When people hear about blockchain, their minds might typically jump first to use cases in banking or financial markets. Although these industries were the trailblazers in adopting blockchain, they are no longer alone: as someone who works closely with organizations in the healthcare and life sciences space, I am seeing major industry players move beyond investigating the technology and into the phase of building production-ready blockchain applications. This is the first of two posts where I will explore why blockchain is a necessary consideration for these industries, why certain use cases are better applications of blockchain, and the importance of being a first mover.
The blockchain paradox
For the healthcare and life sciences industries, blockchain is the perfect paradox. These industries operate with overwhelming amounts of data — data which must be shared yet secure, data that is digitized now more than ever, data that belongs to the increasingly empowered patient. By providing faster access to this trusted data, as well as facilitating better collaboration and increased transparency, blockchain can significantly improve and personalize the patient experience. The technology can also help reduce counterfeit medicines, promote more effective research and development, and drive new or optimized business models.
The characteristics of these healthcare and life sciences organizations that make them superb candidates for the adoption of blockchain technology, however, are the very same that may deter them from implementing. As the IBM Institute of Business Value (IBV), in collaboration with the Economist Intelligence Unit (EIU), found this year in their study of over 200 life sciences executives in 18 countries, life sciences organizations face different challenges than those in many other industries when implementing new processes and technologies. First off, the industry, awash with personal health information and classified research, is not only highly regulated, but also differs significantly across geographies in this degree of regulation. Second, antiquated and inefficient processes, combined with an inherent caution in applying new technologies, further slows this industry from exploring and adopting blockchain.
The IBV also found in its 2016 study of over 200 healthcare executives that healthcare organizations in North America are lagging behind other regions in adopting blockchain — only eight percent of North American respondents are blockchain Trailblazers, with 56 percent of North American organizations viewing immature technology as a barrier to implementing and many prioritizing readjustment to the 2010 Affordable Care Act over blockchain exploration.
From conversation to action
Despite the characteristics that delay these industries from diving into blockchain, we found in the first IBV study mentioned above, that these organizations are very eager to take the next step. In fact, nearly 70 percent of all life sciences executives surveyed expect to have a blockchain network in production by 2020. Although this may seem like an aggressive target, my team is passionate about partnering with these organizations to make this statistic a reality.
In order to move from conversation to action, we have had to narrow our focus and begin working on only the highest value use cases, which tend to have three characteristics: first, the blockchain technology itself provides significant value-added; second, implementing blockchain produces a sizeable near-term, demonstrable return on investment (ROI); third, there is some external, motivating force driving the need to redesign an existing process or service. Successful blockchain projects tend to address tangible problems that the industry faces and are coupled with either a regulatory or financial incentive.
The lifetime of a drug
A quintessential example of the ideal use case, which we discuss both in the Team Medicine study linked above and in our recent healthcare and life sciences industries blog post, is track-and-trace for pharmaceuticals. The need for a secure, immutable history of a drug is largely driven by the Drug Supply Chain Security Act (DSCSA), a U.S. Food and Drug Administration (FDA) policy enacted in 2013, which “outlines the steps to build an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” This Act acts as the “external motivating force” propelling major life sciences companies towards blockchain.
Blockchain is an ideal solution for the business problem of tracking and tracing pharmaceuticals, as it provides increased trust through consensus, provenance and supply chain immutability. In addition to supporting compliance, there are many benefits to “doing DSCSA” on the blockchain: not only are there numerous operational benefits and millions of dollars of savings to be reaped through supply chain efficiency and rebate management, but there is also nothing stopping these organizations from “flipping the system on” early once the functionality is in place, years before the 2023 FDA-mandated deadline.
These first movers who recognize the massive potential of blockchain for DSCSA — and are working with my team to build and test it — will be poised to tackle the oncoming wave of regulation and disruption while deriving massive cost savings from the platform, positioning themselves competitively in the industry for years to come.
Perhaps the most widely referenced use case for blockchain is track and trace, the benefits of which have been expounded upon countlessly. Still, how often are these benefits applied to industries outside of banking and manufacturing? Blockchain as a service continues to prove itself across industries, having graduated from successful pilots such as those in […]
The swift journey of blockchain from a buzzword to reality is fascinating. Blockchain is currently transforming many industries from healthcare to the food supply chain. Now auto manufacturers are envisioning how distributed ledger technology can be applied to power autonomous vehicles and improve them, increase customer retention, satisfaction, and the overall auto experience. But how […]
The hope, the dream, the expectation of the nearly every CEO has always been to constantly synchronize people, operations and suppliers to yield a more efficient and effective business. We all are experiencing the emergency measures of business process and human separation due to COVID-19. We also probably realize much of this will pass and […]