This blog-post is the fourth part of an ongoing series about Blockchain and a shortened version of our in-depth report Blockchain 2020: A Practical Guide to Blockchain Solutions for the Pharmaceutical Supply Chain The first part introduced the current problems supply chain is facing, and the second part was an introduction to blockchain and the third part covered the different network types. Today we will have a look at the possible applications of blockchain in the pharmaceutical supply chain.
PRACTICAL APPLICATIONS OF BLOCKCHAIN
Blockchain’s inherent qualities such as transparency and auditability, enhanced automatization, resilience, and data integrity promise to solve a myriad of today’s supply chain problems and allow for creative implementation in all kinds of situations. Let’s have a look at how inventive start-ups tackle the biggest challenges of current supply chains.
The pharmaceutical industry has been under intense pressure to stop counterfeiting and manipulation. According to a recent report from PWC, German authorities confiscated 4 million counterfeit tablets in 2015 alone and, in developing regions such as Africa, the proportion of fake pharmaceuticals in the market can rise to 70%. US and European Regulators responded with The Drug Supply Chain Security Act (DSCSA) and the EU’s Falsified Medicine Directive 2011/62/EU, both outlining systems to track and trace pharmaceutical packages with unique identifiers.
Blockverify is a UK startup that developed, in collaboration with Pixelplex, a blockchain-based solution to fight counterfeit issues in several industries. Existing counterfeit solutions have several shortcomings and vulnerabilities as they can be hacked or duplicated. The proposed solution includes the creation of a unique ID for each package, stored in a secure database using the Graphene blockchain. The tag is used at all stages of the supply chain to record the entire history of transfers, ownership and locations permanently on the blockchain. The system supports up to 3000 transactions per second and allows all parties involved to access parameters and view transaction details.
The global pharma industry today is at almost $1.2 trillion and projected to rise by 41% by 2021. Products that require refrigerated storage and transport account for around $283 billion and will rise 70% between over the same span, while non-refrigerated products are projected to rise by about 32%. One fundamental driver behind this development is the emergence of new forms of therapies and more sensitive products, that demand temperature monitoring throughout the transportation process.
The Swiss Startup Modum is specialized in supply chain monitoring solutions, with a focus on large volumes of sensitive goods such as pharmaceuticals or medical supplies. Their first development is a Good Distribution Practice certified IoT monitoring device called ModSense that is able to record temperature and that can be integrated into existing track and trace systems based on QR-codes. Shipment-specific quality requirements are set prior to shipment, stored in a smart contract and paired with the package’s QR-code. During transport, the data logger records the temperature and cross-validates it with the pre-set requirements upon arrival. The blockchain-backed back-end ensures that data cannot be manipulated and allows for easy export of audit reports on demand.
Companies often need to collect sensitive information about their users or employees in order to facilitate simple identification tasks. This set of personal information is often stored improperly and poses a big counterparty risk. Identity theft has become a rampant problem and shifting regulations, such as the EU’s General Data Protection Regulation (GDPR), focus on more corporate IT responsibility. Additionally, there are about 7 billion internet-connected devices, and this number is expected to grow to 22 billion by 2025. Internet-activated devices such as sensors or monitoring devices need to manage access to sensitive data in a secure manner, but current systems are isolated, inaccessible, and insecure.
uPort has partnered with the Global Legal Identifier Foundation (GLEIF) that manages the process of issuing more than 1,5 million corporate identity verifications around the world. They worked on a proof-of-concept platform in collaboration with Société Générale, the Banque de France, and the French Statistics Bureau, to issue and validate Legal Entity Identifiers (LEIs). The system facilitated the issuance and storage of verifiable documents by connecting the needed legal entities and it enabled employees to sign and submit documents via a mobile app and regulators to view and verify the signatures. Each employee has their own wallet with their credentials. Personal information cannot be accessed publicly but can be revealed to regulators and is, therefore, privacy-preserving by design.
The above-mentioned examples make clear that the technology has enormous potential to reshape and disrupt existing structures. Further applications such as proof-of-provenance, frictionless international payments or smart-inventory management for chemical goods are just some more examples of the technology’s versatility but would exceed the scope of this article. However, the topic can be explored in further detail in the original report.
Despite all the enthusiasm for the technology it is important to stay realistic and to be aware of heightened expectations. Blockchain is still in development and faces several critical challenges on technical and regulatory levels.
The next installment of our series will cover the challenges that need to be overcome in order to close “the chasm” and reach mass adoption.
 Fighting Counterfeit Pharmaceuticals, PWC, 29.06.2017 https://www.strategyand.pwc.com/gx/en/insights/2017/counterfeit-pharmaceuticals.html
 Cf. Tom Lyons and Ludivic Courcelas, Blockchain in Trade Finance and Supply Chain, EU Blockchain Observatory, 9 December 2019. Accessed 02.02.2020, https://www.eublockchainforum.eu/sites/default/files/ report_supply_chain_v1.pdf
 Cf. Work, ‘Work’, Pixelplex. Accessed 04.02.2020, https://pixelplex.io/work/blockchain-supply-chain-and-anti-counterfeit-solution/
 Pharmaceutical Cold Chain Logistics is a $13.4B Global Industry, Pharmaceutical Commerce, May 2017. Accessed 04.02.2020, https://pharmaceuticalcommerce.com/supply-chain-logistics/pharmaceutical-cold-chain-logistics-13-4-bil¬lion-global-industry/
 Cf. ModSense, ‘Solutions’, Modum AG. Accessed 02.02.2020, https://modum.io/solutions/modsense
 Cf. Digital Identity, ‘Blockchain Use Cases’, Consensys AG. Accessed 15.01.2020, https://consensys.net/ blockchain-use-cases/digital-identity/
 uPort partners with the GLEIF network to launch decentralized corporate identity management, Medium, 05.11.2019, https://medium.com/uport/uport-partners-with-the-gleif-network-to-launch-decentralized-corporate-identity-management-2a7a20be3354