What is blockchain and what can it do for pharmaceutical supply chains?

Chanice Henry

Most of us have heard of the term blockchain coupled with the likes of bitcoin and cryptocurrency.

Although many of us have questions. Firstly what is blockchain? And secondly, how exactly can it push the pharmaceutical industry forward?


What actually is blockchain?

Bob Celeste the founder of The Center For Supply Chain Studies (C4SCS) defines it as ‘a continuously growing list of records, called blocks, which are linked and secured using cryptography.’  This network usually peer-to-peer managed and follows set rules when validating new data block.

The distribution of data is secure and a data transaction is conducted at a minor fee. Data governance rules are enforced to preserve integrity when inputting or retrieving information. After input, data and program modification or removal is usually impossible.

These attributes provide all users with a consistent view of the ledger in its latest state.

The case for blockchain in pharmaceutical supply chains

Currently in the drug supply chain, the trading partners in the chain connect via individual systems for exchanging contracts, agreements and transactions, which can duplicate work and in some cases produce slightly varying conclusions.

A blockchain provides a single source of truth for partners to work with and so minimizes activity needed to communicate and limits the risk of exposing proprietary information.

Mark Toohey of TBSx3 noted: “If there’s one word that really sums up why blockchain, that word is collaboration.” 

Various stakeholders in a drug supply chain can share, cross match and store information and be assured of its integrity.

The general idea is that everyone decides and agrees on each block before it is added to the chain. After that, no one has the rights to go in and change any element.  This technology is focused on certainty, it is not a rapid process because lots of transactions are built into a block before that block is added to the chain.

“We all know how important data is in the world, and that collaborative synergy, for want of a better term, unleashes some new possibilities that we haven’t had in the commercial world before.”

Read more: What’s new for outsourcing in pharma supply? It’s not just about the costs

Combatting fake pharmaceuticals with multiple layers of security

Seven years ago Mark Toohey was diagnosed with cancer, which he survived with the help of oncology treatment. He has been working with bitcoin and blockchain for six years as he was an early adopter of the technology. Then, two years ago the issue of the counterfeit medicines market came to his attention.

According to PWC, with annual sales ranging from $163 billion to $217 billion, counterfeit pharmaceuticals are estimated as the most lucrative sector of the global trade in

illegally copied goods.” “I came across something that was very personal and very profound for me.  I read news of cancer patients in US hospitals who had been given fake chemotherapy. I’m only alive now because I got genuine chemotherapy.”

He continued: “To think that someone has to go through the ordeal and anguish of chemotherapy, even if what they’re getting isn’t fake, the anguish of walking into a room and allowing someone to poison you is really, really hard.  It was just a profound moment for me. 

“I thought it’s almost like I’ve got a second life here and I just refused to accept to live in a world like that.”

Mark Toohey is dedicated to combatting the counterfeit medicines market and opened up his blockchain company TBSx3 – which stands for To Be Sure, To Be Sure, To Be Sure.  

Serialization is a useful traceability tool, however, can you be certain that a counterfeiter hasn’t copied your product’s serial code?

TBSx3 looks at providing three layers of protection.

First layer: Every item, packet or bottle gets its own encrypted ID - QR code or RFID – to prevent counterfeiters from copying/guessing the code to replicate onto fake batches of the product to infiltrate the legitimate supply chain.

Second layer: The container filled with the pallet of cartons is tracked along the drug supply chain. From the assembly line to the warehouse, to the truck, to the port, to the ship, to the port and so on until it gets to the end customer. Machine learning is applied to the data to prevent weak spots in the chain.

Third Layer: Is a bitcoin feature called no double spend. Mark Toohey explains: “This simply means that in this ledger you cross off an ID/code that has already been used. So if someone tries to present a copy of that ID, it won’t be accepted.”

This deters counterfeiters from creating a huge number of copies of a genuine item with this code because they will only be able to sell one item.

Blockchain and cold chain study

At Temperature Controlled Logistics live, Bob Celeste presented insight and intelligence C4SCS gathered from the simulated ReferenceModels in its recent “DSCSA & Blockchain” Study. 

The research looked at the possible benefits of applying blockchain technology to the cold chain. The study looked at testing different process flows, data sets and alerts as well as defining a common set of cold chain data criteria. The study advanced to see how blockchain could demonstrate the movement, use and trading partner reaction to temperature control sensor and other input measures (i.e. humidity, vibration, light, etc.) 

The findings outlined that blockchain could be used to support DSCSA and serialization measures as an additional layer of security to store tracking data, links to tracing systems as well as the current status of the product.

In regards to temperature control in supply chains, blockchain could be used to share trading partner assertions, support temperature data verifications and guide temperature excursion investigations.

An array of data types could be hosted to do so:

  •         Temp Indicators (visual and digital)
  •          Temp Sensors
  •          Temp controlled areas
  •          Temp controlled transport
  •          Temp protective packaging

Watch Bob's session on the study: Enhance your cold chain with Blockchain


In resource lacking environments, for instance in emerging markets, larger public blockchains (like for bitcoin) may struggle to perform. In these cases, the technology relies on consistent high-speed network connectivity and rich computing power to remain completely up to date. 

However, for smaller private chains, like the ones pharmaceutical companies will use, much less computing power will be required. This will open up the use of blockchain for medicines being transported through emerging markets. Also, nodes in the chain can be decentralised and placed where power is available and cheap.

The Future

There is a lot on the path ahead for blockchain and firms will need to experiment with the technology. Those that test the blockchain waters early will likely be the market leaders to cash in the technology’s benefits for protecting the pharmaceutical supply chain.  

Read more: 2018 Trends to disrupt pharma supply chains