How to Prevent the Sale of Counterfeit Products in Pharma Industry using Blockchain?

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Written by
Shivani Tripathi
Published on
September 13, 2022

As per this report, the global market size of the pharmaceutical industry was about $1.27 trillion in 2020. It is only slated to grow further as more and more pharmaceutical companies are heavily investing in the research and development of new drugs.


Especially after the onset of the COVID-19 pandemic, the onus of being on the cutting edge of research is on the pharmaceutical sector to be better prepared for another epidemic. Furthermore, the pharmaceutical industry's compound annual growth rate (CAGR) is expected to be 8% by 2025.

With such a lucrative amount of money at stake, criminals are enticed to exploit the pharma market. Counterfeit products harm the healthcare industry by causing patients to consume fake medications unknowingly. These drugs can be dangerous and even fatal, as they may not contain the correct ingredients or could be duplicate versions of popular medications.

In addition, counterfeit products cost healthcare providers money and can derail legitimate pharmaceuticals from reaching consumers. To protect patients and ensure access to the right medical supplies, the pharma industry needs to put in more effort to actively stop counterfeiting.

Blockchain Technology's Key Features

The situation that the pharmaceutical industry is in is perfect for integrating blockchain technology, as the benefits that blockchain offers overlap with the issues the pharma industry is facing.

Now let's understand the different types of blockchains.

A blockchain is a type of distributed ledger or decentralized database that records the complete transaction history of each digital asset that is traded. Each transaction is recorded in a block.

The data on the blockchain is tamper-resistant as it is data stored in a decentralized manner. Cryptographic algorithms make sure that a blockchain is always correct because they are used to confirm that assets have been moved.

There are three different types of blockchain: public, private, and consortium:

  • Public Blockchain: A blockchain that is open to the public is called a public blockchain or open blockchain. There are no entry restrictions for a public blockchain, so anyone can join and start working with it. The decentralized nature of the technology prevents double-spending, which means it is impossible to spend the same amount of money twice. The transactions are recorded in a public ledger that is accessible to all parties. Furthermore, the users are anonymous, so it is impossible to track the transactions made by a specific person.
  • Private Blockchain: Private blockchains can only be accessed by a restricted number of people. These are usually created for enterprises that work on specific projects. They are also used by companies that need additional security and privacy. Private blockchains allow companies to control the movement of digital assets, as only selected individuals within the organization can access them. The transactions made on a private blockchain are protected with a key, which is encrypted with the public key of the receiver.
  • Consortium Blockchain: These blockchains are created through the collaboration of various organizations. In a consortium, the participants are allowed to edit certain blocks. The transactions on this type of blockchain are visible to all the participants.

Features of Blockchain That Make it Popular in a Variety of Industries

  • Privacy: The system allows you to keep the data private. Only authorized people can view them.
  • Immutability: The immutability of data means that it cannot be changed or deleted.
  • Data Integrity: The integrity of data means that its authenticity and correctness can be verified.
  • Decentralized Control: The control is decentralized, as the authorized person can access the data at any time.
  • Scalability: The system is suitable for complex processes because it can be scaled.

How Can Pharma Counterfeiting Issues Be Tackled Utilizing Blockchain Technology?

  1. Supply Chain Monitoring

It could take a long time for the products manufactured by a specific pharma company to be authenticated for their genuineness. This is because the request for verification has to go through various hierarchies to the person handling the machine for the specific batch of medications.

The counterfeit market gets away with this because there is a delay between the manufacturing and the updation of the information to the company's repository.

However, with blockchain technology, this could be thwarted as the moment the pharma product is manufactured, all the details and the time would automatically be updated to the blockchain. The information required for the verification would thus be available in a matter of seconds instead of hours or days.

  1. Preventing the Sale of Generic Medicines as Brand Name Medicines

Generic medicines have been approved by the Food and Drug Administration (FDA) as being essentially the same as branded medicines. However, they may be cheaper to buy because they do not have to go through the costly regulatory process required for a brand-name drug.

This becomes an issue for brand-name medicine manufacturers because all the investment in research and development is lost. After all, the generic medicine is repackaged on the cover of the branded product, essentially diluting brand recognition.

Using blockchain technology, anyone, not just distributors or shopkeepers, could verify the authenticity of the product provided in branded packaging, thus improving the brand value and brand perception of the company.

  1. Control Over Packaging and Labeling Systems

Since blockchain technology is integrated within the manufacturing system, all the details related to the batch, machine, manufacturing plant, etc., get etched into immutable databases.

These databases don't rely on the availability of the manufacturers' servers being online or offline, as the manufacturing company is no longer handling the process of hosting the details on the server.

This improves the customer experience and trusts in the said brand as details are available for the customer to check immediately.

  1. Maintaining Constant Inventory Levels of All Products Supplied to Customers

It is easy to have a dissatisfied customer because of the unavailability of essential medicines at the time of need. However, it is now possible to keep track of the overall inventory even out of the supply chain to the last mile of the product cycle.

The product can be continuously checked and verified at every step of the process. It can also be logged in the verification request made by the end customer whenever they check for it. This gives the manufacturing company a very intricate overview of the consumption and production levels of the product.


Overall, blockchain technology offers several benefits that can be applied to the pharmaceutical industry to mitigate counterfeiting issues.

The technology is tamper-resistant, which makes it hard for criminals to alter records or fake products. Additionally, it allows customers to verify the authenticity of products and track inventory levels.

Integrating blockchain into these systems allows pharma manufacturers to protect their brand identity and keep customers happy.

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