Supply chain & logistics
First implemented in 2009 to record Bitcoin transactions, blockchain was then adapted to support other cryptocurrencies before making the leap into other industries, such as pharmaceuticals.
The last mile gap
As the pharmaceutical supply chain moves and tracks physical assets rather than digital ones, blockchain is best applied with ‘digital twins’. These digital representations of the physical medical products carry key identifiers such as the expiry date, serial number, trade ID and batch number printed on the carton. “In fintech, the assets you’re moving are already digital but when you’re moving physical assets and working with blockchain, you need to create digital twins and close the gap between the physical and the digital,” says Alexandru Popa, MSD’s former associate director of blockchain for the digital supply chain. “The challenge is bridging the trust and usability gap between on-chain digital transactions and real-world interactions in blockchain.”
In blockchain, this issue is referred to as ‘the last mile gap’. While the technology ensures secure, immutable records, its effectiveness is limited by external dependencies – such as verifying real-world data, enforcing contracts, and integrating with traditional institutions. Popa explains, “This gap arises due to issues such as reliance on oracles (which introduce trust assumptions, which could be legacy systems), the complexity of enforcing smart contracts in legal frameworks, and the difficulty of ensuring that real-world actors behave according to on-chain, digital world rules. Overcoming this gap requires innovative solutions, such as decentralised trusted execution environments, or hybrid models combining blockchain with off-chain governance mechanisms.”
Enhancing supply chain transparency Blockchain is an immutable ledger that cannot be altered once data has been inputted. Creating digital twins of medical products enables important information to be verified at key points of the supply chain. For example, if a product has been compromised in some way – such as being diverted from its intended recipient or tampered with by bad actors – the manufacturer can identify which batch has been affected and at which stage of the process things went wrong. These are just a couple of the ways in which the technology can help prevent inferior products from being distributed to patients. In addition to identifying and eliminating substandard and falsified medicines, the technology can help to maintain the quality of legal prescription drugs. Digital twins gather live supply chain data in drug shipments and detect anomalies in circumstances such as location, temperature and condition in real time. This is particularly useful
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when transporting temperature-critical vaccines, which have a short life cycle. For example, a digital twin can track a drug shipment’s temperature, location and condition in real time and blockchain will log this data securely so it can be verified by regulators, suppliers and customers. If temperature conditions breach safe limits, smart contracts will trigger alerts or recalls.
Further efficiencies include setting up smart contracts to automate payments and invoicing, compliance and quality checks, which reduces the number of intermediaries along the supply chain. This enables faster delivery and reduces staff costs. “Vaccines have short expiry dates, so minimising the number of intermediaries in the supply chain helps ensure faster delivery to patients and reduces the risk of large-scale disposal of expired products,” says Popa.
Blockchain can optimise the supply chain and streamline product delivery by identifying potential bottlenecks. For example, alerts can also be set up to optimise supply and secure product flow and pharmaceutical turnover – by informing manufacturers when stock is running low, for example. The technology also provides an audit trail to evidence manufacturers’ distribution methods and standards and to help them verify the authenticity of their products.
Overcoming barriers to blockchain adoption
As well as being useful for compliance, this data can also be aggregated and analysed to understand what happens to medical products at the end point of consumption. This can inform marketing and boost patient treatment – perhaps by identifying groups that might need additional vaccination efforts, such as people with chronic conditions. “Understanding the behaviour of the patient and
the Vaccination Consumption Rate (VCR) allows you to do better planning around the distribution and consumption rates, particularly where there are more incidents of counterfeiting,” says Popa. All this game-changing technology obviously comes at a cost. But cost isn’t the only barrier to its more widespread adoption. The technology itself is complex and requires expertise to fully understand and maximise its capabilities. It also requires a shift in mindset from working with medical products to working with new systems. Popa believes the successful deployment of this innovative technology hinges on team building, effective leadership strategies and collaboration. “Digital transformation involves an
orchestration of people, processes and technology. All three play critical roles, but the most crucial dynamic in digital transformation is the role of people,” says Popa.
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