Can Blockchain Secure the Pharmaceutical Supply Chain?

Incidents of substandard or fraudulent pharmaceutical products continue to increase through what are assumed to be legitimate supply chains around the world. A recently released report by Organization for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) estimates that international trade in counterfeit pharmaceuticals reached USD 4.4 billion in 2016. These counterfeit medicines are believed to origin mostly in developing countries that can penetrate supply chains and make their way to anywhere in the world. This leaves regulators and distributors in a frenzy who struggle to locate substandard products that have entered the system. These potentially harmful products pose serious risk to the health of millions of patients who buy and consume these medicines believing that they are safe and effective.  


To address some of these supply chain challenges, the pharmaceutical industry is turning to blockchain technology to improve its visibility and potentially enhance patient safety.  


What is Blockchain?  

Blockchain is a public ledger technology that provides an immutable record of transactions. 

It maintains a continuously growing set of data, by logging data entries in a decentralised manner and then combining the discrete blocks of data from various stakeholders which upon acceptance are linked to the previous and future blocks. It is readable, writable, and tamper-proof by all. No central authority can control the content added and it is impossible to remove any entries after being accepted into the blockchain. It thus allows for transparency while maintaining data privacy. Immutability of the data enables the technology to be considered for highly regulated industries such as pharmaceuticals and healthcare.  

Using this advanced technology, several companies that may include an entire network of suppliers, producers, distributors, retailers, etc. can safely collaborate using a shared ledger while maintaining complete control and confidentiality. This helps all the members of the network to manage the data without the presence of any third party 


How Can It Help the Pharmaceutical Industry? 

Pharmaceutical supply chains are highly complex and involve various stakeholders that range from manufacturers, suppliers, distributors, to regulatory agencies, hospitals, retailers who collaborate to collectively produce and deliver drug products. It is important that the supply chain although complex be flexible and responsive enough to swiftly introduce new products to the market, especially in a crisis like the one we are facing right now when timely distribution of life-saving drugs becomes all the more important and necessary.  

Blockchain technology can effectively help manufacturers secure the quality of each ingredient, ensure the timely shipping of materials and maintenance of optimal storage conditions. Blockchain-based supply chain containing IoT devices, smart contracts, distribution ledger, and business layers can generate data for monitoring the quality of the assets, handle the privacy of data, and predict the end-user requirements.  

It not only introduces transparency in supply chain among the relevant stakeholders but also accelerates the overall process of the delivery of drugs to patients. Blockchain can greatly help improve the agility of the supply chain even during extraordinary circumstances to expedite the supply of essential medicines. Enabling realtime verification by confirming transactions without having to look at the underlying data, it can also smoothen day-to-day operations. Pharmaceutical companies deal with highly sensitive information. With  blockchain technology, the confidentiality of such information can be well-protected. 

This technology can significantly reduce costs, automate processes by eliminating manual interventions and help save the pharmaceutical industry billions of dollars annually. To sum up, using blockchain technology can immensely benefit pharmaceutical supply chain by offering end-to-end visibility, control, enhanced agility, and transparency. Most importantly, blockchain technology creates an ecosystem of all stakeholders where they can collaborate, freely communicate, and operate seamlessly. 


The Road Ahead 

With further development of the technology and successful adoption of it, pharmaceutical companies along with other relevant supply and distribution stakeholders could precisely detect blockages in the supply chain, and remove damaged or counterfeit products, effectively identify which products are facing shortages or which areas have poor supply and redistribute inventory wherever it is most required. 

All through the COVID crisis the pharmaceutical industry has had tremendous pressure to maintain its operational continuity ensuring fast and continuous supply of medicines even during these challenging circumstances. The global health crisis in fact reinstated our dependence on the pharmaceutical industry. It is therefore an opportunity for the industry to reimagine its processes and adopt the technology that will significantly help it in operating seamlessly.  

  1. Hasselgren, A.; Kralevska, K.; Gligoroski, D.; Pedersen, S. A.; Faxvaag, A. Blockchain in Healthcare and Health Sciences—A Scoping Review. Int. J. Med. Inform. 2020 Feb; 134(2020):1-10 
  2. Arun Samuga; How blockchain can add value to the pharmaceutical industry. European Pharmaceutical Manufacturer. 2020 May


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