Broad adoption of blockchain technology requires manufacturers to look at their investments in the supply chain, just as they look at R&D, AmerisourceBergen executive says.
As data sharing and management processes in the pharmaceutical industry become more challenging, and the availability of innovative technologies increases, companies both at the clinical and commercial stage look to tap into the flexibility of blockchain technology by entering data sharing networks.
Heather Zenk, VP of global secure supply chain operations at AmerisourceBergen, told us how the company, which ‘sits in the middle’ of the supply chain, has started to integrate blockchain technology in order to build on its communication with manufacturers.
“Due to the most recent components of the drug supply regulation, we needed to communicate externally with manufacturers in nearly real-time transactions, to validate the serial numbers on packaging,” the executive explained, adding, “Our current technology would not support that, so we started to look for other options, and blockchain organically came forward.”
Zenk explained that blockchain technology allowed the distributor to create and hold a safe, encrypted ‘phone book’ consisting of the electronic locations of each product included in each transaction. The phone book is automatically synced with any updates from the manufacturer, facilitating the validation.
This process, according to Zenk, is seen as the first use case which “sets up the baseline infrastructure” that will enable the expansion to other use cases. Another potential use case would be the activation of a dynamic list with all the entities eligible to buy certain products.
The challenges in getting more players into the game
Although blockchain technology has the potential to facilitate and secure data sharing in the supply chain, it can provide no results unless more companies get on board.
According to Zenk, adoption is increasing, however, a few manufacturers still appear hesitant due to security concerns.
“Our traditional transaction and communication protocols are very secure, while with blockchain, there is always the threat of an entity intruding into the network,” she noted.
Notwithstanding, Zenk pointed out that “blockchain as a concept creates additional securities in the transactions due to the encryption, and allows us to be more flexible on who we want to share information with, and how.”
According to the executive, the biggest challenge regarding blockchain technology that the industry is called to overcome is belated adoption.
“On the one side, we have early adopters, and on the other side, companies that might not see the value in it or don’t understand what it is and how to move in it,” Zenk noted.
She added that if the industry doesn’t communicate and empower the adoption, “we will end up with a supply chain sitting on two different types of platforms that are very different to manage,” an obstruction that would drive costs up.
The fundamental requirement to encourage adoption would be “manufacturers to think about the supply chain as something they also need to invest in, apart from R&D.”
“Manufacturers might spend years bringing a product to market and then find themselves unable to engage in the highly sophisticated supply chain,” Zenk pointed out.
And she concluded, “We really want to encourage them to value keeping up with the supply chain as a core competency, and enter the migration path, in order to allow this technology save us all time, cost, and effort.”