Counterfeit Drug problems? Blockchain to your rescue - Marlabs Resilience through design

Counterfeit Drug problems? Blockchain to your rescue

How likely are we to question the medicine that we receive from the pharmacist based on the prescription from the medical practitioner? Not very likely, right? The drug markets in industrialized economies are highly regulated, and a lot of care is taken to ensure the right treatments reach our pharmacies as mentioned on the packet.

However, a dangerous trade in counterfeit drugs is flourishing that has become a global problem for vulnerable citizens. It’s tricky to identify fake drugs and the only true way of knowing if a drug is counterfeit is in the labs. Many a times, these fake drugs differ in size, shape, color, are incorrectly formulated with wrong or poor-quality APIs and / or are sold in poor-quality packaging often causing unusual side effects and being fatal at times. But they often appear identical to the real drug.

In fact, the World Health Organization estimates that about 9% to 41% medical products in low- and middle-income countries is substandard or falsified.

Many anti-counterfeiting technologies are being leveraged by pharma companies to ensure authenticity of the distributed drug from the manufacturing site to the pharmacy. Among these technologies are holograms, color-shifting inks, embedded codes, IC based and chip-less RFID, and dyes. These features facilitate identification of suspicious drugs. The industry has invested billions of dollars into such defensive actions, but these efforts have only slowed the drug mafias and not stopped. Are these enough to save lives?

Multi-country pharmaceutical supply chains are increasingly complex, and e-commerce has added to the complexity.

Let’s see how track-and-trace solutions leveraging Blockchain can offer a novel way to create digital trust within the supply chain and possibly prevent the counterfeit drugs from reaching the buyer.

Blockchain is a System of Record and makes it impossible to manipulate or hack the system. It is a digital ledger of transactions, copy of that ledger is distributed across the network. In the drug manufacturing value chain, following stakeholders can participate in the blockchain to bring in transparency and authenticity to the buyers.

  • Generics manufacturing firms
  • Pharmaceutical companies
  • Supply chain partners or network
  • Distributors
  • Dealers
  • Drug stores
  • Hospitals

Through Blockchain, multiple functionalities can be exposed to different parties involved in the supply chain. The manufacturer QR code with essential information like timestamp, item name, location and manufacturing, expiry dates etc. gets stored on the Blockchain. A hash ID is produced that can be used by distributors for verification of the drug provenance after collection from the logistic providers. These signed transactions generate smart contracts to send drugs to the hospitals and pharmacies who can validate authenticity with the private key. This eliminates any unauthorized transaction and prevents sale of counterfeit drugs with fake drug IDs. Patients can also authenticate the source and quality standards of the drug by scanning the QR code linked to the hash ID that would fetch information from the Blockchain.

Role of Blockchain in supply chain finance:

  • Real time availability of orders and invoices and automatic payments processing
  • Close collaboration between supply chain participants
  • Elimination of potential data mismatch between multiple F&A functions

Role of Blockchain in track-and-trace functions:

  • Provides complete transparency with drug provenance information and helps establish e-lineage with a permanent log of equipment sensor readings
  • Eliminates dispensing error and accelerates defective drugs recall
  • Identifies the faction responsible for introducing fake and falsified products into the supply chain

Blockchain also acts as a shared database across the organization from which data is read for predictive analytics.

So, if a pharmaceutical supply chain is built over and traced with Blockchain, each transaction would be entered and tracked, which would provide a fully transparent track-and-trace system for drug authenticity. It would provide real-time traceability to downstream accomplices.

Points to ponder before implementing Blockchain:

  • Technology complexity and IT Infrastructure
  • Integration of various systems into the Blockchain
  • All the players in the value chain should participate

However, above challenges can be mitigated by carefully architecting the Blockchain with right technology choices, planning the information to be captured and maintained. Blockchain brings an exceptional defence mechanism in serious challenges like fighting counterfeit drugs.

The question now is about mindset. Are you ready to counter the counterfeit drug market?  We’re here to help.
Write to us –


Surya Kothapalli,
SVP – Global Head of Practices,

Shishir Vahia,
Senior Manager, Marketing
Marlabs LLC

About Marlabs LLC

Marlabs helps leading companies around the world make operations sleeker, keep customers closer, transform data into decisions, de-risk cyberspace, boost legacy systems, and capture novel opportunities and digital-led revenues. It provides digital-first strategy and advisory services, rapid solution incubation and prototyping, and agile digital solution engineering. Marlabs is headquartered in New Jersey, with offices in the US, Germany, and India. Its 2,500+ global workforce includes highly experienced technology, platform, and industry specialists from the world’s leading technical universities.

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