Blockchain infrastructures and distributed ledger technologies are very well known as the technological pillars of crypto-assets and cryptocurrencies like Bitcoin, Ethereum, Cardano, and Dogecoin. In recent years the popularity of these cryptocurrencies has been skyrocketing as it enables novel decentralized approaches to payments and other financial services, i.e., they enable financial transactions without traditional banks. In 2021, the total market value of crypto assets has exceeded 1 trillion dollars for the first time in history. Nevertheless, the value of blockchain technology is not limited to providing support for decentralized finance services. Rather, blockchains are also deployed and used in many other industries like manufacturing, energy, healthcare, and supply chain management. These deployments are motivated by the decentralized nature of blockchain technologies, which obviates the need for controlling and managing business transactions through some trusted third party.
One of the most popular applications of blockchain technology beyond cryptocurrencies is its use for tracking and tracing transactions in the manufacturing chain. Specifically, blockchain technologies enable the decentralization of the manufacturing chain by offering distributed, secure, and reliable ways for tracking and tracing products, processes, and transactions. These benefits are very relevant for complex supply chains, where there is no effective way for centralized actors to track, trace and manage transactions. A prominent example of such a supply chain can be found in the pharmaceutical industry. This industry is highly regulated as it manages a variety of products that are made available in different countries and are subject to different laws and conditions.
The deployment and use of blockchain technology in the pharma supply chain is motivated by the following benefits of distributed ledger technologies:
Acknowledging the benefits of distributed ledger technologies for the pharma chain, many companies have implemented, deployed and experimented with blockchain systems. As a prominent example, back in 2019, several pharma companies participated in FDA’s Drug Supply Chain Security Act (DSCSA) pilot. The pilot implemented blockchain-based tracking, tracing, and verification for pharma products. Security and interoperability requirements were validated during the pilot implementation and operation. The results of the pilot were positive, as the blockchain systems were proven capable of meeting the requirements of the DSCSA.
As another example, the PharmaLedger project in Europe demonstrated the management of patients’ electronic medical records using blockchain technologies. As part of the project, pharmaceutical companies used the blockchain to provide accurate and up-to-date information about their products. Patients were able to access this information as part of their medical records and prescriptions. The project demonstrated the benefits of a decentralized and fully digital process. It was sponsored by the Innovative Medicines Initiative (IMI) and proved the benefits of blockchain technology for accurate and trusted information sharing between pharma companies and patients.
Despite the benefits of blockchain technology for the pharma chain, there is still a lack of very large-scale implementations. Most projects are either small scale or at a pilot stage. This is because of the performance limitations of blockchain technology, the lack of experience in blockchain application development, but mainly due to that there is no easy way to transition from conventional centralized and paper-based platforms to decentralized blockchain-based ones. Moving from a centralized model to a decentralized paradigm requires not only a technology shift but also a change of processes and of the overall culture of supply chain participants. These are some of the barriers that inhibit the adoption of distributed ledger technology at scale.
Overall, blockchain technologies and applications provide excellent use cases for pharmaceutical companies, including use cases that boost security, increase automation, and save costs. Moreover, the blockchain use cases for the pharma chains are relevant to all stakeholders, including pharmaceutical manufacturers, retailers, pharmacies, patients, regulatory authorities, and other supply chain actors. Blockchain’s potential in the pharma industry is nowadays proven, yet several adoption barriers persist. In this landscape, technology companies and high-tech startups should look for innovation opportunities at this space. At the same time, other business actors of the pharma industry and the pharma supply chain should gradually prepare to adopt more decentralized, yet more reliable and secure processes.
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