How Blockchain Can Revolutionize The Pharmaceutical Supply Chain?

Pratik Rupareliya
May 16, 2019 · 5 min read

The pharmaceutical industry is a dynamic ecosystem of mutually-dependent stakeholders who work in union to bring healthcare and pharmaceutical products to the end users. If you have ever visited a pharmacy, I am sure you might have been intrigued and questioned the authenticity of the drugs you are taking.

The problem is not only yours. Globally, counterfeit drugs are a big problem with WHO estimating 120,000 annual deaths in Africa alone due to the usage of counterfeit drugs. When counterfeit drugs are such a big problem, the question of the integrity of pharmaceutical supply chain efficiency arises, automatically.

Deciphering the Challenges of Pharmaceutical Supply Chain

There is no denying to the fact that pharmaceutical supply chains are a complex phenomenon. All the parties depend on each other to share and update data at various points and ensure trust and reliability is maintained throughout the entire process.

When so many stakeholders are in the supply chain, naturally, the quality of data gets deteriorated. It becomes extremely difficult to monitor and validate information due to chances of human error, misinterpretation, miscommunication or misplacement of documentation.

Moreover, The Drug Supply Chain Security Act 2013 in the US and similar laws elsewhere requires drug manufacturers and vendors to keep a detailed track record of the source and the destination where the drug is shipped. It is anticipated that by 2020, end-users- patients, hospitals and pharmacies will get the power to verify the source of every bottle of pharmaceutical produce.

The growing demand for an efficient drug-tracking and counterfeit-eliminating system has made decision-makers and the top brass in pharmaceutical organizations scratch their heads. They are unclear about how to shift from a batch-based tracking system to a single-bottle tracking system. Clearly, existing systems and supply chains are inefficient in handling such extensive databases with an immutable record of origins.

Blockchain technology has served as a ray of hope for drug manufacturers and other stakeholders who are under obligation by law to be more transparent in defining the source of medicine and providing that information to the patients and pharmacy operators.

Transforming Pharma Supply Chain for Compliance through Blockchain

Blockchain can provide a single-window information solution for multiple stakeholders which would promote transparency, security, and monitoring of deliveries under a single bundle. Blockchain facilitates tracking of the drug throughout the entire journey from the manufacturer to the patient, thus helping eliminate the chances of counterfeiting.

With the help of distributed ledger based systems, integrity can be infused back into the pharma supply chains easily using cryptographic keys. A blockchain-based healthcare and pharma supply chain can be used efficiently to track the route of drugs using private keys and smart contracts for proving the ownership of drugs. The Proof-of-Drug Ownership system based on the blockchain can reinvent the entire supply chain mechanism, thus streamlining the whole system in the process.

Eliminating Counterfeits via Blockchain-based Supply Chain System

As you all know, blockchain based architecture has no room for faults and promote end-to-end data encryption. With these added functionalities, supply chains would become inherently reliable, eliminating the need for third-party P2P data integration.

Added Spotlight on the Need for a Total Facelift

Apart from the compliance requirements forcing drug companies to transform the supply chain, there is a more logical explanation to the need for revamp of existing supply chain mechanism. In the traditional pharmaceutical value chain, which is a lengthy mechanism, nothing is simple when it comes to auditing and getting approvals. The different stages of the preliminary supply chain deal with getting regulatory approvals and involves:

  • Discovery of a New Drug
  • Testing of Drug For
  • Safety
  • Effectiveness
  • Efficacy
  • Patent Protection
  • Regulatory Approvals
  • Production & Supply

During this entire process, when the drug is ready to enter the market, manufacturers face several issues related to proving a drug’s authenticity, quality, and provenance for persuading patients about its safety. Due to the complexity of the supply chain, sometimes manufacturers find it hard to maintain transparency, thus demotivating others who are trying to disrupt the industry using breakthrough innovations and discoveries.

Blockchain promotes end-to-end traceability of drugs, eliminating the need for extra efforts to prove its authenticity owing to cryptographic timestamps in the public blockchain. Not only this system keeps counterfeits in check, but promotes innovation and addresses major drug safety and security concerns.

Promising Blockchain Use Cases Revolutionizing Pharmaceutical Supply Chains

When it comes to actualizing everything that blockchain promises for supply chain optimization, there have been some advancements made. Here, I would like to outline two specific use cases which deal with challenges faced by supply chains using blockchain technology:

  • Fighting the Counterfeit Menace

Millions of lives are lost owing to the use of counterfeit drugs worldwide. Though the sale of counterfeit drugs is low, when compared to the industry turnover, still, they have turned into a menace for the entire healthcare system. It costs billions of dollars annually to the public healthcare and generally people fall in prey to these drugs through the online route.

Using the blockchain technology, transparency, trust, and reliability can be boosted, efficiently. If blockchain is introduced in the conventional supply chain, patients would be able to directly track supplies and the origin in minutes as everything will be recorded on the distributed public ledger. Using a barcode-based system with gated access to trusted parties, companies can promote drug verification, detection, and alteration in case someone tries to do anything wrong with the actual drugs.

The efficiency of distribution systems will improve as leakage through secondary channels will reduce if blockchain-based systems are introduced. This will ensure everyone receives required drugs without worrying about its authenticity.

  • Dealing with Data Inconsistencies & Returns

The R&D department is one of the most crucial aspects of the entire pharmaceutical industry. Yet, there are glaring instances of data asymmetry between financier and companies when it comes to research. This paves way for transmission of inconsistent information to investors, creating obstacles in innovation, research, and new product discovery.

One of the main premises of blockchain technology is trust and credibility. By promoting transparency in early-research phase through clear information exchange, blockchain eliminates chances of data inconsistency, thus boosting returns from investment in pharmaceutical R&D. When the R&D investments are profitable, naturally, the entire organization, industry and ultimately the value chain becomes more useful for the healthcare system.

I hope my personal insights were able to enlighten you about the complex maze of the pharmaceutical supply chain and how blockchain can make a positive impact. If you are keen on exploring more about blockchain or improving the efficiencies of legacy supply chains, check our blockchain development & consulting service and don’t forget to drop your thoughts in a comment below.

Thanks to hackerhodl

Pratik Rupareliya

Written by

Techno-commercial leader heading Intuz as head of Strategy | | Cloud, Blockchain, Iot, Mobile and Web



Intuz is a custom mobile, software and cloud services company.Our passion for work reflects our values & produces delightful experiences for enterprises.

More From Medium

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade