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Ensuring drug safety is vital to our health and wellbeing. Fake drugs cause economic damages for the sector and pose a serious health threat. With the counterfeit medicine market growing fast, effective solutions are needed urgently.
Counterfeit medicines are a multi-billion-dollar business for criminals and a serious health threat for society.The estimated value of illicit trade in counterfeit pharmaceuticals in 2019 reached between USD 9 billion to USD 28 billion, which represents around 1.3% to 4.2% of total trade in pharmaceutical products.In addition to strengthening border controls, product regulations, and promoting intellectual property enforcement, tracking technologies and drug analytics offer promising solutions to help combat the global threat.Last November, several patients in Austria and the UK were hospitalized after using allegedly fake versions of Novo Nordisk’s GLP-1 weight-loss drug Ozempic.1Hypoglycemia and seizure were reported as serious side effects of using the falsified drugs.2,3 The US Food and Drug Administration (FDA) seized “thousands of units” of counterfeit weight-loss drugs and warns consumers not to use fake drugs found in the US drug supply chain.4 In addition, the US regulator said the sterility of the needles cannot be confirmed, which increases the risk of infection in patients.5
For decades, fake drugs and their effects were mostly a problem in developing and low-income countries, where most people do not have access to the prescription drugs, vaccines, or medical devices available in the developed world. Today, due to the emergence of online pharmacies, countries around the world are struggling with fake drugs. Their use has increased dramatically, posing a serious threat to the health of patients or even putting their lives at risk. Counterfeit drugs may contain the correct ingredient, but in either too high or too low dosage or in a contaminated form. If a toxic substance is used in such a drug, it may threaten patient safety. Sometimes fake drugs contain ground brick or flour, and in other cases ingredients such as insecticides, cement or even rat poison.6
According to the World Trade Organization (WTO), the estimated value of illicit trade in counterfeit pharmaceuticals in 2019 was between USD 9 billion to USD 28 billion. This represents around 1.3% to 4.2% of total trade in pharmaceutical products.7A detailed review of the customs data shows that counterfeit antibiotics, male impotence pills, and painkillers were the most targeted drugs by counterfeiters (Figure 1). Other types of counterfeit pharmaceuticals often seized by customs authorities include those targeting treatment for malaria, diabetes, allergies, or blood pressure, to name a few.8
Falsified drugs seem to be a lucrative business for criminal organizations. As Figure 2 shows, pharmaceutical crime rose by 50% between 2018 and 2022. There were 6,615 pharmaceutical crime incidents in 2022, up from 4,405 in 2018.9The WTO estimates that one-in-ten medical products in low- and middle-income countries are substandard or falsified.10
With the advent of online pharmacies, it is becoming harder for customers to distinguish between real medicines and imitations. Possible solutions could include strengthening border controls, product regulations, and promoting intellectual property enforcement. Open and hidden markings on medication packages, such as holograms, color-changing ink, or iridescent surfaces, can make counterfeiting more difficult.11
Companies are also relying on tracking technologies (“track-and-trace”). This allows an individual package of drugs to be pinpointed at any stage in the supply chain in real time. As an example, Thermo Fisher Scientific Inc., a supplier of analytical instruments, is a manufacturer of Versa RxV checkweigher, which enables drug manufacturers to print and verify codes that can be used for either unit level or lot level traceability.12,13 Another interesting example is Patheon Inc. (subsidiary of Thermo Fisher Scientific Inc.) which offers a real-time track-and-trace solution that provides internal and external clinical trial stakeholders with on-demand shipment updates for all in-transit materials for a clinical trial.14
Drug analytics is another solution to analyze counterfeit drugs. The most common tools include:15
Fake drugs threaten people’s health and wellbeing. Since they do not pass through the usual rigorous process evaluating their quality, safety, and efficacy, they can pose a health hazard to the entire society. But with every challenge comes an opportunity: we believe the health prevention theme within our safety & security offering is a compelling investment opportunity for investors. Consequently, we are invested in leading companies that provide solutions needed to mitigate the risks of counterfeit medicines, for example in the field of track-and-trace technologies or drug analytics.
Senior portfolio manager, Thematic Equities
Patrick Kolb (PhD), Managing Director, has been a Senior Portfolio Manager for the Security Equity strategy since 2007. In 2005, he joined Credit Suisse Asset Management, now part of ۶Ƶ Group, where he initially focused on the industrials and technology sectors. Patrick graduated from the University of Zurich with a major in Finance and then worked as a research assistant at the Institute of Banking and Finance at the University of Zurich before earning his PhD in Financial Economics.
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