COVID-19 to temporarily setback blockchain implementation in global pharmaceutical supply chains

Even though blockchain stands out as a potential solution to improve pharmaceutical supply chains, COVID-19 may become a hindrance rather than a trigger in the technology’s future implementation and uptake, says GlobalData, a leading data and analytics company.

Urte Jakimaviciute, MSc, Senior Director of Market Research at GlobalData, comments: “A blockchain-based distributed ledger can provide a critical solution for streamlining product tracking and recalls, while at the same time mitigating issues such as drug shortages and counterfeiting. However, with the current crisis, blockchain may not be a top priority for the healthcare industry and any blockchain-related investments may be put on hold.

“Companies may shift their focus to operational resilience and agility, as well as remote workforces. While risk management in supply chains is extremely important for the pharmaceutical sector, blockchain technologies are still emerging, therefore the return on investment is hard to assess.”

Blockchain implementation in pharmaceutical product supply chains is currently in early pilot stages. The Drug Supply Chain Security Act (DSCSA) was enacted in 2013 in US prompted companies such as IBM, KPMG, Merck & Co and Walmart to explore blockchain technology. In February 2020, these companies issued a report declaring the blockchain pilot program successful in addressing the stated objectives and demonstrating compliance with the DSCSA. Nevertheless, they also highlighted a need to develop a defined industry governance framework associated with the blockchain network and standards for information exchange, such as GS1.

There are number of limitations and challenges that technology providers, industry and governments need to address in order to bring blockchain developments forward. Aside from compliance, regulations and governance challenges, issues related to security for Internet of Things (IoT) devices, access control and scalability may present additional barriers and risks.

Jakimaviciute concludes: “While blockchain provides an extremely appealing use case in pharmaceutical supply chains, due to the lack of ‘real world’ applications, the COVID-19 crisis may present a temporary setback for blockchain rather than encouraging growth.”

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