Blockchain for Pharma, Medicine and Life Sciences. Part 1: Context


Why is it important to monitor Blockchain’s adoption in Pharma?

The adoption of the TCP/IP protocol (transmission control protocol/internet protocol) brought the internet in the 90s, leading to a revolution of the communication processes (e.g. democratization of information, reduction of the cost of connectivity and information sharing). These accomplishments were made possible without the need of any central authority and they deeply transformed the business world. However, some industries still rely on outdated procedures (e.g. fax machine has not died out yet).


The Blockchain has the potential to become a disruptive technology, such as the internet, by transforming the transaction process. The reasons for the adoption of the internet by pharma and biotech companies were vast, due to the extensive properties of the internet and the diversity of the Healthcare industry.

Due to several of its limitations, Blockchain skeptics exist, just as it was for the internet (Paul Krugman, 2008 economy Nobel Prize: “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s”).


So, if the Blockchain becomes a successful technology (i.e. becomes widely adopted), laggers will suffer compared to early adopters. The same way big companies who did not believe in the internet suffered from competition with its early adopters (for example, amazon versus the bookselling company Borders that did not have its own website until 2008).

In order to define the spread of the Blockchain technology into the healthcare industry, it is necessary to study its different characteristics and see how it may serve different sectors of this industry. By focusing on the applications already developed in these sectors, it will be possible to see on which phase of the maturity curve the Blockchain is. Following the adoption of the Blockchain could be of tremendous importance in order to foresee the next trend in Healthcare industry. Indeed, in itself, the Blockchain has the potential to create/modify the business model of different actors. Understanding this trend before everyone else could provide us great investment opportunities!

Context: data breaches, flawed data, frauds

In 2015, it was estimated that 253 healthcare record data breaches, due to hacking/IT incidents, had a combined loss of over 112 million records (Moffit & Steffen 2017). In 2012, 1000 healthcare facilities in 48 US states have been warned by the US Food and Drug Administration (FDA), that they might have bought and administered a fake version of an anti-cancer drug, Avastin ® (bevacizumab) (Mackey et al. 2015). In 2016, it was estimated that over 80% of the clinical trial data submitted to the Chinese FDA contained fraudulent (fabricated or flawed) data (DeRuzza 2017).

Countless of such misdemeanors can be found in the Healthcare industry, ranging for example, from frauds, falsification, hacking, to exploitation of supply chain vulnerabilities. All of these induce a huge financial strain on the Healthcare industry. For example, the loss of profit due to counterfeit drug sales is estimated around tens of billions of dollars, $75 billion in (Blackstone et al. 2014). It is only recently that a technology, the Blockchain, has gained hype across the Healthcare industry, as a panacea for a broad range of misdemeanors.

The Blockchain

The Blockchain technology was originally implemented in 2008 by the enigmatic(s) Satoshi Nakamoto, to serve as the underlying technology of the cryptocurrency Bitcoin. The core fundamentals of Blockchain were driven by the rejection of bank-controlled payments. Despite the Bitcoin being widely criticized by states and banks, the Blockchain has grabbed the attention of different industries. For an overview of how the Blockchain works, with the example of a Bitcoin transaction, see this article.

In today’s modern digital world, data and information are continuously exchanged between different systems. These interactions are regularly proved not to be totally secure and reliable. The Blockchain is one of the technology that tries to improve the reliability and the security of these transactions, while remaining efficient and cost-effective and without relying on third-party intermediaries to conduct any transaction. Moreover, these transactions can be of any type: from money to financial assets (stocks, bonds), documents and records of ownership or even votes.

The Blockchain is known as an open, incorruptible distributed ledger, recording in a secure way “peer-to-peer” transaction as it operates without relying on any third parties. Thus, the trust in the Blockchain does not arise from a trusted intermediary such as a bank or an institution. The trust is in fact encoded in the Blockchain protocol. Indeed, the database is not owned or controlled by any central regulatory instance. Instead, the consensus of the network participants is required to update the database. Moreover, the recorded information cannot be erased. Therefore, the data are all securely recorded, continuously updated and shared by the whole network.


The internet protocol suite, a set of communication protocols used on the internet, changed the way we communicate. Internet gave birth to new business as well as almost entirely connecting humankind. However, the internet did not transform the transaction paradigm of our societies. Indeed, the transactions between two unknown parties, even on the internet, still required to trust intermediaries (banks, institutions, PayPal…) for verifying, validating, and processing transactions. 

The Blockchain is a shift of the transaction paradigm.  Every transaction can now be verified, validated and processed trustfully to parties without relying on an intermediary. These properties have naturally fueled the financial and banking industry interest in order to make transactions more trustworthy and efficient and other industries also, such as insurance, entertainment, healthcare and even institutions.

In the Healthcare industry, the Blockchain has been investigated in the context of patients’ electronic health records, or in the drug traceability along the supply chain, as well as in clinical trials. These projects are the sign of Blockchain’s progressive adoption. However, due to the diversity of the Healthcare industry, trends and reason for the adoption of the Blockchain are not particularly emerging.

Structure of the Dossier on Blockchain for Pharma, Medicine and life sciences

This suite of articles will focus on the adoption of the Blockchain in the Healthcare industry. Based on a thorough review of the literature (consulting report, scientific papers…), but also on the review of Blockchain’s early adopters in the different sectors of the health industry, we will separate the findings into the different parts. For anyone interested, here is the structure of this dossier “Blockchain for Pharma, Medicine and life sciences”

  • Prelude: Blockchain, explained
  • Part 1: Context
  • Part 2: Definition of the Blockchain’s properties which are of particular interest for the Healthcare industry
  • Part 3: Analysis and predictions for Administrative and Financial Procedures
  • Part 4: Analysis and predictions for R&D
  • Part 5: Analysis and predictions for Supply Chain
  • Part 6: Analysis and predictions for Precision medicine
  • Part 7: Analysis of the adoption cycle
  • Conclusion


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