This Blockchain Startup Idea from the 1001 Startup Ideas collection of YoStartups is to establish a Blockchain to Prevent Counterfeit Medicines from reaching & selling in the market. Counterfeit medicines are the widespread problem, especially in the developing countries which are accounting for both health and economic loss to the countries.
Market Definition | Blockchain to Prevent Counterfeit Medicines
In a report released by WHO in late 2017 estimates that 1 in 10 medical products circulating in low and medium income countries is either substandard or falsified. That includes pills, vaccines, and diagnostic kits.
Talking in terms of economic loss, the counterfeit medicine market costs over $45 billion to pharmaceutical industry globally on an annual basis, and the total counterfeit medicine market is projected to be even way more, somewhere between $75 to $200 billion. Just in Euro, the projected loss to pharma business is over $11 billion annually, which works out to be around 4.4% of the total sales. Developing countries, especially the African and Asian countries have counterfeit market grabbing upto 30% of the total sales.
Some of the medicines that are found to be most prone to being counterfeit are for anti-malarial, HIV/AIDS, cough syrups, sexual health etc. and they have caused over hundreds of thousands of deaths, plus loss in productivity due to longer time to get well.
Competitor Analysis | Blockchain to Prevent Counterfeit Medicines
There are few companies like BlockVerify, iSolve, LinkLab, that are working proactively to find a blockchain based solution to the tackle the issue of counterfeit medicines.
London-based anti-counterfeit solution provider, BlockVerify, has started focusing their efforts on the pharmaceutical industry. They plan to give every drug its own permanent record on the blockchain, which will make manipulation of private keys an impossible task. The system will also be able to identify stolen drugs, diverted goods, and fraudulent transactions.
Pain Point & Target Audience | Blockchain to Prevent Counterfeit Medicines
The target audience for the proposed startup would be pharmaceutical companies especially in the segment of making over the counter available medicines, as they are more prone to being counterfeited.
The counterfeit medicine market is almost to the size or even larger than the genuine pharma industry in some of the developing countries. The problem has even made a deeper route to the developed countries due to the rise of online pharmacies. The FDA routinely purchases drugs on the internet and finds that more than 50% are fake.
These fake medicines adversely affect the health of the users and also increase the time to recovery affecting the overall productivity of the country translating into national output loss.
For the pharmaceutical companies, the discovery of the fake medicines and proven side effects or ineffectiveness leads to loss of brand value.
Value Proposition | Blockchain to Prevent Counterfeit Medicines
The blockchain has been predominantly used in the financial sector, but there a lot more use of this decentralized technology and pharmaceutical industry is one such field where the technology has found strong relevance.
The complete supply chain for the pharmaceutical products can be logged on the blockchain, making it tamperproof and transparent to used and verified by multiple parties. Every manufactured unit can be added to the blockchain and assigned a unique identification number, which is called hash. And then throughout the supply chain, any party can verify the hash to find out whether the unit in question is counterfeit or genuine.
The beauty of the process is that anyone can get access to the blockchain and conduct his independent verification, making the whole process transparent and trustworthy.
Business Model |Blockchain to Prevent Counterfeit Medicines
The proposed startup will work on B2B model with the pharmaceutical companies and traders. The startup can charge a small commission for tagging the assets on the blockchain. A part of this commission fee goes to the independent users on the network in the form of digital currency, who helps to grow the blockchain network and verifies the transactions.
Way to market | Blockchain to Prevent Counterfeit Medicines
The startup first needs to establish a validating procedure which verifies the integrity of any transaction on the network. There is a need to set up some kind of digital signature procedure that can be done by a large number of participants (or verifiers).
Only the limited group of trusted parties should be allowed to write on the blockchain, while everyone else should have access to scan the details like location, price, manufacturer, supplier, etc. The system should also conduct scheduled checks to identify any abnormality and report the counterfeit medicines and their associated suppliers and manufacturers.
Using this the startup would be able to create a verified profile for all the associated manufacturers and supplier and give them a trust score.
Once the basic system is in place, the startup should launch its services in some of the developing countries in Asia or Africa, where counterfeit medicines are a big problem. One of the advisable countries could be Indonesia, owing to its large market size.
Milestones | Blockchain to Prevent Counterfeit Medicines
The proposed startup should look to launch the decentralized platform within 6 months of the inception. They should start by working with a couple of large pharma manufacturers or suppliers in the country of launch. Once the blockchain network gains some traction, it can also look for the option of ICO to raise funds.
Investment Needed | Blockchain to Prevent Counterfeit Medicines
The startup should look to raise upto 100k for the product development and initial marketing. Once the platform is set-up and functional there is literally no cost associated to keep it operational, so the money is only needed for one-time platform set-up.
The startup should try to get into one of the blockchain specific accelerators which will not only provide the access to seed fund, but also the blockchain expertise and legal advice.
Investors / Expert Take | Blockchain Startup Idea
The scale of the problem of counterfeit medicines can be estimated from the fact that global counterfeit drug detection devices market valued at $904 million in 2016 and is expected to reach above $1.3 billion by 2021, growing at a CAGR of 8.5%.
If implemented properly the proposed idea will not only get interested from pharmaceutical manufacturers but also garner support from different government bodies and NGOs.
Also at the end, if the hard work and innovation of the pharma company are rewarded properly in the form of a market share, there would be increased investment and efforts in R&D creating new formulation to gift the world with life-saving drugs.
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