Article written by Corrie White
For a few years, thought leaders across the global economy have invested hopes that blockchain, the record-keeping technology behind Bitcoin, could bring transparency across the $8 trillion logistics industry and supply chain. Deloitte tweeted in 2017 that 10% of the global gross domestic product would be built on top of blockchain.
However in 2020, the conversations around blockchain have turned inward, and in some cases, pessimistic. Interested parties question blockchain’s profitability and success because companies have serious hesitation about sharing private data with other companies. Craig Montgomery, senior vice president of global branding and marketing at Powerfleet, believes blockchain’s big bang moment will occur in an area with the highest value and risk and where people are willing to pay for the data – the pharmaceutical industry.
“Blockchain won’t gain broad adoption in any market or vertical until it’s truly commercialized, and a hallmark of that is when third-party companies are willing to pay for the value of the data within it,” said Montgomery. “Also, an impartial player leading the blockchain efforts will be key. Blockchain data on our supply chain will illuminate areas that are inefficient in various lanes and supply chain management. So the organization advocating and managing a supply chain blockchain can’t have anything to hide or any axe to grind.”
The New York Supply Chain Meetup organized its first 2020 conversation with representatives from IBM Blockchain and TradeLens. Freightwave’s takeaway from this discussion was that blockchain will be best utilized when applied to a supply chain network across an entire industry.
The pharmaceutical industry, Montgomery believes, is the perfect space for the commercialization of blockchain, because it’s already heavily regulated, its products are environmentally sensitive and need to be monitored, and they are very valuable in both cost and societal impact. This makes their products primed for the transparency that blockchain can provide.
For instance, every time a pharmaceutical product goes bad, it’s the pharmaceutical company, not the trucking company’s responsibility to complete a corrective and preventive action report (CAPA), run diagnostics to understand the cause of the issue, and write a report to ensure the same scenario will be avoided. Using blockchain, a company like Bristol-Myers Squibb, for example, would have access to robust supply chain data (location, hauler, ambient- and product-level temperatures within the trailer or container) from various logistics providers. Data such as this becomes very helpful in identifying the root cause of a temperature variance that could harm several pallets of product worth millions of dollars.
Projecting $1.3 trillion in global sales for 2020, the pharmaceutical industry can afford an end-to-end technological investment. Of those sales, 28% goes towards cold chain cargo or environmentally sensitive products – products that cause the industry to lose $35 billion each year due to temperature deviations. This amount of waste is too expensive and time-consuming for an industry whose priority is human health and survival.
When looking at the current environment with COVID-19 and the criticality of pharmaceutical products, sensitive medical equipment or other key items such as plasma, the value of a blockchain for the industry’s global supply chain makes complete sense. “Being able to identify where key medical supplies are during shipment, and ensuring their environmental status is known and stable is key,” said Montgomery. “We must move quickly to provide the industry with a more holistic and robust view of pharmaceutical and medical products.”
The ongoing Drug Quality Security Act (DQSA) states that by 2021 the government must “Develop regulations establishing enhanced drug distribution security systems for interoperable electronic tracing of product at the package level.” This will require not only traceability, but being able to validate that a drug is indeed not counterfeit. This means that pharmaceuticals anywhere in the supply chain must have the ability to be scanned for quick information access to prove the drugs’ authenticity via barcode or small bluetooth chip encoded with its manufacturing date, etc. However, 2020 is here, but there is no centralized database in the cloud allowing for the collection and dissemination of that data.
“The only way you can make the DQSA work efficiently is with blockchain,” said Montgomery. “It won’t work efficiently otherwise, because information has to feed from multiple sources into a single database across all of the chains of custody for that to work. And, it has to be cryptographically secure. That is by definition a blockchain.”
Here’s another alternative for blockchain commercialization – one pharmaceutical company decides single-handedly to provide qualifying data for its products at any point in the supply chain. Anyone could scan to see that the product was kept at a controlled temperature for the entire journey from bulk manufacturers to redistribution centers, and eventually, the consumer.
“Consumers may choose to buy one brand over the other if they feel better about it because they know it was kept within its limits during shipment – which in turn will elevate their brand,” said Montgomery.
Consumers already think about supply chain transparency when they make food purchases, whether they’re conscious of it or not. How chickens were raised, how many times the spinach was rinsed and whether or not the granola was packaged alongside peanuts are primary health and lifestyle concerns for consumers. Blockchain would just take transparency to the next level.
When inoculations, whether for the flu or whooping cough, go bad, they become less effective. The problem is, the defective product has the same appearance as the bonafide product. It’s imperative that consumers standing in line for a vaccine aren’t given a dose only 60% effective because it was not shipped or stored properly.
“Our ability to effectively combat this sort of stuff as a country is going to rely on the sanctity and the transparency and the effectiveness of our supply chain,” said Montgomery. “And the only thing that can handle all that is blockchain.”
Original Source: https://www.freightwaves.com/news/big-pharma-could-commercialize-and-save-blockchain