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Indian start-up strikes deal to combat counterfeiting of medicine

PharmaSecure, a New Delhi outfit founded by a Dartmouth grad, has devised a grass-roots method to stem such counterfeiting. Fake drugs make up more than 10 percent of the global market.

By Staff writer / December 14, 2010

American Nathan Sigworth, cofounder and CEO of PharmaSecure at his company offices in New Delhi, India on Nov. 1. His for-profit company allows customers in India to verify whether the medicines they buy are counterfeit or not.

Ben Arnoldy/Staff

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New Delhi

A start-up company in New Delhi announced a deal today with a major Indian drug manufacturer to combat counterfeit medications, a $32 billion illicit business that has been blamed for hundreds of thousands of deaths.

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Counterfeits – not to be confused with generic drugs, which are made from the same active ingredients as trademarked drugs but for a lower cost – pose as a drug they are not.

Moving back the expiration date on old drugs is the most common form of counterfeiting. Other methods include producing fake pills from a fraction of the necessary ingredients, or wholly out of chalk, sometimes using rusty cement mixers.

PharmaSecure, the New Delhi start-up, has developed an elegant solution to the problem, which could help India protect its reputation as a major supplier of drugs.

The company will print a random code on up to 70 million pill packets, which customers can then text message to a phone number linked to a database. Computers look up the code, cross it off, and send back the expiration date and batch number to the customer.

If multiple customers send in the same code, the system warns them instantly. It also alerts manufacturers that fakes are afoot and helps pinpoint where. For drugs made in India but exported, the company can simply set up a phone number to route calls coming from other countries.

The company will thus be able to monitor the massive sales volumes in developing countries like India, not by battling opaque supply chains and endemic corruption, but by leapfrogging those problems with a cheap, mass technology – the mobile phone.

Not bad for an idea cooked up by a group of college students.

“There are hundreds of thousands of people dying, and there’s something I can do about this. It felt like I didn’t really have a choice to just walk away without at least investigating it and seeing if we could do something, seeing if it would be possible to build this,” says Nathan Sigworth, who founded PharmaSecure after graduating in 2007 from Dartmouth College and moving to India.

The deal announced Tuesday with Unichem Laboratories for 70 million codes marks the first major order for Mr. Sigworth’s company.

As major exporter, India scrutinized over fakes

Roger Bate, a counterfeit medication expert at the American Enterprise Institute in Washington, estimates that as many as 1 million people die a year from taking faulty medicines, including fakes but also those that are degraded or substandard. (Editor's note: The original version wrongly attributed all the deaths to fake medicines alone.)

Such counterfeits make up more than 10 percent of the global medicine market, according to estimates by the US Food and Drug Administration. India in particular worries global health officials because the country manufactures and exports much of the medicine used in poor nations where the problem is the worst.

Indian manufacturers have reasons to be concerned about their reputation, even when they are not the perpetrators. In 2009, investigators determined that a shipment of fake drugs to Africa labeled “Made in India” actually came from China. Kenya has drafted a law that’s being watched around Africa that would restrict medicine imports from India, but loose language could halt the trade of legitimate generics.

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