Cure Pharmaceutical's anti-counterfeiting strategy for emerging markets

¶ … organization Cure Pharmaceutical (Cure) belongs to the pharmaceutical industry\'s drug delivery technology sector. Cure is considered a small size pharmaceutical company with annual revenues of one hundred and fifty million dollars. A technology, designed by the firm, enables patients to effectively take medications without requiring water in the process. This patented Oral Thin Film technology is small, light and occupies much less space after packaging (Advances in Technology 2015). Cure\'s core business integrates generic drugs that are an effective treatment for a multitude of diseases into its proprietary OTF technology. Cure\'s main emphasis is on expanding its distribution channel into emerging markets particularly in Africa for the treatment of Malaria, HIV and other infectious diseases (Maliski 2011).

As we enter these emerging markets the threat of counterfeit infiltration of our brand and value chain increases. For Cure to continue to grow in these markets we must use independent brokers and distributors often controlled by small private entities with little or no security and control over their distribution chain. Since entering the emerging market sector Cure has seen a five percent increase in counterfeit products infiltrating our distribution channels over the last eighteen months period. This is mainly due to the use of independent broker distributors into the hospital and clinics in rural areas.

As Chief Executive Officer of Cure I have been tasked with the opportunity to research how we can better protect our protects from being counterfeited as well as how it may help our overall mission of delivering quality therapeutics for life threatening diseases and creating a socially responsible sustainable value chain within our organization. I will report my findings to the board of directors representing all stakeholders within our organization with my findings and later a proposal to facilitate the appropriate plan of action.

1.2 The Sustainability Opportunity

Although we have taken many measures to create a sustainable value chain such as auditing our suppliers, validating material, green packaging, efficient energy use during manufacturing process, water use reduction and testing all components, we have not yet addressed the issue of counterfeit infiltration into our supply chain. As Chief Executive Officer (CEO) of Cure Pharmaceutical I believe it is our responsibility to address these social sustainability issues that impact our stakeholders and the communities we serve. Multiple options exist -- from RFID, coding/printing, holograms, security labels to track and trace, tamper evidence features and end-use design (Markets & Markets 2016)

The company has had internal debates on social sustainability and how it relates to protecting our value chain, especially in the fight against counterfeit products in the pharmaceutical sector. Counterfeit medicine not only can cause death and prolonged illness in a patient population, but also can have a severe impact on the economy due to loss of work, increased health cost as a result of secondary illness and increased morbidity. Stakeholders can lose faith in medicines as well as the brand that has been counterfeited. As such, the need for more steadfast approaches or initiatives to tackle the issue of counterfeits has led to the need for the development of stringent and effective measures (Robson and Mccartan 2016).

The company has also debated on whether or not an investment in anti-counterfeit measures would be economically feasible and how it could help mitigate risk to our value chain thereby protecting our stakeholders. Some of the concerns about implementing anti-counterfeit technology into Cure\'s product are the entry cost associated with the implementation as well as the overall effectiveness. There are several Board of Directors of Cure that feel no matter what Anti-counterfeit technology a company implements, the counterfeiters are always one step ahead. The company continues to question how an investment in counterfeit technology will make a difference.

2 Business Case Analysis

The business case analysis section of this report looks at two individual firms that have implemented anti-counterfeit technology in recent years. Representatives of these firms were interviewed and data recorded for thematic analysis. What emerges from an examination of these interviews is a common theme that centers on reducing negative social impacts related to counterfeit drug usage. Anti-counterfeit technology, such as RFID, is a method that both firms\' representatives believed mitigated the risk of counterfeiting taking place. The review of the data follows in the Critical Analysis section. Here, an overview of the methods and case studies are provided for contextual purposes.

2.1 Practitioner

The challenge of overcoming counterfeiting in the pharmaceutical industry has wider sustainability relevance because of the degree to which counterfeiting impacts all sectors of markets all around the world, undermining the social order by causing consumers to feel insecure in their purchases. Just as Norton Guarantee in conjunction with Symantec technology has become popular for eCommerce firms in recent years (promoting the concept of secure Web transactions), the pharmaceutical industry stands to benefit from addressing the issue of security when it comes to delivering an authentic product to consumers wherever they may be in the world.

Firms must be creative in order to combat activities that are hard to root out. One way to do that is to implement anti-counterfeit technology in the delivery process. Bringing positive change for sustainable development is the key factor here, and anti-counterfeit technology is a variable that can make an enormous difference in the way that firms control their products during the shipping process. It is in the firm\'s interest and the client\'s interest that these protections be implemented as the firm is responsible not just for producing a product that works but also for getting it to the shelves and into consumers\' hands untouched and uncontaminated in the exchange. It is true that measures can be duplicated by counterfeiters usually within 12-18 months of implementation, which requires deliverers to implement a rotation strategy; however, the overall assessment of researchers is that this strategy is imperative because without it there is no guarantee that products are arriving as advertised on the box (Bansal, Malla, Gudala, Tiwari 2013).

Abel (2010) reports that anti-counterfeiting measures are on the rise in the pharmaceutical industry, which is actively engaged in reducing counterfeit drug cases. Estimates given by the World Health Organization show that \"10% of all pharmaceuticals in the global supply chain today are counterfeit and that sometimes the fake drugs contain toxic substances and chemicals that could cause death\" (Abel 2010:1). The risk of not addressing this issue, therefore, is that consumers face a 1 in 10 chance of purchasing a product that is not only not what is advertised on the box but that can actually pose a severe health risk to them. Companies that do not thus engage in anti-counterfeiting practices show a severe lack of corporate social responsibility.

Castka et al. (2005:vii) report that corporate social responsibility programs efficiently and effectively allow management within a firm to employ both direct and indirect positive and beneficial impact on \"social, environmental and economic\" areas where the firms do business. The overall goal of these programs is to effect a \"better world\" where ethical practices serve to guide all aspects of a business\'s relationship with consumers, the community where it does business, its workers, its culture, and its business objectives (Friedman, Miles 2002:1). In addressing social responsibility within the firm, Cure should consider what Anyangoooko (2014) identifies as the environmental factors that impact its business model: environmental factors in this case refer to the risk environment in which third party entities are actively engaged in counterfeiting at least 10% of the pharmaceuticals on the market today -- a factor which raises a serious and legitimate threat to the safety and security not only of Cure\'s business model but also of Cure\'s clientele. Sound corporate social responsibility practices are such that the firm puts the interests of the community ahead of interest in profits, thus signaling that its aims are aligned with the health-related goals of the community it seeks to serve. Without this alignment there can be no fundamental ethical support or foundation for the firm going forward -- no reason for the public to place its trust in the firm\'s activities -- and no reason for the firm\'s achievements in technology to not be undermined by a failure in the firm\'s response to the legitimate threat that is counterfeiting of pharmaceuticals. Thus, the research indicates that it is in the company\'s best interest as well as in the community\'s best interest for Cure to adopt a corporate social responsibility program that takes to heart this issue and addresses it by implementing a strategy of anti-counterfeiting technology on all deliveries.

Sharad (2014) locates the emergence of the problem of counterfeiting in the \"expansion of international free trade\" combined with \"inadequate drug regulation\" in markets around the world. Sharad examines the different ways in which pharmaceuticals can be protected using anti-counterfeiting technology, from overt technologies which employ visible features to covert technologies which use hidden markers to forensic techniques. Each method has its own particular value and helps in its own way to alert brand owners/developers, distributors, marketers and retailers to identify when a seal has been cracked or when a product has been counterfeited. Sharad\'s (2014) assessment is supported by Sword\'s earlier (2010) analysis. Sword, of Thermo Fisher Scientific, also asserts that anti-counterfeiting technology is a viable solution to combating the problem of a counterfeiting pharmaceuticals in today\'s unregulated markets.

Finally, Davison (2011), author of Pharmaceutical Anti-Counterfeiting: Combating the Real Danger from Fake Drugs, asserts that authentication is imperative in reducing the risk faced by counterfeiters within the market place. Authentication is the only means available by which consumers can be assured that the product they receive is what the advertising says it will be. By using authentication measure such as tracking technology, RFID, or other measures available to producers, distribution can more safely and effectively be accomplished and consumer fears about being hurt by taking a drug that is something other than what it should be can be put to rest in a more systemic manner than any other way available. Thus, the research on this subject is clear: anti-counterfeiting technology works, it is effective, and it should be implemented in order to product both producers and consumers from potentially fatal counterfeit substitutes.

2.2 Research Design and Methods

Informed by a thorough research literature review, the research aims to explore primary research using three real-world pharmaceutical company case studies through interviews. This research study incorporates a qualitative approach with the acquisition of both primary and secondary data. It is also acknowledged that research is an iterative rather than linear process; a qualitative method is hence preferred in order to understand and explain how and why things happen, and give in-depth insight into complex phenomena and processes (Silverman, 2010). Case studies provide in-depth information about specific anti-counterfeit technologies and trends, which can then be drawn upon to generate insights. Primary data was collected through semi-structured interviews, discussions and participatory methods. Semi-structure interviews were chosen as they provide reliable, comparable qualitative data and allow informants the freedom to express their views and thoughts more openly (Silverman, 2010). Using a list of standardised questions, semi-structured interviews allow the interviewer to omit or add to some of the questions, depending on the situation and the flow of the conversation (Bryman, 2001).

Interviews were electronically transcribed and data organised according to the interview topics and emerging themes. This primary data was conceptually analysed establishing the existence and frequency of concepts. Through a process of qualitative content analysis and coding the data was mapped graphically to identify and present the themes emerging from the research data (Silverman, 1993).

Case Study 1: Shire Inc. is a mid size biotechnology company that is focused on serving individuals who are suffering from rare diseases and highly specialized conditions. Shire has expanded into several emerging markets and has recently introduced Radio Frequency Identification (RFID) anti-counterfeit technology into their product. Interviews were conducted with four key supply chain managers whom have direct knowledge of the implementation of the anti-counterfeit technology and how it affects their company.

Case Study 2: Bluepharma is a mid size pharmaceutical company that is focused on the development and distribution of generic drugs to the underserved market. Blue Pharma has distributes product into emerging markets for the last seven years. Bluepharma is not only dedicated to the safety and quality of their pharmaceutical products but also recognizes the importance of social sustainability and their responsibility to implement it. Bluepharma has incorporated an anti-counterfeit technology known as Thin Layer Technology (TLC). TLC is a small minilab that test for active ingredient accuracy and fits in a small suitcase. Interviews were conducted with four individuals including the CEO whom are directly involved in insuring the quality of Bluepharma\'s supply chain as well as implementation of their anti-counterfeit technology and how it has affected their supply and value chain.

3. Critical Analysis

To the question of whether the company had seen economic benefit to the organization and mitigation of negative societal impact through its sustainability approach, both Shire Pharmaceutical and Bluepharma replied, \"Yes.\" The reasons for the affirmative answer were similar: Shire reported that through RFID implementation, the company had been able to increase distribution via independent distributors and hospitals; the implication here is that new markets are aware of contingencies and risks associated with counterfeiting and want to work with companies that are prepared to mitigate these risks: doing so thus opens up new doors in terms of exposure to new markets and territories, as Shire stated in the interview. The use of independent distributors (a potentially risky practice because it is through such actors that counterfeiting most commonly occurs) is mitigated by the RFID technology. Thus, because the company is able to control the flow of its product and track it, exposure to potentially risky distributors is hedged by the anti-counterfeiting technology.

BluePharma essentially gave the same response when explaining its affirmation: it was able to ensure new markets (hospitals, clinics and pharmacies) that the products they were receiving from the company were legitimate and had been tracked entirely from shipping point A to receiving point B; this serves as a kind of Norton Guarantee in the pharmaceutical world and opens up the company to doing new business with clients that want to be assured of protection of products that they will in turn be using or selling. From a B2B or B2C standpoint, this method of tracking products and implementing anti-counterfeiting technology is the best solution possible for both firm and customer.

Both companies also affirmed that there are social benefits that emanate from the mitigation of counterfeiting. Shire explained that anti-counterfeiting technology helps to build brand trust with distributors and clients. Bluepharma expressed the same sense -- that the technology enabled the company to build trust with clients. This emphasis of trust is important as it is the cornerstone of healthy relationships and can be explained in the following manner: a consumer seeks a product but is uncertain as to whether the product being purchased is actually the product advertised. This uncertainty leads to reluctance to buy, which leads to ailments going untreated. Untreated ailments lead to an unhealthy society, as work is missed, family lives are disrupted, and social normative patters are disrupted as a result. By going back to the issue of the firm providing the client with what is advertising along with a guarantee that what is advertised is what is being purchased, the firm and the consumer forge a relationship based on trust that can develop both into brand loyalty and into healthier, functioning communities, as the needed treatment is being confidently purchased and used. Thus the positive social impact of using anti-counterfeiting technology is evident, according to the analysis of both companies.