Blockchain – a solution to pharma's supply chain vulnerabilities?


Blockchain technology is a secure system of digital record-keeping, first used as a distributed ledger for cryptocurrency transactions back in 2008. In its second generation, smart contracts were introduced for assets and trust agreements.

The next wave of blockchain technologies will focus on scaling and addressing transaction processing times and bottlenecking problems. This has many promising applications spanning across industries outside of finance and business processes, including supply chain management.

Blockchain, when applied correctly, is not a silver bullet for solving the complex web of challenges facing the pharmaceutical industry, but it can help alleviate many of the pressures facing global supply chains.

Benefits include accelerating digitalisation to unlock efficiencies and cost-savings, boosting transparency, ensuring data security and compliance, tackling the growing counterfeit drugs market, and ultimately protecting patient safety.

In this article, I’ll explore the viability of emerging blockchain technology, how it is already being used within pharma and what more it could offer the industry as adoption increases and innovation continues.

Enhancing supply chain transparency and compliance

Pharma 4.0 demands the gap between the digital and physical is closed, allowing for a 360-degree view of business operations. In a global supply chain, this can be difficult to achieve – without the right technology.

Blockchain technology offers an immutable and decentralised ledger system that records every transaction and movement of pharmaceutical products across the global supply chain. Every step in the process becomes visible.

The transparency gained enables stakeholders to track and trace every product from manufacturer to the end user. This, in turn, can help to identify and eliminate inefficiencies, reduce the risk of drug shortages that can inconvenience or put patients in danger, ensure compliance with tightening regulatory standards and protect product quality.

When integrating blockchain and artificial intelligence (AI), greater opportunities are unlocked. Working together, the two technologies enable the transfer of products between authenticated entities within the supply chain. Blockchain provides a secure and tamper-proof record of drug movements, while AI algorithms analyse the data to detect anomalies, identify potential risks, and enhance decision-making processes.

This integration of blockchain and AI further strengthens transparency and compliance by enabling real-time monitoring and ensuring the integrity of the supply chain.

Tackling counterfeit and falsified medicine

Counterfeit and falsified drugs pose a significant threat to patient safety and public health.

Pharmaceuticals are the world’s most counterfeited consumer product, with the World Customs Organization estimating the global ‘fake’ pharma market to be worth upwards of $200 billion.

Anti-counterfeiting is a cat and mouse game, with criminals usually cracking today’s systems in two to three years. This means continuous improvements and advancements are needed to stay one step ahead.

Blockchain technology is part of the solution, providing a tamper-proof and traceable record of each drug's journey, making it easier to identify and eliminate counterfeit products from the supply chain before they end up in the hands of patients.

Each drug can be assigned a unique identifier that is recorded on the blockchain, allowing anyone in the supply chain to verify its authenticity and track its origin.

This transparency not only helps in preventing the distribution of counterfeit drugs, but also facilitates product recalls and investigations in case of quality issues.

Alongside smart packaging, with trackers and identifiers integrated into the product itself as it moves through the supply chain, these technological advancements are helping pharma companies to locate and interrogate a product anywhere in the supply chain.

Streamlining supply chain processes

While efforts and ingenuity are ramping up in drug innovation, forecasting, and inventory management, untapped opportunities remain in the outbound supply chain, from packaging to final delivery.

At the heart of transforming the supply chain is the application of lean principles. This essentially means using less human effort, less inventory, less space, and less time to produce high-quality products. It also means working as efficiently and economically as possible, while being highly responsive to customer demand.

Blockchain technology has the power to streamline processes across the supply chain, reducing paperwork, human error, and costly delays.

Smart contracts, which are self-executing contracts embedded in blockchain, automate and enforce predefined rules and conditions.

These smart contracts can facilitate automatic payments, regulatory compliance, and real-time tracking of shipments, enhancing efficiency and reducing costs for all stakeholders involved in the pharmaceutical supply chain.

Commercial benefits aside, there are also important social impact and environmental gains to be had by creating a more efficient supply chain. Now, more than ever, environmental management as part of wider supply chain management matters.

Overcoming challenges to adoption

The promise of blockchain and other advanced technologies, such as AI, in streamlining the pharma supply chain is clear. However, as is the case with most new technologies, outdated IT infrastructure and skillsets are limiting their uptake on the ground.

Moving forwards, budget and resources need to be ringfenced for updating legacy IT infrastructure, digital skills training, and the onboarding of specialist data scientists to make sure solutions are being fully leveraged.

Unfortunately, throwing money at new technology doesn’t automatically equate to success. A long-term perspective with the flexibility to adapt is just as important.

Pharma companies need to think about which digital functions they’ll need to compete in two, five, or even ten years’ time, not just today. Collaborating closely with tech start-ups can help keep big pharma ahead, or at least on top, of the curve, alongside training up the workforce to boost digital literacy.

These cost-saving and efficiency gains will simultaneously help the industry fulfil its social and environmental responsibilities, including the need to create more sustainable manufacturing processes and produce more effective and safer medicines the entire world can afford.

Steve Brownett-Gale
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Steve Brownett-Gale