From Hype to Reality: How IoT (Internet of Things) is Transforming Pharma

How the "Internet of Things" is impacting the pharma industry

Digitalization of supply chains is a transformational force that will allow companies to achieve profitable growth and operational excellence through leveraging automation and analytics. Companies who implement technology-driven supply chain practices can meet consumer needs in a more expeditious and efficient manner. Pharmaceuticals (“Pharma”) is one industry that has embraced digitalization as it has faced growing challenges from increased complexities, price and cost pressures, and personalized medicines [1]. Specifically, the “Internet of Things” (“IoT”) is one critical element within digitalization that makes smooth supply chain information transmission possible [11]. IoT is broadly defined as a network of internet-connected objects able to collect and exchange data using embedded sensors [5]. Sensors throughout the supply chain can transmit critical information and provide real-time insights across the entire value chain. The potential for IoT is enormous, including reducing lead times down to days rather than weeks or months [1]. Research estimates that by 2020, there will be 50 billion connected devices, and in five years, 80% of companies are expected to utilize IoT in their digitized supply chains in some form [1].

Pfizer, one of the world’s largest pharma companies, is one such corporation that has been looking at innovative opportunities to digitalize its supply chain over the next few years using IoT. For instance, Pfizer was one of the first pharma companies to utilize radio-frequency identification (“RFID”) tagging to reduce counterfeiting of its drugs. A few years ago, Pfizer added RFID labels to all its Viagra bottles that allows distributors to verify the product’s authenticity [4]. RFID tagging and product serialization allows for better control over material flow and ensure patient safety by reducing prevalence counterfeit. Having a highly orchestrated supply network that guarantees full end-to-end visibility is also crucial to a seamless supply of medicines which save patient lives and help Pfizer continually improve its processes.

More recently, in 2016 Pfizer announced a first-of-its-kind research collaboration with IBM called Project Blue Sky to employ monitoring tools that enable clinicians to deliver higher quality care to patients with Parkinson’s disease [2]. Through smart spoons fitted with sensors for instance, Pfizer can detect tremors which are symptomatic of Parkinson’s and alert clinicians of patient behaviors [2]. One of the main issues with Parkinson’s treatment today is that it’s highly reliant on patient anecdotes which often can be subjective or inaccurate. Utilization of scanners and motion sensors allows for real-time data which can greatly enhance anecdotal information received from patients, enabling researchers and clinicians to have a better idea of how a patient is responding to medicine and how the disease is progressing. Ultimately, Pfizer intends to use this project as catalyst for treatment of other degenerative diseases and to show how new treatments can improve daily wellbeing.

While Pfizer has clearly been at the forefront of using IoT for supply chain management and drug development, it should invest in mitigating several risk factors that are unique to the pharma industry. One challenge in adoption of IoT is the vast number of different electronic systems which makes seamless information flow difficult both internally and externally across stakeholders. To fully take advantage of all that IoT has to offer, Pfizer should invest in increasing data interoperability of its own enterprise resource planning (“ERP”) systems with those of others in its supply chain. Many smaller pharma companies are adopting cloud-based ERP software whose single-instance, multi-tenant functionality allows for easier data interoperability [10].

Another key concern in this industry is regulatory risk particularly around patient information. Traditionally, the pharma industry has been much more heavily regulated than other sectors. Because of this, access to point of sale (“PoS”) information has been systematically limited by legal constraints such as need for protecting sensitive customer information [8]. Given the vast amounts of data that implementing IoT would continue to generate, ensuring secure flows of sensitive data is a critical requirement for Pfizer. Recently, the US FDA just announced a new digital health certification pilot program to help regulate new technologies such as IoT [3]. In order to stay ahead of regulatory changes, Pfizer should aim to be a participant in these pilot programs and be a trailblazer in the pharma industry in terms of information cybersecurity.

While the advantages of investing in IoT are apparent, several questions are key to understanding its momentum and rate of adoption. What roles will future regulation have in the healthcare sector? For instance will privacy laws like HIPAA become relaxed over time that may unleash further opportunities for IoT? Will pharma companies be equipped to analyze and protect the vast amounts of data collected through RFID tags, sensors, and patient monitors? How will companies quantify the ROI impact of investing in IoT technologies and measure various benefits such as increased innovation, better visibility, and cost reductions?

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  1. Behner, Peter, and Marcus Ehrhardt. “Digitization in Pharma.” PwC Strategy&, 2016.
  2. Bourla, Albert. “How the next Wave of Technologies Will Disrupt Healthcare: Q&A with Pfizer’s Albert Bourla.” WIRED, WIRED UK, 18 Apr. 2017,
  3. Caccomo, Stephanie. “FDA Selects Participants for New Digital Health Software Precertification Pilot Program.” US Food and Drug Administration , 26 Sept. 2017,
  4. Catherine O’Connor, Mary. “Pfizer Using RFID to Fight Fake Viagra.” RFID Journal, 6 Jan. 2006,
  5. Kelly, Kevin. The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future. Penguin USA, 2017
  6. Kemppainen, Pasi. Pharma Digitalisation: Challenges and Opportunities in Transforming the Pharma Industry. European Pharmaceutical Review, 30 May 2017,
  7. Schrauf, S. and P. Berttram, Industry 4.0; How Digitization Makes the Supply Chain More Efficient, Agile, and Customer Focused,PWC Strategy & (2017)
  8. Senatore, Mirko. “Digitizing the Supply Chain: Why Pfizer Is Investing in IoT Technologies.”Internet of Business, 2 Feb. 2017,
  9. Moreno, Hugo. “How A Digitized Supply Chain Can Give You A Competitive Edge.” Forbes, Forbes Magazine, 25 May 2017,
  10. Thai, Samantha. Oracle Announces Pfizer’s Selection of Oracle Cloud . Oracle, 20 June 2016,
  11. Yan, Bo, and Guangwen Huang. “Supply Chain Information Transmission Based on RFID and Internet of Things.” 2009 ISECS International Colloquium on Computing, Communication, Control, and Management, 2009, doi:10.1109/cccm.2009.5267755.


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Student comments on From Hype to Reality: How IoT (Internet of Things) is Transforming Pharma

  1. This makes so much sense! Patients are notoriously not great at giving an accurate picture of their symptoms – some people like to tough it out, while others may say they feel much worse than they actually are. I found an interesting article about how cancer researchers are using data from patients’ fitbits to assess their physical state when their mental state might be foggy due to side effects of treatment [1]. I agree with you that the main concern is privacy and I worry that pharmaceutical companies may not be equipped to handle such data on a mass scale. I would be very surprised if HIPPA standards were relaxed for digitization purposes. I wonder if companies like Epic that are focused on electronic medical records and integration of hospital systems will see this as a new business opportunity (since they have the secure infrastructure) or if this deviates too greatly from their current business model.


  2. I love the potential for the IoT to impact healthcare, but I have one major concern: Who buys the sensor-equipped spoon? If the end user is expected to foot the bill, then how can the price be brought down to an affordable level–I don’t know about everyone else, but I can only afford so many $200 accessories, and I suspect that the average consumer has similar concerns.

  3. I agree with you that Pfizer should take the lead and participate in the pilot programs and other opportunities to pave the way for other pharmas. Their use of IoT gives them a competitive edge and is helping to provide reliable, and proactive versus reactive diagnoses. I am curious to know more about the role of IBM in developing the smart spoon capability. Do you think pharmas can eventually develop these solutions fully in-house, or will they likely continue to depend on outsourcing development to the IBMs of the world? If Pfizer could develop a complete in-house solution, and cut out IBM, this may quell some of the privacy concerns as fewer parties would have access to sensitive data.

  4. Thanks for a thought provoking read! I agree that the regulatory risk particularly around patient information is important to the firms employing IoT. With that said, I’m also concerned about the level of patient information available to the pharma companies. While having greater access to patient can enhance diagnosis, prevention and product development, I am also wary of other applications of this information to cross-sell products or potentially sell this patient information to other interested parties. Also I would be concerned about ensuring that the cost of investing in such interoperable technologies would not impact the consumers’ prices.

  5. The internet of things application to pharmaceutical clinical studies seems to offer a lot of potential for clinical studies to incorporate quality of life and functional end points to measure efficacy. Traditionally, these “soft” end points have been hard to quantify but, with new ways of tracking patient vitals and daily activities, drug companies should be able to track patient information that historically was only measured in the hospital setting. Standardization of these metrics and determining significance versus “noise” will be the greatest challenge for Pfizer and other companies employing this technology to clinical studies.

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