When you think of blockchain, the first thing you think of is probably cryptocurrency where blockchain is the enabling technology. But, aside from financial services, blockchain has the potential to revolutionise many other industries due to its ability to securely record transactions around an incorruptible digital ledger.
The potential for the high stakes pharmaceutical industry to benefit from the use of blockchain is huge, solving problems both for the pharma businesses and the medical staff and patients they serve — and in some cases, it is already doing so.
Blockchain Raises Safety Standards for Drugs and Surgical Equipment
Many factors can affect medicines before they reach a patient. Things can go wrong, and not just during the manufacturing process. Steps on the supply chain, such as shipping and warehousing, bring their own dangers.
Although all companies involved in the supply chain will monitor these factors independently, there is no centralised way of tracking everything that has happened to a medicine on its journey from production facility to patient. Blockchain can solve this problem: it creates a uniform method of recording the entire supply chain, rather than relying on the accounts of individual companies.
This is important, for instance, as some vaccines must be stored below a certain temperature during transportation, or they risk losing their effectiveness. In this case, blockchain ensures everyone in the supply chain adheres to the correct standards.
If the temperature of a drug has exceeded its recommended level during transportation, blockchain makes it easy to see when and where the mistake took place, so remedies can be applied. Using smart contracts, pharmaceutical companies could even financially penalise the logistics firm for the error.
The benefit to patients from the use of blockchain in healthcare is simple: they receive better quality healthcare through the application of pristine medicine. Ethical issues aside, for pharma businesses, blockchain tracking reduces the likelihood of lawsuits, damage to corporate reputation and the resultant effect on stock price that can arise from patients taking substandard drugs.
Blockchain can Combat Counterfeit Drugs and Medical Devices
In addition to its ability to assure the integrity of a drug’s supply chain, blockchain can also verify the authenticity of the drug itself. The counterfeiting of medicines and equipment represents a significant problem for the pharma industry, besides posing an obvious threat to patients’ health. This problem is particularly prevalent in the developing world, where the World Health Organisation estimates that 10 per
Using blockchain, every individual package of medicine can be identified with a unique code that cannot be altered, allowing drug companies, wholesalers, and even individual sellers, to check the legitimacy of their medicines. If all parties — including those located in developing countries — were to adhere to this model, it would be near impossible for counterfeits to enter the supply chain undetected.
Patients benefit most from this use of blockchain in healthcare, as the medicine prescribed or administered to them by clinicians is guaranteed to be authentic. For businesses in pharma, blockchain can help eliminate the loss of revenue or trust incurred in the face of counterfeit drugs.
In fact, there are live examples of blockchain being used to fight these issues. Pharma giant Novartis is using blockchain to pinpoint counterfeit drugs in the supply chain, as well as track temperature changes in real-time.
Blockchain Helps Regulate the Drug Resale Market
Around 3 per
Pharma businesses, if they wish, can put these drugs back on the market. However, American and EU regulation requires that their authenticity is re-verified—a difficult task for pharma companies, who may not be fully up-to-date with their medicines’ itineraries and conservation history while out of their control.
The EU already has a centralised database where pharma producers can upload their medicines’ serial numbers, allowing distributors to check this to verify a drug’s authenticity. However, this is not yet the case in the US. Pharmaceutical company Merck is experimenting with blockchain to develop a system that tracks every time a drug package changes hands.
When a package moves from the manufacturer to a logistics company, to a wholesaler and perhaps back again, blockchain technology records all relevant details. As such, it makes it easier for pharma businesses to match their production to demand without having to build volumes for wastage.
A Virtuous Cycle
Such systems also support inventory management, helping drug companies anticipate periods of higher demand and ensure every market has enough supply.
Blockchain is also being used to raise standards of patient confidentiality in clinical trials, with its highly secure model bringing peace of mind to subjects who might have been reticent to participate initially.
If using blockchain in healthcare can make pharma businesses more efficient and more profitable, there exists the potential to increase investment into new treatments. This will only benefit patients’ health further — a virtuous cycle we can all get behind.
If you’d like to read more about the impact of technology on healthcare, download Hampleton Partners’ latest Healthtech M&A Market Report here or click on the image below.
Director & Sector Principal
Jonathan has been involved in the technology business for over three decades, founding, managing and turning around businesses and helping management and their investors in fast-growth technology segments to grow, manage change, enter markets, transfer technologies, acquire, merge and sell.
He holds a Master’s degree in Science and Technology Policy from The University of Manchester, attended the Stanford Graduate School of Business and blogs on technology innovation, marketing and management at “The World According to WestFour”.