‘Fighting counterfeits with tech’

Saim Siddiqui is the Chief Executive Officer of ProCheck. ProCheck is a local B2B startup that uses digital means to counter product counterfeiting in Pakistan. Incorporated in 2014, the firm currently has eleven employees and is based out of Karachi, with a sales office in Lahore. Saim completed his undergraduate studies in Economics at the University of Toronto in 2012. He started his career as a Business Development Manager at Social Asset Measurements, a Toronto-based startup. BR Research caught up with Saim recently in Islamabad and discussed the scale of counterfeit products in Pakistan and how his startup is tackling the issue. Selected excerpts follow:

BR Research: What led you to launch ProCheck?

Saim Siddiqui: The fake-medicine crisis of 2012, which resulted in deaths of over a hundred heart patients in Punjab, made the problem of substandard medicines in Pakistan really clear to me. I thought there was a technology-based, commercial solution for this problem. I had been away from Pakistan for about a decade at that time. My own background was in technology in Toronto and my own interest was in the healthcare space. A mix of me wanting to return to Pakistan and doing something about the fake medicines was what pushed me to come back in 2013 and launch this startup in 2014.

BRR: Let’s talk about the problem first. In your view, how big is the market for counterfeit medicines in Pakistan?

SS: A lot of figures are thrown around, and admittedly it is a difficult problem to quantify. The World Health Organisation has stated that up to 30 percent of medicines sold in the developing countries are counterfeit and/or substandard. Anecdotal evidence and feedback from local pharma stakeholders suggest the figure is around 10 percent.

Having said that, counterfeiting will vary based on the areas. We have observed that the supply-chain of most counterfeit products is regional, not national. Collusion between wholesalers and retailers is often circumscribed within a certain geographical area.

BRR: You mentioned a technology-based, commercial solution to this menace. Please elaborate.

SS: The solution is that if you have customers who don’t know about the legitimacy of their medicines, and when you have a market failure as a result of regulatory problems, you put the power of authenticating the medicines in the hands of the consumer. The consumer would thus know in real-time whether their medicine is the real one.

ProCheck empowers consumers to check the authenticity of the medicine they purchase by assigning a unique, randomized identifier on every medicine pack. This information is encoded in a two-dimensional barcode that can be scanned using an app, and getting instant verification that the drug purchased is a genuine one.

BRR: What is the commercial angle here?

SS: There are three primary things we are doing. First, and the immediate one, is that we help manufacturers protect their brands and recoup lost revenues to counterfeiters.

Two, we are helping collect aggregated consumer behaviour trends. Based on sampling studies, we can establish valuable indicators that help increase visibility into post-purchase behaviour, information that is highly valuable in the chronic segment.

And three, our solution helps manufacturers track their product as it moves through the supply chain. So manufacturers have the same visibility playing out on the back-end as well as on the consumer-facing end.

BRR: Which digital mediums are you actually using to authenticate medicines?

SS: Users can authenticate their medicine through a variety of methods: an app, a web page, an SMS, or a missed call. We understand that the regulator, the Drugs Regulatory Authority of Pakistan (DRAP) will have an app that can be used for verification as well.

BRR: Tell us more about the regulatory channel preference for drugs’ authentication.

SS: The government has recently issued an SRO that makes it mandatory for every pharma manufacturer to have serialization on their medicines within two years. Serialization, which includes bar codes, is now a regulatory mandate. This move towards bar-coding is in line with international standards, led by GS1, which is an international body promoting cross-border standard. This standard is being adopted across the globe, including the US, EU, India and countries in the Middle East.

BRR: How costly is it to install the bar-coding system at a pharma facility?

SS: The hardware costs for bar-coding, including for printers and vision cameras, come to around Rs2 million per line. That said, there is substantial variation based on the manufacturing line itself. Bottles and vials, for example, are far more challenging to barcode. As the process becomes mature, there will likely be a reduction in installation complexity.

Preparing a manufacturing line to be “serialization ready” is a complex, time-consuming process. Space, hardware, the level of automation and a slew of other factors come into play.

BRR: Perhaps that’s where firms like ProCheck can do some business. What exactly are you selling?

SS: We offer pharma manufacturers a suite of applications that does the serial-number generation, data management, systems integration, end-user verification; reporting and consent-based patient engagement services.

BRR: So bar-coding will work fine for the manufacturers, helping them track and trace their shipments, along with all the associated benefits. How will the bar-codes help the average consumer in Pakistan?

SS: The consumer will download an app, then scan on the app the bar-code written on the medicine box, and instantly get verification that the drug is a genuine product.

BRR: That will exclude a sizable chunk of the population not having smartphones.

SS: That is true. If the pharmacists are involved in the process – there are about 40,000 licensed pharmacies in the country – this problem can be overcome to some extent. The bar-coding feature will not be available on the medicine pack, but on the medicine box, which contains several medicine packs. If consumers are made aware of this authentication feature, pharmacists can offer this service as a way of establishing trust. Finally, Pakistan now has a substantial and rapidly growing internet user base, over 40 million at last count.

BRR: ProCheck recently formed an alliance with US-based firm PharmaSecure. Please elaborate how it will benefit your product offering.

SS: By partnering with PharmaSecure, we are able to bring a robust, mature and proven solution to Pakistan. In a highly-regulated industry like pharmaceutical manufacturing, this helps manufacturers who are averse to experimentation.

We use the PharmaSecure serialization suite for manufacturers, with ProCheck providing the local systems integration on manufacturing lines, with telecommunication providers and, finally, providing consumer-facing activities like patient engagement services and verification portals.

BRR: Are you going to expand your target market, given product counterfeiting cuts across a number of sectors?

SS: For a little background for your readers, ProCheck started out as Asli Goli. A year later, we changed the name to ProCheck, as we wanted the name representing our interest and growing expertise with companies in the non-pharma sectors as well.

While the majority of our work is in the pharmaceutical vertical, we are very much looking at other verticals, too. We are having a number of conversations in the agri-business, auto parts, and building materials industries. If we can send tips to a patient so they can stay healthy, we can also send tips to farmers for better yield.

BRR: You seem focused on the up market.

SS: We are focusing on the manufacturers themselves to be able to reach a big chunk of consumers. We are focused on the top twenty players, which make about two-thirds of the market. Our current client list includes Ferozsons, Getz Pharma, GSK, and Nabi Qasim Industries in the pharmaceutical vertical

BRR: How much capital has ProCheck raised since it graduated from the invest-to-innovate (i2i) accelerator?

SS: Six months after graduating from the i2i accelerator, we received grant funding worth $100,000 from investors of overseas origin. This year in April, we raised $250,000 in a round led by Sarmayacar, a local angel-investment syndicate.

BRR: What are some of the critical success factors you find relevant for your firm?

SS: It’s the people and the culture we have that will define success. Recruiting, maintaining and growing talent is our biggest pain-point and opportunity. In the knowledge company, our people are our balance sheet. And while it sounds like a trope given how much it is repeated, it is very much true.

We’re also cognizant of the fact that everything we do is an input; the outputs depend on a multitude of factors like the state of economy, the industry etc. And finally, luck, all of which is out of our hands but something we try to be prepared for.

BRR: In the end, how do you think Pakistan can raise consumer awareness regarding counterfeiting?

SS: The government and manufacturers working together will make a difference. Once the DRAP regulations are in force for Phase-1 compliance in December, it will be important to have an awareness campaign.

Hopefully, the government will conduct such a campaign in concert with the associations that represent the manufacturing industry.