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In Focus: Blockchain & Pharmaceuticals

The pharmaceutical industry is an almost perfect match for blockchain technology given that it employs track and trace technology, and requires data on product point of origin and supply chain control. The merits of blockchain are therefore being explored to help solve real-world issues within the industry. A good deal of these technologies have already been prototyped or are being used in the wider industry already.

Pharmaceutical companies are plagued by the frequent return of drugs to the manufacturers, for reasons such as excess inventory.  In this instance, verification of product provenance is essential.

Although returned product accounts for a relatively small percentage of goods (approximately 1-3% of sales), this equates to $7-10 billion per annum. Naturally, instead of intentionally destroying this surplus product, the preference would be for the pharmaceutical company to resell it so it doesn’t miss out on clean profit.  There is, however, a catch: before the drugs can be resold, the manufacturer must verify the authenticity of the returned drugs. There are plans in the USA to fully serialise products so they are trackable but this would rely on each manufacturer doing so independently.  By implementing a de-centralised blockchain solution, clarity regarding provenance could be provided for both manufacturers and clients, who could independently verify the quality and point of origin of drugs quickly and securely.

Merck have partnered with SAP to develop the SAP Blockchain POC (Proof of Concept) app, which allows the user to link various pieces of data to a barcode attached to a product.  Item number, serial number, batch number and expiry date can all be inputted against the product. These pieces of data are extractable via the app, which is powered by the blockchain.

Another use for blockchain would be in the security and integrity of clinical trial data. Security is a key pillar of blockchain technology and where confidential patient information is concerned it is of the upmost priority.  Being able to have accessible and secure data would mean that when a trial enrols participants they could be checked against the existing chain – allowing them to be included or excluded from multiple studies at once.  Around 20-30% of the mainstream budgets of pharmaceutical companies are spent on clinical trial security so there are large potential savings to be made with this technology.

The National Institution for Transforming India (NITI) is currently putting blockchain technology at the forefront of their research. CEO Amitabh Kant said that “Pharma supply chain management with blockchain for the complete traceability of drugs from manufacturer to consumer will revolutionise the industry”.

NITI has partnered with the tech giant Oracle to implement the project and are planning to eradicate all channels of counterfeit medical products. The technology aims to reduce fraud and better manage production.  One of their other goals is to improve public safety and the perception of the industry and individual companies with the availability of real-time data through blockchain.

In the pharmaceutical industry where trustworthiness is a cornerstone in terms of public perception and revenue is key for the manufacturers, blockchain technology has multiple applications that can satiate the public hunger for transparency, toughen up the entire supply chain of drug production, and make substantial savings.  We may well be a couple of years from full integration but suffice to say that when the industry fully understands blockchain and the real value of what it can do, adoption will quickly grow and become the norm for many years to come.

Written by Piers Courtney