UCOT to put an end to fake and counterfeit medicines

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UCOT Australia

5 min readSep 25, 2018

Global pharmaceutical product sales are estimated to be over US$1 trillion annually. However, between eight and fifteen percent of all medicines sold worldwide are estimated to be counterfeit or fake. This equates to sales of counterfeit and fake drugs of between US$80 billion and US$150 billion every year

Source: https://torreya.com/publications/torreya_global_pharma_industry_study_october2017.pdf

Sydney based Ultimo Digital Technologies has developed a solution to eradicate counterfeit and fake pharmaceutical products through their project UCOT. It all starts with a tiny microchip which can be inserted in a medicine’s packaging. The microchip can trace the entire history of the medicine from ‘manufacturer to consumer’ and alert both the manufacturer and consumer whether the medicine’s packaging has been opened or tampered with.

Immense Monetary, Reputational and Health Consequences

The financial consequences of counterfeit and fake medicines go beyond the billions of dollars of lost sales for pharmaceutical companies. Many of these companies invest a lot of money to come up with effective anti-counterfeiting measures. These investments leave the pharmaceutical companies with less money for research & development and also increase the pressure on them to cut costs in other areas.

A further issue is the reputational damage to the pharmaceutical companies. Customers often don’t realize that they’ve purchased counterfeit medicines. The negative effects coming from the medicine not working properly or making conditions worse only reflects badly on the medicine’s brand, not the counterfeiter.

The human cost of fake and counterfeit medicines well surpasses the monetary and reputational issues though. The World Health Organization reports that a modelling exercise developed by the University of Edinburgh estimates that 72,000 to 169,000 children may be dying each year from pneumonia due to substandard and falsified antibiotics. A second model done by the London School of Hygiene and Tropical Medicine estimates that 64,000 to 158,000 additional deaths from malaria could be caused every year by substandard and falsified antimalarials in sub-Saharan Africa.

Note that counterfeit and fake medicines aren’t limited to third world countries alone. Many patients in more developed countries order their medicines online, often because the prices are significantly lower. However, as internet pharmacies regularly purchase medicines from countries with loose regulatory systems the drugs often come from a different country than is stated on the website.

Current anti-counterfeit solutions not sophisticated enough

Pharmaceutical companies and regulatory authorities are continuously investing in counterfeiting measures, but so far these have not deterred and stopped counterfeiters.

Most manufacturers use barcodes, QR codes or radio frequency identification (RFID) coding on medicines’ packaging. However, this hasn’t turned out to be the answer to the counterfeit problem as:

· They can be copied quite easily and applied to counterfeit medicines.

· The packaging can still be reused and an inferior product inserted, especially when the codes aren’t unique or can’t be checked against a central database.

· They are placed on the outside of the packaging and cannot report on the actual contents or whether the packaging has been opened.

Regulatory frameworks on the other hand have geographical shortcomings. Anti-counterfeiting regulations only apply in one jurisdiction or a group of countries. For example, Europe’s Falsified Medicines Directive governs drugs produced and distributed within the European Union. This won’t deter counterfeiting of medicines outside of the EU in any way.

UCOT the solution to counterfeit and fake medicines

UCOT is a digitized supply chain ecosystem powered by the latest 5G NB-IoT and blockchain technologies. It starts with a narrowband-IoT microchip that has its own battery life, can communicate in real-time with the internet, and commits the gathered information into the UCOT IoT blockchain.

The entire history of a medicine from ‘production to patient’ can be traced by inserting the microchip in a medicine’s packaging. The microchip can report on various characteristics in the supply chain, including:

· If and how a medicine’s packaging was opened/damaged/tampered with;

· When and where an incident happened by time stamped reporting on GPS;

· Storage temperature throughout the medicine’s journey to ensure that the medicine was shipped in the best possible conditions.

This information is accessible in real-time by both the pharmaceutical company and the patient. The manufacturer can track the progress of the shipping process by accessing the UCOT blockchain or be automatically alerted if a certain set of conditions changes. The patient can simply scan a medicine’s packaging and see whether the medicine is the real product, if it was stored at an acceptable temperature and whether the medicine’s packaging has been opened or tampered with before.

From threat to opportunity

Apart from finally solving their counterfeit and fake medicine issue, pharmaceutical companies using the UCOT ecosystem can also set their company apart from the competition in many other ways:

· Automated processes: There is no need for the medicines to be manually scanned by third parties at any point in the supply chain. This makes the supply chain more cost effective, less time consuming and more compliant with processes and regulations.

· Real-time tracking: As the microchips report a medicine’s conditions in real-time, any issues can be addressed immediately and responsible parties easily identified. This also makes any recalls less expensive and more efficient.

· Trusted data sharing: The data from the microchips is uploaded to the secure UCOT blockchain. This data cannot be altered once recorded, ensuring all relevant parties in the supply chain can trust the data.

· Smart contracts: Payments for suppliers can be automated when the medicines arrive at the destination in the right conditions and insurance contracts automatically enforced should there be any issues.

· Stronger relationship with end consumer: The pharmaceutical company can improve the direct relationship with the patient by providing more in-depth product information upon scanning the medicine.