Will blockchain change the pharmaceutical supply chain?

Written by Maikel Kuijpers, SVP Operations & Technology

Blockchain is one of those new technologies that stirs up both enthusiasm and cynicism in equal measure. While much has been written about its potential transformative power, there is also a sense of skepticism about it. As we make some promising inroads into blockchain, I would like to focus on some immediate opportunities we are seeing to create impact for our customers and patients.

Given our heritage and experience in distribution, I am very excited about some of the use cases for blockchain within the pharmaceutical industry. Drugs today have evolved to contain high-value active ingredients with short shelf lives and strict temperature requirements. It is, therefore, crucial to monitor how these drugs are stored and transported from the time of manufacture to the time of use.

The value and volume of such therapies continue to increase and the pharmaceutical industry is expected to spend around $17 billion by 2020 on cold chain management.

At Zuellig Pharma, we operate the most comprehensive supply and cold chain network in the healthcare industry across the region.

Picture this: Every day, pharmaceutical companies deal with the complexity of production, quality assurance, distribution and tracking of products. There are four key challenges namely compliance, counterfeit drugs, healthcare data vulnerabilities and finally, tracking and traceability.

Being able to locate where the drugs are along the supply chain requires advanced tracking technology which can be costly and expend precious time if done inefficiently.

In summary, any of these above challenges could mean failure to maintain appropriate conditions at any point in the supply chain, which then impacts the efficacy of the drug, resulting in the loss of a shipment and putting patients at risk.

Enter blockchain: The distributed ledger of transactions that enables communities to record and share information. While it is best known as the core component of Bitcoin digital currency, it is perfectly suited to meeting the challenges of the evolving supply chain.

There are two key areas of application – one, a more sophisticated supply chain monitoring solution and two, enhanced ability to trace and recall.

Pharmaceutical companies can use blockchain to keep track of temperature, humidity, and pressure through every point in a product’s journey. If a storage condition deviates from what has been agreed, each member of the blockchain will see it. A smart contract can trigger an action to correct the situation. Depending on the size of the deviation, this action may be to simply adjust the storage. However, it could also extend to changing “use-by” dates, declaring products unfit, or applying penalties.

The other area of traceability and recall is also crucial to pharmaceutical companies. If a drug shipment is disrupted or goes missing, the data stored on the common ledger is a quick way for all parties to trace it, and determine who handled the shipment last. The public availability of the ledger would also make it possible to trace every drug product all the way back to the origin of the raw material used to make it. We have worked with a client to implement blockchain to improve efficiency especially during product recalls. The instantaneous tracking of products along the supply chain and blockchain ensures greater security, given that you cannot delete transactions on the ledgers.

While we still have much to learn about blockchain, these two areas hold the most promise for immediate real-world applications to further boost reach and access to essential and life-saving therapies in our region.

In the months to come, we will also be exploring additional applications of blockchain technology, focusing on 1-2 critical pain-point areas in supply chain management and financing. An exciting time indeed!