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How Blockchain Is Vastly Improving Pharmaceutical Supply Chains And Delivering Safer Drugs

Countries like India and China specifically are very vulnerable to counterfeit products, as are several other Southeast Asian countries.

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Chennai is today known as a hub for cutting-edge medical care, with hospitals such as Aravind Eye and Apollo and some 42,000 pharmacies making it a nerve centre for both cutting-edge and affordable treatment for patients around the world. A little over a decade ago, in 2010, the city’s medical and pharma credentials took a nasty hit, when a counterfeit drug racket was exposed and its kingpin Meenakshi Sundaram, a regular with the city’s swish set, was outed as the leader of this fake medicines ring.

These counterfeit drugs had lethal consequences - a baby was killed when given fake medicines, and the government was jolted into action, announcing sweeping raids and arresting many people across this sordid operation. Despite these actions, there is little evidence that regulators have been able to stamp out counterfeit medicines both in India and worldwide.

According to one estimate from BIS Research, global pharma companies lose around $200 billion to counterfeit drugs annually. Countries like India and China specifically are very vulnerable to counterfeit products, as are several other Southeast Asian countries who are adulterating drugs and putting the life and health of their population in immediate danger.

As things stand, devising fake and expired drugs isn’t difficult today—with a bit of rubbing alcohol you can easily remove the ink stamped details and be in business. As a consumer, this raises big questions: what is the drug am I buying and is it authentic or a rip-off? As things stand today, the use of track-and-trace within India’s pharma industry is limited, so the opportunity for counterfeiting remains wide open.

We need to have regulators mandate the use of track-and-trace technology and companies need to strongly consider the use of blockchain, a technology innovation most often associated with the fuzzy world of cryptocurrencies, such as bitcoin, to make the pharma supply chain safe. Blockchain is a secure decentralised system in which transactional or historical data are recorded, stored, and maintained across a peer-to-peer network of personal computers called nodes. It is an immutable, public digital ledger. For the pharma industry, this is of massive interest, because blockchain is a virtual or digital ledger that contains continuously updated, time-stamped, and highly encrypted virtual records.

By giving each strip, bottle or vial of medicine a unique number, it can be closely tracked all along the supply chain. My fellow CEOs seem to agree: 40% of health execs see blockchain as among their top 5 priorities, with spending on this technology expected to hit $5.61 billion by 2025, according to a report by BIS Research. The adoption of the blockchain technology could save the healthcare industry up to $100-$150 billion per year by 2025 in data breach-related costs, IT costs, operations costs, support function costs and personnel costs, and through a reduction in frauds and counterfeit products, the agency reports.

In India, Niti Aayog has chosen pharma (and reducing counterfeit drugs), as one of the focus areas for concept studies for blockchain. “Research and interviews conducted … found that drugs coming directly from the manufacturer’s facility are trustworthy … the risk of entry of fake drugs arises when the products are handed off between the various stages and layers of the complex supply chain (i.e. wholesalers, distributors, or sub-distributors),” a NITI Aayog report called

Blockchain the India Strategy, notes. At each transfer point from the factory to the patient, drugs can be stolen, adulterated, and replaced.

“The National Informatics Centre has designed and implemented a new system named Drug Authentication and Verification Application (DAVA), based on the GS1 standards, for drug tracking and traceability,” the report adds. “(However) it does not ensure visibility of each transaction to all stakeholders … it is not able to track and trace the product throughout the supply chain.” With emerging technologies such as blockchain and Internet of Things (IoT), this can be achieved.

For consumers, the implementation of such a blockchain solution could be transformative. If you pick up a box of medicines, you could text a unique number and get the details of the medicine in your hands (perhaps a picture too), with a complete name and time of manufacturing and expiry. The government or regulator can safeguard the health of its citizens by ensuring the product details are entered on this distributed ledger and along the supply chain, its path is updated to ensure complete safety and eliminate counterfeiting enroute.

For me as a pharma company leader, the interest in this kind of breakthrough technology is deeper. For example, I believe that the use of innovations such as blockchain can transform supply chain not just to the end customer, but also backwards to more closely track the quality of the entire manufacturing process. Consider this scenario: as companies begin to leverage technology more heavily (blockchain with cloud and IoT), you can track quality and production metrics for each batch that is made, the quantities shipped and performance of each drug.

As the CEO, I can track any deviations right from the manufacturing process, to the time of process, using cloud-connected factories, IoT and blockchain. Further afield and hopefully sometime soon, hard-pressed regulators from say the USFDA, who are always running behind the clock, can perform virtual inspections of drugs produced, rather than fly all the way to India and do it in person. With all details updated in a blockchain ledger, the chances of counterfeiting are minimized and the entire production process can be approved (or not) much faster

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Blockchain supply chains pharmaceutical industry

Karan Singh

The author is Managing Director, ACG

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