cola.

 

     I think each of the developments offers considerable potential. They certainly each demonstrate what’s possible, in any event. While there are potential cost savings from each that companies could realize, the larger issue is that of corporate and social responsibility. So in the long run, we all can benefit from these type endeavors.

     If, like me, you watched news of the turmoil in Egypt over the weekend, today didn’t offer any relief. What’s more, whether or not the on-going conflict ultimately closes the Suez Canal remains to be seen.

 

     The Egyptian authorities struck Islamist protesters early Saturday, killing at least 72 people in the second mass killing of demonstrators in three weeks and the deadliest attack by the security services since Egypt’s uprising in early 2011. The attack provided further evidence that Egypt’s security establishment was reasserting its dominance after President Mohamed Morsi’s ouster three weeks ago, and widening its crackdown on his Islamist allies in the Muslim Brotherhood, according to an article in The New York Times. The tactics—many protestors were killed with gunshot wounds to the head or the chest—suggest that Egypt’s security services felt no need to show any restraint, the Times article notes.

 

     The killings occurred a day after hundreds of thousands of Egyptians marched in support of the military. The situation isn’t much different today as the protestors are still gathered and the military is watching. Military helicopters dropped leaflets on pro-Morsi protesters in Rabaa al-Adawiya early Monday and appealed for them not to approach military installations and units, the state-run EGYnews said, CNN reports

 

     So what’s that mean to the supply chain? Since the canal is owned and maintained by Egypt’s Suez Canal Authority, the concern is that the political turmoil in Egypt may result in terrorist activity that closes the canal. Such a closure would have significant effect on global trade. Indeed, according to the U.S. Department of Homeland Security, more than 35,000 ships crossed the Suez in 2009. If the Suez Canal were to close, ships traveling from Asia to Europe or vice versa (and from Asia to the U.S. East Coast and vice versa) would be forced to sail around southern Africa—adding further delay and cost to the supply chain because carriers would be forced to add additional ships into the Asia-North Europe services, increase the speed of their ships or a combination of both.

 

     Fortunately, according to the latest issue of Drewry's Container Insight Weekly, if the Suez Canal was suddenly closed, container vessel schedules between Asia and Europe could be immediately adjusted to minimize delays by simply increasing speeds to 22 knots in each direction and sailing around the Cape of Good Hope, an article in SupplyChainBrain notes.

 

     Nevertheless, Drewry warned that shippers would have to pay a hefty surcharge to cover the cost. Earlier this year, it was noted that, according to Drewry research, companies would face a 77.5 percent increase in fuel costs, up to approximately $8.1 million per round voyage, if such steps were necessary. On the other hand, taking a route around the Cape of Good Hope also would save Suez Canal charges of approximately $1.36 million per voyage along with the cost of anti-piracy measures associated with sailing through the Gulf of Aden. So there are tradeoffs to consider in either case.

 

     While it’s considered unlikely that the Suez Canal would end up being closed for some reason, it’s still a possibility. Some companies are making—or have already made—plans to account for such a closure so they are prepared with a contingency plan so their business would remain uninterrupted.

 

     Would a closure of the Suez Canal have an impact on your supply chain?

     If you’ve been following the story of China’s crackdown on corruption and high prices in the pharmaceutical industry, you know that the allegations read like a summertime best-selling novel.

 

     As has been widely reported, China has been investigating GlaxoSmithKline Plc for suspected economic crimes. China has accused Glaxo, a British pharmaceutical company, of behaving like a “criminal godfather”—using a network of more than 700 middlemen and travel agencies to bribe doctors and lawyers with cash and even sexual favors in return for prescribing its drugs, explains an article in The Guardian. So far, Chinese police have detained four senior Chinese executives as part of an investigation that stretches back to 2007 and involves deals worth 3bn yuan ($489m).

 

     “We found that bribery is a core part of the activities of the company,” Gao Feng, the head of China’s fraud unit, says in The Guardian article. “To boost their share prices and sales, the company performed illegal actions.”

 

     Part of the problem is the way China’s healthcare industry is set up. Low, standardized salaries for doctors and nurses—who are mostly public servants in China—have prompted some to pad their income by prescribing unnecessary medicine and surgery, where they can take a cut of the money. Sometimes they also receive so-called “donations” from patients as well as kickbacks from drug companies.

 

     Those practices also appear to be targeted by China’s investigative force. Indeed, Chinese doctors and officials at the receiving end of bribes are also feeling the heat. Reuters reports that, citing a statement from China’s Health Ministry, the official Xinhua news agency recently noted that 39 employees at a hospital in southern Guangdong Province would be punished for taking illegal kickbacks, totaling 2.82 million yuan ($460,367), from two drug makers between January 2010 and December 2012.

 

     Even so, the big news—for now—remains Glaxo’s investigation. However, the scope could be widening. China’s Food and Drug Administration has said it will “severely crack down” on fake medications, forged documents and bribery, according to a Washington Post article. In fact, China’s drugs regulator will conduct a crackdown from July to December, Yan Jiangying, a spokeswoman for the agency, told reporters.

 

     What’s more, while recent investigations have so far only implicated Glaxo, other foreign companies may also be involved, Gao Feng told reporters.

 

     In that regard, other companies’ history maybe under scrutiny, or at least cause for additional investigation. As the Washington Post article explains, Eli Lilly & Co. in December agreed to pay $29.4 million to settle U.S. Securities and Exchange Commission allegations that employees gave cash and gifts to officials in China, Brazil, Russia and Poland to win millions of dollars in business. Additionally, the Post article notes, Pfizer Inc., the world’s biggest drugmaker, agreed last August to pay $60.2 million to settle foreign bribery cases it disclosed to U.S. authorities involving alleged payments paid by employees and agents of subsidiaries, including in China.

 

     The chief executive of GlaxoSmithKline, Sir Andrew Witty, said in The Guardian that the company’s headquarters had “no sense” of the Glaxo China executives’ “shameful” and “deeply disappointing” “fraudulent behavior” at the heart of the allegations.

 

     “It appears that certain senior executives in the Chinese business have acted outside of our processes and our controls to both defraud the company and the Chinese healthcare system,” Witty says.

 

     Despite the apparent serious breach of compliance, Witty says in The Guardian that the company’s controls and audit systems are “extremely robust,” but he promised the company would “learn from this and make changes.”

 

     I don’t know what the company’s controls and audit systems are but it certainly seems something is amiss and improvements are needed. For that matter, it will be interesting to see what the Chinese authorities’ crackdown reveals, as well as how the pharmaceutical industry in China responds.

Do you think emerging markets will be a primary source of business growth for your company during the next few years? I ask, because that’s the finding of two reports based on new surveys.

 

    So, for exampleIn the KPMG “High Growth Markets Outlook Survey,” 69 percent of the respondents identified geographic expansion as the top area for increased spending over the next year, with the majority focused on expanding into or among high-growth and emerging markets outside of the U.S. When asked about the new markets in which their companies planned to make capital investments of more than U.S. $5 million over the next year, Brazil (27 percent), China (26 percent), Mexico (17 percent) and India (13 percent) were the most frequently cited countries.

 

     “We see some investment moving outside of the BRICs and into other markets such as the Philippines, Turkey, South Africa, Korea, Indonesia, Vietnam and Colombia, all of which possess natural resources, a hunger for goods and services such as healthcare and financial services, and a need for vital infrastructure,” says Mark Barnes, national leader of KPMG’s U.S. High Growth Markets practice. “While some of these countries may not generate immediate returns, they have bright, long-term growth prospects and companies that establish an early presence there can gain a competitive advantage.”

 

     Respondents cited a number of supply chain challenges. For instance, the role of government and bureaucracy (50 percent), political risk (42 percent), securing and retaining talent (33 percent), bribery and corruption (30 percent), and regulatory issues (27 percent) were cited by respondents as the biggest operational challenges for their companies in high-growth and emerging markets.

 

     The results of a recent survey from Gartner show similar concerns from its respondents. So, while the emerging-market opportunity is compelling, the challenges for the supply chain organization are numerous, and dealing with the risk of uncertainty is a common theme. The supply chain challenge in emerging markets most frequently cited by the survey’s respondents is dealing with changing rules—including regulatory or tax requirements. The next most-cited challenge is to build local talent or teams and adapting supply chains to local market needs.

 

     There are, of course, other notable challenges. For example, demand in these markets is often highly fragmented, with customers spread across many rural and urban locations, Gartner says. The infrastructure required to support both physical product and information flows is often unreliable, with poor transit systems hindering transportation, limited technology is a barrier to communication, and local supply capabilities are inconsistent. Gartner also notes that political and regulatory instability impact market access and make long-term supply chain investment and partnering strategies a risky task.

 

     One way to address those challenges is to partner with local firms, which was often cited by the KPMG survey respondents. Indeed, joint ventures (cited by 37 percent of the respondents) and mergers and acquisitions (cited by 22 percent of the respondents) are seen as the types of investments companies plan to make when entering into new emerging and high-growth markets over the next year.

 

     Choosing the right joint venture partner and conducting detailed due diligence on an M&A target when entering into a new market is critical, says Barnes at KPMG. Additionally, the management model must be carefully considered because companies often cannot find local talent and don’t have a grasp on how business gets done in these markets to succeed on their own, he says.

 

     “While many companies anticipate revenue growth in emerging and high-growth markets, we’ve seen plenty of companies—especially smaller companies—struggle to succeed, usually because they didn’t conduct the necessary due diligence or identify the right business partners,” says Barnes. "Companies need to enter into these markets with their eyes wide open and a deep sense of cultural understanding of how business gets done because these markets are highly entrepreneurial and competitive.”

 

     Does your company have plans for expansion into emerging markets? If so, what do you think key challenges will be?

     Being in Colorado late last month and early this month reminded me that floods, tsunamis and political unrest may all cause supply chain disruptions but so do wildfires. Indeed, the wildfires—and in particular, the Waldo Canyon Fire—have caused significant damage.

 

     If it seems like the number of supply chain disruptions is increasing, that’s because the number is growing. That rising number, and its resulting cost, isn’t lost on executives. According to research from Deloitte, global executives are increasingly concerned about the growing risks to their supply chains and costly negative impacts such as margin erosion and inability to keep up with demand. More than half (53 percent) of executives taking part in a survey said that supply chain disruptions have become more costly over the last three years. Nearly half (48 percent) of the executives said the frequency of risk events that had negative outcomes, such as sudden demand change or margin erosion, has increased over the last three years.

 

     One of the largest obstacles though simply stems from a lack of supply chain visibility. As the results from KPMG’s 4th annual “Global Manufacturing Outlook—Competitive Advantage- Enhancing Supply Chain Networks for Efficiency and Innovation”—survey point out, many manufacturing executives (49 percent globally and 54 percent in the U.S.) admit that their companies currently don’t have visibility of their supply chain beyond Tier 1 suppliers. Moreover, only nine percent of the respondents say they have complete visibility of their supply chains. Actually, that number is even lower among U.S. executives, with only seven percent claiming complete supplier visibility.

 

     When asked about their ability to assess the impact of an unplanned supply chain disruption, a similarly small percentage of executives (nine percent global and seven percent U.S.) taking part in KPMG’s survey say they are able to assess the impact within hours. However, the most frequent response among global executives was between one and six days (36 percent) and U.S. respondents most frequently said between one and two weeks (32 percent).

 

     With the topic on my mind, I was interested to see a recent Wall Street Journal article about being prepared for disaster. Granted, the article is written for homeowners but its fundamental focus also applies to businesses. So essentially, companies should make a plan, make sure they have appropriate insurance coverage, adequately store (protect) vital documents and protect the building. I think that’s a good start. The next step then is to review and evaluate the plan to ensure the company is able to maintain operations through a crisis as well as position the business for the return to full operations in the weeks after a disruption.

 

     But that’s just the beginning because how well the supply chain functions—or grinds to a halt—is equally, if not more, important. And that’s the challenge. As the results of the KPMG study show, it’s difficult to evaluate the supply chain to determine how it may be effected by potential disruptions. This type of evaluation should be conducted by a multidisciplinary team comprised of individuals from departments including procurement, logistics, product development, finance, accounting, marketing, sales, IT, business continuity and enterprise risk management. Working together, they can help a company determine which suppliers or supplies are truly vital to efforts to protect profitability, market share and reputation. The team may also be able to shed some light on whether or not the company truly “knows” what the risk levels and factors are for the supply chain.

 

     What I’d like to know is if your company regularly evaluates its business continuity plan? Do executives know what the main risks are and how the company will respond to disruptions? How will other companies and partners respond?

     It’s been widely reported that the U.S. and China will start negotiating a bilateral investment treaty, which could open vast sectors of each economy to investments from the other side, according to officials.

 

     Treasury Secretary Jacob J. Lew called the development a significant breakthrough, reports the New York Times. The article goes on to note that in a statement, Lew said this represents “the first time China has agreed to negotiate a bilateral investment treaty, to include all sectors and stages of investment, with another country.”

 

     The treaty talks were announced at the close of a two-day meeting of high-ranking Chinese and American diplomatic, security and economic officials, part of an annual “Strategic and Economic Dialogue” between the world’s two largest economies. But concerns over cyber espionage and theft have complicated the economic discussions, with diplomats working on those issues this week. Protections against cyber spying would presumably have to be part of any investment treaty, and potentially could be a major sticking point.

 

     The United States has repeatedly warned that the theft of American companies’ intellectual property, often over computer networks, could make businesses hesitant to invest. And the U.S. has blocked some Chinese investments, fearing that they could facilitate electronic espionage.

 

     So, for example, there are the reports that a clandestine Chinese military unit has conducted sophisticated cyber espionage operations against dozens of American and Canadian companies. According to a private report earlier this spring by computer security firm Mandiant Corp., attacks against 141 companies have been traced to a specific 12-story office building in the financial center of Shanghai. According to the report, the building is home to the 2nd Bureau of the People’s Liberation Army’s General Staff Department’s 3rd Department, which is known as Unit 61398.

 

     Nonetheless, discussions continue, and the new meetings do follow on the heels of the meetings by Presidents Obama and Xi Jinping last month. But as an article in The Guardian reported at the time, the U.S.’ concerns about cyber espionage were overshadowed by revelations of Washington’s own cyber warfare strategy. The presidents discussed the issue for several hours, according to aides, but the best that the U.S. was able to boast afterwards was that Beijing was no longer unaware of the depth of feeling on the subject.

 

     “It’s quite obvious now that the Chinese senior leadership understand clearly the importance of this issue to the U.S.,” said Obama’s national security adviser, Tom Donilon, The Guardian article reports.

 

     Nevertheless, the security concerns don’t seem to hamper progress on economic matters. American businesses face significant hurdles in investing in China—when they are allowed to invest at all. At the same time, Chinese companies seeking to invest in the U.S. often fear a political backlash in Congress or rejection on national security grounds. A bilateral treaty might open the door for American financial, consulting and energy companies to make significant inroads in the growing Chinese market.

 

     “If China negotiates a treaty that not only protects investments after they are made but also improves U.S. investors’ access to the Chinese market, this would be a real breakthrough,” says Michael Smart of consultants Rock Creek Global Advisors, in an article that ran on Reuters.

 

     In the end, I believe there are many tough issues and considerable sticking points to get past—and negotiations on a treaty could be lengthy. However, if both countries are committed to protecting intellectual property and fighting cyber espionage, while promoting investment opportunities, this is a positive development. It will, however, be playing out for quite some time.

     I’ve been doing quite a bit of traveling this summer, and in catching up on some reading, I have been interested to run across some articles exploring the connection between reshoring and capitalizing on customers’ preference to purchase goods “Made in the U.S.A.”

 

     In the first article, Ron Felber, president and CEO of Chemetall-North America, wrote in IndustryWeek that for the first time in decades, he’s beginning to hear upbeat accounts from entrepreneurs engaged in American manufacturing. The need to reduce cost has driven considerable work outside the U.S. but the possibility of saving time and reducing cost may bring it back, he wrote.

 

     Through most of post-World War II history, the forces of globalization have made it harder to keep manufacturing jobs in the U.S., Felber wrote. Today, he believes the wave of technological innovation in communication systems and production tools make it easier to bring new products to market faster than the competition by designing, refining and manufacturing them here in the U.S.

 

     “At the same time, social and economic changes in China are making outsourcing to Asia ever costlier and trickier for all but the most sophisticated firms,” Felber wrote.

 

     In the other article that caught my attention, Robert J. Bowman wrote in SupplyChainBrain about a survey by AlixPartners last spring. The results from the firm’s survey show that manufacturing executives believe the U.S. is already equal to Mexico in “attractiveness” as a place to make product that was previously sourced in China.

 

     I’ve seen the survey before but I still find it interesting that 37 percent of the executives name the U.S. as their preferred location for near-shoring production to serve American consumers. That’s the same percentage of executives who would prefer placing production in Mexico but the gap between the two countries is narrowing. Last year, 49 percent of the executives surveyed named Mexico as their first choice, with 36 percent of them citing the U.S. The year before, the numbers were 63 percent and 19 percent.

 

     Sentiment plays a big part in the sourcing debate. Indeed, business decision-makers are displaying “a maniacal focus on the lowest cost of getting an item produced and available,” AlixPartners managing director Foster Finley says. Indeed, Bowman further notes that Finley acknowledges some companies have tipped the scale in favor of domestic sourcing “to be able to say this is a U.S. product made by a U.S. labor force.”

 

     The reason is that there’s big business, or at least profitability, in the “Made in the U.S.A.” tag. Consumer Reports notes that given a choice between a product made in the U.S. and an identical product made abroad, 78 percent of surveyed Americans would rather buy the American-made product. Those people are interested in retaining manufacturing jobs and keeping American manufacturing strong in the global economy. They also have concerns about the use of child workers or other cheap labor overseas, and believe American-made goods are of higher quality, according to Consumer Reports.

 

     Surprisingly, they’ll pay more for American-made goods as well. More than 60 percent of all respondents in the Consumer Reports survey indicated they’d buy American-made clothes and appliances even if those cost 10 percent more than imported versions. Furthermore, more than 25 percent said they’d pay at least an extra 20 percent to purchase American-made products.

 

     It’s worth noting that this thinking extends beyond consumers though. Indeed, in a Crain’s Chicago Business article, Ray Wiltgen, owner of Security Locknut LLC in Vernon Hills, IL, says the company’s sales have doubled over the past 18 months—and he credits most of the surge to reshoring in the automotive and rail sectors, prime customers for his products. Security Locknut is one of the few makers of locknuts, nuts designed to resist loosening despite vibrations or pressure, in the U.S.

 

     “Every time I get on a sales call, the big question is: ‘Where do you get this? Where do you get your raw material?’” Wiltgen says in the article.

 

     What do you think? A “Made in the U.S.A.” tag can be an important selling point. Does it matter to you personally? Does it matter to your employer?

    I’m always interested to see which U.S. states have the most manufacturing jobs, and where the job market is growing, so a recent article that ran on CNBC caught my eye. That article shows that when it comes to creating manufacturing jobs, Michigan leads the way, followed by Texas, Indiana—not surpisingly then Ohio and Wisconsin.

 

     I was interested to see though that Georgia is in the top 20, coming in at number 14, because I had just seen some other news regarding the state. Bill Dobbs, director of aerospace, defense and advanced manufacturing, Georgia Department of Economic Development, recently wrote in IndustryWeek that workforce training, hiring and education are top priorities in Georgia’s efforts to help businesses grow. The best-known Georgia workforce advantage is Quick Start, often named as a top workforce development program since its inception in 1967, Dobbs wrote. Quick Start can model a manufacturing or laboratory setup based on a company’s specific requirements and helps companies find the right talent, reducing the time it takes for a company to begin operations.

 

     Obviously, there’s a lot to the Quick Start program. But in Dobbs’ article, three main points stood out for me. The first is the level of flexibility the program is able to deliver. So, for instance, Quick Start delivers training in classrooms, mobile labs or directly on the plant floor. In Savannah, Quick Start trained Mitsubishi Power Systems America’s first production welders on the state-of-the-art welding technology required to produce the company’s precision turbines and other power system components, Dobbs notes. Today, Quick Start operates a 2,000-square-foot plant center where instructors continue to train employees in a custom-designed environment that mirrors the production floor.

 

     Secondly, Dobbs explains that Quick Start works closely with relocating and expanding companies in Georgia to meet their workforce training needs. For example, Quick Start worked with Kia in West Point, Ga., to design and build the Kia Georgia Training Center. Tens of thousands of job candidates have gone through its pre-employment process and virtually all of Kia’s 3,000+ current Georgia employees received Quick Start training in robotics, welding and electronics labs. This training has been so effective that the company’s chairman called Kia’s workforce training “global benchmark,” Dobbs explains.

 

     Finally, and I believe this may be the most important, is the link with community investment. Dobbs wrote that Georgia’s manufacturers think long-term, investing in tomorrow’s workforce. For example, in 2012, Kia pledged $900,000 to strengthen science, technology, engineering and mathematics (STEM) education in the Troup County School System, the county where Kia is located.

 

     In other Georgia news, I was also interested to read that Georgia Gov. Nathan Deal recently announced that Inalfa Roof Systems, a leading global supplier of vehicle roofing systems for automotive manufacturers such as Hyundai Kia, Ford, General Motors, Volvo, Chrysler Group and BMW Group, will open a manufacturing plant in Cherokee County. The plant represents a $17.1 million investment and 300 jobs for Georgians.

 

     “Inalfa joins the dynamic auto industry Georgia has cultivated for more than 100 years,” says Governor Deal. “Our central location in the Southeast, deep workforce resources and logistics infrastructure have attracted well over 300 companies and continue to give the state a competitive advantage in this manufacturing sector.”

 

     What do you think about manufacturing in Georgia or the Quick Start program? Are you aware of other initiatives in other states working toward the same end?

     One of the largest problems concerning counterfeit pharmaceuticals is that they are an international problem crossing national boundaries because there are so many Internet pharmacies that illegally sell unapproved, counterfeit or potentially adulterated or substandard drugs.

 

     However, building on the success of its past global cooperative efforts to stop the on-line sale and distribution of potentially counterfeit and illegal medical products, Interpol announced more than 100 countries recently took part in Operation Pangea VI. The global operation to disrupt the criminal networks behind the illicit sale of potentially dangerous, unapproved prescription medicines online, resulting in 58 arrests worldwide and the seizure of 9.8 million potentially dangerous medicines worth some USD 41million. Among the fake medicines seized during Operation Pangea were antibiotics, cancer medication, anti-depression pills, food supplements and erectile dysfunction medication.

 

     The week-long operation was coordinated by Interpol, with the World Customs Organization, the Permanent Forum of International Pharmaceutical Crime, the Heads of Medicines Agencies Working Group of Enforcement Officers, the Pharmaceutical Security Institute, Europol, and supported by the Center for Safe Internet Pharmacies and private sector companies including Visa, Mastercard, PayPal and Legitscript. It targeted the main areas involved in the illegal on-line medicine trade: Internet Service Providers (ISPs), electronic payment systems and delivery services. More than 9,000 websites linked to illicit on-line pharmacies were identified and shut down, in addition to the suspension of payment facilities of illegitimate pharmacies and the disruption of a substantial number of spam messages.

 

    Worldwide partners combined their efforts in the operation to fight these organized criminal networks, says Interpol Secretary General Ronald K. Noble. Together, they are protecting innocent consumers by shutting down illegitimate online pharmacies, confiscating illegal pharmaceutical products and bringing criminals to justice.

 

     “These are significant steps in safeguarding the health and safety of the public, and in dealing a major blow to the criminal groups behind the counterfeiting of medical products,” says Noble.

 

     As part of Operation Pangea VI the U.S. Food and Drug Administration’s Office of Criminal Investigations, in coordination with the United States Attorney's Office for the District of Colorado, seized and shut down 1,677 illegal pharmacy websites. The FDA explains that many of these websites appeared to be operating as a part of an organized criminal network that falsely purported its websites to be “Canadian Pharmacies.” These websites displayed fake licenses and certifications to convince U.S. consumers to purchase drugs they advertised as “brand name” and “FDA approved.” The drugs received as part of Operation Pangea were not from Canada, and were neither brand name nor FDA approved. These websites also used certain major U.S. pharmacy retailer names to trick U.S. consumers into believing an affiliation existed with these retailers.

 

     Among the fake drugs were:

 

  • Avandaryl: FDA-approved Avandaryl (glimepiride and rosiglitazone) is used to treat type 2 diabetes and to minimize potential associated risks,
  • “Generic Celebrex”: “Generic Celebrex” sold on-line is not an FDA-approved product. FDA-approved Celebrex (celecoxib) is a non-steroidal anti-inflammatory product used to treat the signs and symptoms of osteoarthritis and rheumatoid arthritis and to manage acute pain in adults, and
  • “Levitra Super Force” and “Viagra Super Force”: While Levitra (vardenafil) and Viagra (sildenafil) are FDA-approved medicines used to treat erectile dysfunction (ED), Levitra Super Force and Viagra Super Force are not FDA-approved products.

 

     So on the one hand, I’m glad to see such efforts to halt the flow of counterfeit medicines. I also believe, however, that education should be increasingly stressed so consumers know not only about the dangers of buying medicine from fake on-line pharmacies, but also how to safely buy medicine online. Programs such as FDA’s “FDA BeSafeRx—Know Your Online Pharmacy,” are a step in the right direction.

 

     What do you think?