Sproxil Innovative Solutions to Resolve

Counterfeit Drugs Problem in Africa

Lukmon Sumola

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Table of Contents

Table of Contents ....................................................................................................................................... 2

List of Abbreviations .................................................................................................................................. 2
1.0 Introduction .......................................................................................................................................... 3
1.1 Company Profiles ................................................................................................................................. 3
2.0 The Counterfeit Products Market ......................................................................................................... 4
2.2 Sproxil Solutions to Counterfeit Medicines ......................................................................................... 5
3.0 The attractiveness of the market Segment Sproxil Operates ................................................................ 5
3.1 Sproxil Value Chain Analysis .............................................................................................................. 6
3.1.1 Inbound Logistics: ............................................................................................................................. 7
3.1.2 Operations ......................................................................................................................................... 7
3.1.3 Outbound Logistics ........................................................................................................................... 7
3.1.4 Marketing and sales ........................................................................................................................... 7
3.1.5 Services ............................................................................................................................................. 8
3.1.6 Procurement....................................................................................................................................... 8
3.1.7 Human Resources .............................................................................................................................. 8
3.1.8 Technological development............................................................................................................... 9
3.1.9 Infrastructure ..................................................................................................................................... 9
4.0 Six Thinking Hat as an Improvement Mechanism ............................................................................... 9
5.0 Recommendation ................................................................................................................................ 10
6.0 Reference ............................................................................................................................................ 11

List of Abbreviations
The Organisation for Economic Co-operation and Development
OECD
MPA Mobile Product Authentication
WHO World Health Organisation
RFID Radio Frequency Identification
ERP Enterprise resource Planning
SC Supply Chain

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1.0 Introduction
The number of manufacturing products moving backward and forward across global
marketplaces due to the integration of world economy, globalisation, increase in high speed
internet and telecommunication is astonishing. It provides substantial business opportunities and
challenges, products and services can be purchased from suppliers in different geographical
locations. Therefore, it opens doors for the counterfeit products to travel easily to countries with
weak regulatory and enforcement systems.

The fake goods is manufactured across every business sectors and the list of counterfeit products
create a daunting challenge to compile. However, the socio-economy implication of
counterfeiting cannot be overlooked, the magnitude and impact compel tougher action from
governments, consumers, and businesses alike. The counterfeiting of pharmaceuticals further
highlight the danger, fake medical products are a major health risk for us all. The amount of
counterfeit pharmaceuticals sold across border is staggering, the third world countries are the
likely destination and the breeding ground often used by the counterfeit criminals.

This writing aims to present the innovative solution leverage by Sproxil to eradicate counterfeit
medical products market in the less developed countries. It looks into how the company
capitalised in the gap in pharmaceutical security market to provide differentiated service
offerings that open up a new market and create immense value to their customers, government,
and customers’ customers. In this article, we delineate the constituent components of value chain
as it applied to Sproxil operations and recommend six thinking hats to bring out workforce
creativity.

1.1 Company Profiles

Sproxil is a mobile product authentication (MPA) solution provider based in Cambridge
Massachusetts founded in 2009. The company provides mobile-based solutions to combat
counterfeit pharmaceuticals for the emerging market. The solution is compatible with any
tangible products and widely used by many leading pharmaceutical companies to eliminate
multi-billion dollar counterfeit drugs industry. Sproxil operates in Africa, Asia, and North
America. The company continue to broaden market share in the industry through expansion into
other geographical region and penetration into non-pharmaceutical industries, such as cosmetics,
automobiles, electrical cables, and luxury under wear products. Sproxil was named 7th most
innovative company in 2013 by fast company.

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2.0 The Counterfeit Products Market
The counterfeit products are found everywhere in the world and in all sectors of the economy.
The accuracy of defining the extent of fake products is a problem, obtaining accurate field
statistic is a herculean task, and the estimate varies. However, the counterfeit products is a multi-
billion dollar underground economy producing hundreds of billion dollars fake products yearly.
The Organisation for Economic Co-operation and Development (OECD) statistic shows that
counterfeit products rate is minimum in the industrial countries but high in the countries where
regulatory and enforcement systems are weak. The region with the highest rate of counterfeit
products are African countries, Asia, and Latin America. In most of these countries, more than
30% of the prescription drugs in the market can be counterfeit.

The counterfeit products market is estimated by the OECD to be at region of $250 billion
annually in 2009. There are other studies that report approximately $600 billion annual increase
in the counterfeit products in the last four years, of which Counterfeit medicine alone accounts
for $200 billion. The pharmaceutical industry world-wide loses considerable amounts to
counterfeit criminal. However, the ultimate losers are the customers that received suboptimal
prescription drugs at excessive price which can sometimes exposed them to health and safety risk
or possibly death.

In some less developed countries, the counterfeit pharmaceutical fatalities yearly statistic figures
can be in the estimate of six figures. Although, the death tolls is unknown but significant number
of people have lost their life. According to WHO, over 100,000 deaths yearly linked to counterfeit
pharmaceuticals in Africa alone. The estimate of 700,000 deaths globally caused by counterfeit
malaria and tuberculosis medicines reported by The British think-thank network. Therefore, to
reduce and eradicate counterfeit pharmaceutical, discourage counterfeiters, minimise death tolls
caused by usage of fake products, and improve sales of genuine prescription drugs, the
investment in technology present the best way forward.

2.1 The anti-Counterfeit Technologies for the Pharmaceuticals

There are many anti-counterfeit technological products available today in the market for the
manufacturers, government agencies, wholesale distributors, and end-users. The technology
adopted to fight counterfeit medicines war can varies from one country to another. The existing
technologies deployed to fight the counterfeit pharmaceuticals are classified as follows.

Overt – The overt features enable the end users to verify the authentication of a pharmaceutical
product package, the feature is attached to the pack but it is difficult and expensive to reproduce.

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The most popular overt features is the dove hologram used to protect credit cards. The examples
include, unique sequential numbering, Holograms, optical variable devices, security graphics etc.

Covert- The covert features have hidden component not visible to outsider, it helps the brand
owner to identify fake medicines. The example of Covert include, embedded image, digital
watermarks, laser coding etc.

Forensic Markers- use require laboratory testing or field test kits to scientifically prove
authentication. The example include, Biological taggants, DNA taggants etc.

Track and Trace – It involves assigning a unique identification number to each product unit
during manufacture, which then remain with the product throughout it life cycle. The example
include, serialisation, barcodes, radio frequency Identification (RFID) etc.

2.2 Sproxil Solutions to Counterfeit Medicines

The company provides a unique solutions to combat counterfeit products using mobile based
verification service. The customers are empowered to act against counterfeit products by utilising
there mobile phone to confirm the authentication of every products they purchase to ensure
genuine products are purchased at the point of sale. How sproxil works?. Once a consumer
purchase a product, there is a label on the package they can scratch-off to reveal a one-time use
product unique code. They then text the code via SMS to a toll-free number using their respective
mobile phone. The consumer will then receive instant respond confirming that the product is
genuine or warning that it may be a fake.

Sproxil differentiate its service offering from other competitors by leverage the existing growing
technology at our fingertips to prevent consumers of being reap off and expose to health and
safety risk by the counterfeiters.

3.0 The attractiveness of the market Segment Sproxil Operates

The anti-counterfeit market has a significant growth potential in the under developed and
emerging economy countries. In most of the countries in Asia, Middle-East, South America and
Africa, anti-counterfeit market remains untapped and have high level of counterfeiting. The
technological solutions offered by Sproxil provides better security, reliability, and peace of mind
for the end-users, manufacturers and government than many competitors in the market.
According to 2013 Smithers Pira market intelligent report, the anti-counterfeit market is expected
to worth about US$79.3 billion by 2014, the compound annual growth rate is estimate at 8.6%
from 2009 to 2014.

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The financial outlook of anti-counterfeit market is quite attractive, and the external factors of five
competitive forces swing in favour of Sproxil at the moment. Being the early adopter, the
company could earn attractive return on investment. Although, the new entrant to the market
posed low threat due to setup cost and technological knowhow. The substitute brand in the market
technology systems are not as effective. The industry competitors will need to reinvent the wheel
to retain the market share. The product manufacturers will do anything to keep counterfeiters at
bay. The backward integrations from the mobile network, software and hardware suppliers are
the major worries that pose high threat to the Sproxil existence.

3.1 Sproxil Value Chain Analysis

Sproxil used a simple but effective solutions. Combining mobile network, IBM cloud services
and track and trace technological system to provide exceptional value-added services tailored to
the specific market segment. The innovative solutions leverage by the company to combat
counterfeit pharmaceuticals created unrivalled competitive advantage. The question that come to
mind now, is that, how sustainable is the competitive edge enjoy by the company at the moment.
To sustain its market position, Sproxil must design a defensive strategy to protect and grow its
current market share.

According to Porter (1998) it is necessary to examine all the activities a company performs and
how they interact to analyse the source of competitive advantage. The source of Sproxil
competitive advantage stem from series of activities the company perform to deliver value-added
services the customers are willing to pay for. These discrete activities a company perform in
designing, producing, marketing, delivering and supporting was coined by Porter (1998) as a
value chain. The concept of value chain is based on a process view of an organisation, it is the
idea of viewing organisation as a system made up of subsystems each with inputs, transformation
processes and output that acquire and consume resources. In the form of labour, money,
materials, building, equipment, land, administration and management. Porter (1998) further
stated that how company manages value chain activities determines costs and affect profit. The
two main categories of business activities identified are primary and support activities, of which
all the activities are interlinked and act as a complete business system.

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The primary activities consist of the following:

3.1.1 Inbound Logistics:

This involve the partnership relationship Sproxil build with the suppliers of the frontend and
backend technology system the company used to carry out its daily business activities. The
national mobile network carrier, the IBM and the hardware vendors. Sproxil receive and store
products data on IBM cloud services and also pass information to the customers (Pharmaceutical
companies, Cable Company etc) on the customers’ customer purchase experience, geographical
locations etc to improve customer service. It uses the national mobile network to disseminate
information back and forth to their customers’ customer and relied on third party company for
products serialisation.

3.1.2 Operations
All the activities Sproxil required to transform input into outputs to satisfy their customers (The
consumer, the distributor and the brand owners). The daily operations will include collection of
products data from the manufacturers, through integrated ERP system between Sproxil and the
customers. The backend system will use the data to monitor customers products as it travel
through the supply chain pipeline until it finally consumed. The customer support desk designed
to give 24/7 support to their customers’ customers by providing assistance during verification
process, give medical advice, and escalate counterfeit or stolen products. The backend system
response to SMS text message in real time alerting consumers of fake/nor fake or stolen products.

3.1.3 Outbound Logistics

It relates to the relationship Sproxil have with the customers and all the activities required to
collect, store, and distribute the output. The manufacturers have now tag the finished products
with a covered unique identification code already in Sproxil system. Sproxil will now monitor
the products movement as it travels from the manufacturing factory to the regional distributors’
warehouse, and to the individual pharmacy being stored until the product finally consume. It is
at this point the company will act as a direct link between the customers and their end-users

3.1.4 Marketing and sales

It refers to all activities Sproxil deployed to inform prospect client about the services the company
provides, persuade buyers to purchase their solutions and facilitate their purchase. Sproxil

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prepare a unique service offering that meet specific needs of the customers and focus on
delivering of exceptional value difficult for prospect customers to turn down. The company use
various medium of market communicate tools suitable to the targeted region to promote its
products. In addition, due to the nature of the solutions the company provide, Sproxil supports
anti-counterfeit campaign to raise awareness of it services and lobby the countries policy makers
and the regulators. The code counter on the website used as a testimony to show that the service
is effective and efficient in combating fake pharmaceuticals and that people are using the
services.

3.1.5 Services
It includes all the activities required to keep the services provided by Sproxil to be working
effectively for the customers. Sproxil offers exceptional customer service to the customers’
customer at zero cost. It partners with all local mobile network providers to ensure that the
confirmation SMS text message is at no cost for the end users. The company respond on time to
customers’ customer queries and formed a partnership arrangement with their key customers.
Sproxil’s client portal provides access to pharmaceutical manufacturers concerning
pharmaceutical sales, stolen drugs, and suspected counterfeit.

Porter (1998) tells us that support activities are divide into four generic categories, each activity
have numerous distinct value activities, which includes:- Procurement, Human Resources,
Technological development, and Infrastructure.

3.1.6 Procurement
The function responsible for all the purchasing of materials, services, and other consumable
items. This will includes the building sproxil used to carry out its operations, the office
equipment, hardware and software, stationery etc. The company outsource all components or
operations that cannot be performed in-house without incur high cost to third-party company to
concentrate on core competence.

3.1.7 Human Resources

It consists of all the activities involve in recruiting, training and development, compensation,
selection, and maintenance. In Sproxil, employees are considered as the most vital resources, an
important human capital the company cannot do without. The only inimitable and non-

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substitutable source of competitive advantage. The company invest in staff development program
and training.

3.1.8 Technological development

Technology is essential for every business in the modern era, according to Porter (1989) every
value activity embodies technology. In fact, technological system is the backbone of Sproxil
operations and the source of the company competitive advantage. It is used to perform a range
of value-added activities to carry out the day to day business operations. Sproxil uses different
software application system and hardware to perform it operations, such as 2D capturing
software, Track & Trace solutions, Mobile App, IBM ILOG Elixir Enterprise, IBM cloud service
etc. Partnering with IBM help Sproxil to benefit immensely from the cost saving associated with
the cloud environment.

3.1.9 Infrastructure
It consists of numerous activities including planning, management, finance, accounting, quality
management, and government affairs. Effective management of all sproxil information and
technological systems can contribute significantly to the company cost position. While at the
same time, service offerings quality lapse will have direct implication on revenue thereby threat
the market position of Sproxil.

4.0 Six Thinking Hat as an Improvement Mechanism

The method of Six Thinking Hat is a brainchild of Edward de Bono, he used six metaphorical
hats with different colours to describe certain way of thinking. The concept is a way of putting
parallel thinking into practice instead of argument that yield no immediate result. The six thinking
hats are to be worn one at a time as each hat define different thinking. It is an evolutionary way
of focusing thinking in one direction, it enables everyone to think together in parallel and on the
same page cooperatively. When a hat is put on, everyone adopt the style of thinking and
behaviour associate with the hat think.

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The six thinking hats are characterised by the following colours –

White It focuses on information and data. The white hat is neutral and objective.
It is about feelings, intuitions and emotions. The hat allow you to present view without
Red justification and explanation.
It is for caution, risk assessment, and critical. It is possibly the most useful hat. It should not be
Black overused, though, it is easy to be overused. It can be dangerous when overused.
Yellow The logical positive. It is about hope and positivity. It help find benefits and value in a situation.
It a creative hat, about generating new ideas, concepts, and perceptions. When this hat is put
Green on, everybody is creative, find possibilities and alternatives.
Blue It is use for thinking about thinking. It is about process, control, and taking overview.

5.0 Recommendation
The anti-counterfeit technologies market is growing at a rapid rate. The individual market players
will continue to fight to widen their market share and extend competitive advantage. Sproxil
cannot continue to rely and depend on the old recipes, standing still mean falling down.
Therefore, for Sproxil to sustain and improve competitive position, and continue to provide
value-added services customers are willing to pay for. The company must create a learning
workforce through education and training to promote innovative skills within. Education and
training is a predictor of employees’ commitment and job satisfaction. When employees are
committed, they stays with the company through thick and thin, and shares company goals.
Investment in six thinking hats training to invent constructive medium of thinking among
workforce bring huge benefits, especially in generating creative and innovative ideas.

Deployment of De Bono literal thinking tools in Sproxil will ensure that all workforce are
thinking in the same direction cooperatively. Thinking together in parallel will improve meeting
time and boost innovation. The training should start from the top management cascading
downward to the floor workers.

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6.0 Reference
http://www.unodc.org/documents/data-and-analysis/tocta/8.Counterfeit_products.pdf viewed
on 5th Nov.,2013.

IMPACT (2006-2010) International Medical Products Anti-Counterfeiting Taskforce,

Publisher, Italian Medicines Agency (AIFA). Viewed on 6th Nov, 2013 on
http://www.who.int/impact/FinalBrochureWHA2008a.pdf

Morris, J. & Stevens, P. (2006) Counterfeit medicines in less developed countries: Problems
and solutions, publisher, MacGuru Ltd, UK. Viewed on 6th Nov, 2013 on
http://www.hks.harvard.edu/var/ezp_site/storage/fckeditor/file/Morris_Stevens.pdf

Porter, M.E (1998) Competitive Advantage: Creating and Sustaining Superior Performance.

Bansal, D., Malla, S., Gudala, K., and Tiwari, P. (2012) Anti-Counterfeit Technologies: A
Pharmaceutical Industry Perspective Sci. Pharm. Vol. 81, no.1, Pp. 1–13.

http://www.sproxil.com viewed on 5th Nov, 2013

Bono, E.D. (1985) Six Thinking Hats: An Essential Approach to Business Management.

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