Mobile drug authentication app needs work
Ghanaian entrepreneur Ashifi Gogo has developed a mobile-based technology he believes can help consumers and pharmaceutical companies fight back against drug counterfeiters in developing nations. But experts said his solution needs work.
Gogo, a 28-year-old Dartmouth College engineering graduate, co-founded Sproxil Inc. to end the “menace” of counterfeit drugs in West African countries such as Nigeria, where he said up to 80 percent of the over-the-counter medication bought by consumers is fake.
Gogo said when consumers purchase a drug protected by his trademarked Mobile Product Authentication technology, it comes with a scratch code that provides them with a number they can enter into their cellphone as a text and get an immediate text response back on whether the product they just bought was real or fake (read original story here).
Last month Sproxil announced a partnership with Nigeria’s National Agency for Food and Drug Administration and Control and drug company Biofem Pharmaceuticals Ltd. to employ Sproxil’s anti-counterfeiting technology to cover about a million units. “There are other companies or people who tend to talk about the solution or advocate for it, but I can tell you that nobody else is working this close with a drug regulatory authority to implement this and nobody really has a product on the market yet. We’re the first to do this and we’re really excited about it.”
The World Health Organization estimated about a third of all the drugs sold to developing nations are fake and last year a report issued by the United Nations Office on Drugs and Crime predicted the global trade in fake pharmaceuticals would hit $75 billion by the end of this year – an increase of 90 percent since 2005.
“It’s growing at a rate that’s much faster than the rate at which genuine pharmaceuticals are growing,” said Gogo, who bootstrapped the business with about $100,000 from business partners, friends and family. In addition Gogo won a $10,000 grant from the Clinton Foundation and another $100,000 from the Washington, DC- based African Diaspora Marketplace, a not-for-profit organization sponsored by U.S. AID and Western Union that provides grants to African American entrepreneurs creating jobs in Africa. “So it shows you the kind of range that we’re dealing with. Best case you’re 1 out of 3; worst case you’re 4 out of 5.”
Alden Zecha, Sproxil’s chief financial officer, said the company pulled in $100,000 in revenues last year and anticipated growing that to about $1 million by the end of 2010. He said the company’s main challenge this year is to raise capital to hire more sales and marketing staff in order for Sproxil to bring in more clients. Zecha said they are seeking to raise $3-4 million from primarily venture capital firms in the U.S. and Africa.
“Our technology can be moved into almost any market very rapidly, but we need a certain amount of capital to be able to do that,” said Zecha, who confided that it’s often difficult to convince foreign investors to fund Africa-focused companies. “Investors don’t seem to understand the African market and are a bit reluctant to look at deals that might involve targeting Africa as the marketplace.”
TAKING IT TO THE EXPERTS
Derek Kerton, principal analyst at the San Jose, California-based wireless consultancy firm The Kerton Group, said the problem of counterfeit drugs is a very real one and Sproxil’s solution is promising, but one that will be tough to reach a broader consumer audience.
Kerton, whose father is an advocate for product safety in the developing world, said counterfeiters mostly take advantage of less-sophisticated consumers and thought Gogo’s mobile-based solution could help level the playing field in that regard.
“By using the Sproxil solution to verify the authenticity of drugs, those at the bottom of the pyramid can fight back at those that would take advantage of them, and assure themselves safer medicines and better health,” said Kerton, who added Sproxil still requires a savvy consumer to be effective. “A quick chat I had today with Indian entrepreneurs revealed little faith that those buying their drugs in the roadside stalls of Delhi would be early adopters of a Sproxil service.”
Regardless Kerton felt it was a noble undertaking by Gogo and wished more mobile telecom developers would pursue more publicly-beneficial applications instead of “first-person shooter” games. “The best apps might not be 3D games on the iPhone, but rather simple SMS programs that make a real difference.”
Cindy Krum, the founder and CEO of Denver, Colorado-based mobile marketing firm Rank Mobile, echoed Kerton’s sentiments about the empowering quality of Sproxil’s technology for consumers, but said she didn’t think the awareness of the counterfeit drug problem had yet reached a level that would encourage mass adoption.
“To see success the project will have to be embraced and evangelized off-line in mass media. People will only use this technology if they understand the risks and trust the results,” said Krum, who also wondered what happens when a consumer discovers the drugs they just bought are fake. “They must be returned, but this can be more difficult when you are dealing only in cash. Would it be mandatory that a retailer accept the returned drugs or could they refuse the return?”
Krum also had concerns about Sproxil’s ability to stay ahead of the counterfeiters, whom she feared may just replicate the technology and add their own bogus scratch-off codes. “People could believe that just the presence of a scratch code is an indication of security, even if they don’t text it in,” she said, suggesting Gogo switch to the same “chip and PIN” technology used by banks and credit card companies to protect consumers at point of purchase. Krum said it would require the consumer texting in two numbers – one from the bottle and one from the receipt – which would only work in tandem. “While this system requires slightly more digital infrastructure, it’s still information that can easily travel over mobile networks, and will be much harder for the counterfeiters to duplicate or work around.”
Krum said Sproxil’s anti-counterfeiting service could also be used by high-end international consumer brands, such as Prada and Gucci, to protect their products. “I think this technology is great, and it sounds like it can be easily adapted to verify lots of products – both high-dollar and more mainstream.”
Jacob Sharony, the founder of Long Island, New York-based Mobius Consulting and who has more than 25 years experience in the telecommunications field, said Gogo has the right idea, but his solution needs to go deeper to address the problem more effectively.
“The current user interface is not so friendly and prone to errors,” said Sharony, referring to the process whereby the consumer is forced to manually enter a code into their cellphone. “I would rather see an app that takes a picture of a 1-D or 2-D bar code – after scratching – with a quick send button.”
Sharony agreed with Krum that the security of Sproxil’s system was an issue and the technology was fairly easy to hack for counterfeiters, as cellphone texting technology is generally not encrypted and delivery can be delayed.
“A secure data link will be more appropriate, but again data services and more sophisticated phones are not ubiquitous in Africa,” said Sharony. “The idea is good, but the solution needs further improvements to be more robust, secure and transparent.”
What do you think of Sproxil’s technology? Will it help thwart drug counterfeiters in developing nations? Would you invest in them? Leave your comments below: