Can blockchain solve pharma’s supply management problems?

Blockchain was not invented as a supply management tool; Yet today it is helping to solve some of the most complex problems found in global supply chains

First used in 2008, the technology allows the cryptocurrency market to digitally record transactions in a secure and immutable way. A technology that no individual can edit or manipulate. As the use of blockchain became recognized outside of the crypto industry, the technology was adopted for smart contracts, trust agreements, and supply management.

However, a new use case is now being adopted, focused on addressing bottlenecks in complex global supply chains, as well as increasing transaction processing speeds and enabling economies of scale.

The pharmaceutical industry faces many challenges in today’s climate, including increasing demand, stricter regulations and the circulation of counterfeit products.

There is no silver bullet to solve these challenges, but when used correctly, blockchain can certainly help alleviate pressures and make the entire system more reliable and safer – ultimately improving health outcomes.

Increase transparency and compliance within pharmaceuticals

The digitization of pharma, known as Pharma 4.0, aims to close the gap between physical and digital supply management. This is crucial to achieving a high-performing and efficient global supply chain.

Immutable and decentralized blockchain technology can record every transaction or track every movement of pharmaceutical products around the world. Therefore, every step in the supply chain is traceable and accountable.

Bridging the gap between physical and digital supply management

Optimum transparency means that all stakeholders have more control and an overview, from start to finish – or manufacturer to patient. It supports faster and more accurate decision-making, helps reduce inefficiencies, reduce drug shortages, increase regulatory compliance and ensure product quality.

Furthermore, there is the possibility of integrating blockchain with AI to unlock more benefits.

Blockchain provides a record that cannot be tampered with or forged, and AI uses powerful algorithms to detect any anomalies, identify risks and optimize decision-making. When used together, both technologies can provide a further boost to monitoring, transparency and compliance, contributing to a more robust and integrated supply chain.

Defense against counterfeit and falsified medicine

The pharmaceutical industry is one of the largest and most profitable. And that means criminals are increasingly looking for a piece of the pie.

In fact, pharmaceutical products are the most counterfeited globally. The World Customs Organization estimates that the fraud industry is worth more than $200 billion.

Fighting the counterfeits is an ongoing and costly battle, and most anti-counterfeit defense systems are often broken within two to three years. It’s an ever-changing game that requires constant research, development and improvement to keep criminals at bay.

An increasingly important aspect of this defense is blockchain technology. As explained, this immutable and decentralized record is now more tamper-proof than ever. The life cycle of pharmaceuticals is trackable and traceable, making it possible to identify and eliminate more counterfeit products from the supply chain before they reach the hands of patients.

Each product is given a unique identifier as it enters the supply chain. This is the key to verifying each substance’s origin and authenticity. This has a dual functionality as it helps identify counterfeits and supports quality control and product recall investigations.

Effective supply management processes

There are many untapped opportunities to increase efficiency in outbound supply management. This includes all processes involved in packaging up to the final delivery of a product. At the center of these possibilities are lean principles.

Essentially, this means that supply management works in the most efficient and economical way possible through less reliance on human effort and the requirement for physical inventories that need space and take excessive time to organize. Response to market demand is key.

Response to market demand is key

Blockchain technology reduces the likelihood of human error and costly delays, plus large amounts of unnecessary paperwork. The ability to host embedded smart contracts allows automated and predefined rules to be executed without consent or manual action.

Facilitating automatic payments, regulatory compliance and real-time tracking of shipments can significantly reduce costs and inefficiencies in the outbound supply chain.

This not only benefits stakeholders financially, but it also has positive social and environmental consequences.

Master the adoption of blockchain

The benefits of blockchain and AI being used in supply management, especially in the pharmaceutical industry, are plentiful.

However, delays and obstacles are constantly present, which can harm or slow adoption. Skills shortages and outdated IT infrastructure are two significant challenges to overcome if blockchain is to make a real difference to pharma.

Delineating sufficient funding for innovative new technologies is key, as is the phasing out of older IT infrastructure, skills development and the utilization of wider talent pools.

However, this investment will be wasted if the implementation and use of new technologies is not properly managed in the long term. A forward-looking, adaptable and flexible plan is a necessity to keep up with the pace of technological change and subsequent market shifts.

Pharma companies need to think about what digital capabilities they need to compete in two, five or ten years, not just today. Collaborating alongside tech startups is one way pharma companies can stay ahead or at least ride the wave of innovation and disruption.

The benefits available to those who use blockchain and other emerging technologies safely and effectively will support positive change around social and environmental responsibility and goals. These include the need to create more sustainable manufacturing processes and produce more effective and safer medicines that the whole world can afford.

Written and delivered by Steve Brownett-Gale, Marketing Manager at Origin.