How Blockchain Technology Could Transform The Pharmaceuticals Industry Part 2

Supply Chain

Once a pharmaceutical company finished research, runs trials and gets approval from the United States Federal Drug Administration, it needs to manufacture the drug and then sell it. There are two main issues that pharma companies have to deal with at this stage. The first issue is protecting the quality of the drugs. The second issue is counterfeit knockoffs and making sure that end users do not buy counterfeit products thinking that they are buying the original dru, because buying counterfeit products is both dangerous for health and detrimental to the profits. When manufacturers of the counterfeit drugs are able to sell them at a very high profit, they get funds that they can spend creating more counterfeit drugs and the cycle continues.

According to estimates, pharmaceutical companies lose about $200 billion a year globally because of the counterfeit products (source: ). The problem is especially serious in the developing countries in Africa, South America and Asia, where experts say about 30% of all medications sold to patients are counterfeit.

To solve the problem, governments all around the world, including the United States Food and Drug Administration, China Food and Drug Administration, the authorities in the European Union, and Brazil, have been introducing serialization policies for both drugs and medical devices. The issue with the serialization policy is that serial numbers may be hard to verify. You may be looking at a product that does have a serial number, but checking if this serial number is valid or counterfeit may be an issue.

This problem is not unique to the pharmaceuticals industry. While in pharmaceuticals industry the stakes are higher because taking a fake drug can be dangerous to health, the problem has existed for years with online marketplaces such as eBay and Amazon. In the past, eBay has been sued multiple times by companies such as Tiffany&Co and LVMH, the parent company of Louis Vuitton. In 2008, a court has ordered that eBay pays Louis Vuitton over $60 million for not doing enough to protect its consumers from counterfeit goods (source: ).

With blockchain, it is possible to track both the source products for the drugs and the path of the finished product from manufacturers to end users, to do so almost in real time and make the log tamper-proof.

From the perspective of the blockchain technology, the process of drug manufacturing and delivery of the drug could be viewed as one long transaction that is similar to a financial transaction in which a cryptocurrency exchanges hands multiple times.

The Bitcoin network adds coins to circulation by giving them as rewards to the miners on the network and anyone at any time can check the number of coins in circulation. You can see the exact number of Bitcoins in circulation as you are reading this article by visiting With a drug, it is possible to create a blockchain on which manufacturers of the components add the information about the components to the blockchain and the records get updates every time components change hands. Every party involved in a transaction could have a set of unique digital verification keys. This way, when a product reaches final destination, it would be possible for the recipient of the product to check how, where and when the product has changed hands. At the end of the process, a pharma company could attach a card with a unique key to the product and the end users could go onto a website or an app to check the authenticity of products in a similar way you can check transactions on the Bitcoin network by visiting

While for the end users the process may look and feel the same as before because they will still be checking a website or a app, the technology behind the process is superior to the technology from the past for several reasons.

First, blockchain technology is decentralized. With Bitcoin and other cryptocurrency networks this means that any person can download a full copy of the blockchain. The copy will contain all the transactions that have happened on the blockchain since its launch. In an industry like the pharmaceuticals industry, this would mean that all interested parties, including pharma companies themselves, the governments, suppliers and sellers, could download a copy of the blockchain at any time and everyone would have their own copy.

Secondly, blockchains seal the blocks of information with cryptography hashes, which makes them tamper-proof. Practically speaking, this would mean that not only would all the interested parties be able to get a copy of the records, but also that the records would be tamper-proof and nobody could change the data in the copies.