Stolen and diverted pharmaceuticals

In part 1, I wrote about the complexities of Navigating the journey of medicines from manufacturing to the supply chain endpoint is highly intricate, posing significant challenges that counterfeiters exploit to their advantage. Counterfeit: how falsified drugs emerge.

During my tenure at Procter and Gamble, I gained insights into Inventory Reconciliation - a critical process involving the verification of product inventory by comparing physical stock with recorded data to ensure accurate shipment delivery. Regrettably, numerous companies still depend on this approach to address the significant issue of pilferages and diversion in the supply chain, perpetuating a cycle of pilferage.

The Dark Side of Diversion:

In the global marketplace, the journey of a product from manufacturer to consumer should be straightforward. However, the reality is often much more complex, and unfortunately, riddled with illicit activities like theft and product diversion. These issues not only undermine legitimate businesses but also contribute significantly to the rise of counterfeit medicines. Understanding this link is crucial for both consumers and companies looking to protect themselves and maintain the integrity of the market.

What Are Stolen and Diverted Products?

Stolen products are goods that have been illegally taken from the supply chain. This can happen at any stage—from warehouses and shipping containers to retail shelves.

Diverted products refer to goods that are sold through unauthorized channels. While they may be legitimate items initially, their sale outside authorized networks circumvents official distribution agreements and quality controls. This is common in industries like pharmaceuticals, cosmetics, and electronics.

The Nexus Between Diversion and Counterfeiting

1. Loss of Control Over Product Integrity:

When products are stolen or diverted, the original manufacturers lose control over their distribution. This lack of control creates opportunities for counterfeiters to introduce fake products into the market. Consumers may unknowingly purchase these counterfeits, believing they are getting genuine items.

2. Increased Availability of Counterfeits:

Stolen goods can be mixed with counterfeit products and sold in bulk. This practice not only floods the market with fake items but also makes it difficult for consumers to distinguish between genuine and counterfeit products.

3. Undermined Brand Trust:

Counterfeit products often lack the quality and safety standards of the original. When consumers encounter subpar products, it damages the reputation of the brand, leading to loss of customer trust and loyalty. This is particularly damaging in sectors where safety is paramount, such as pharmaceuticals and electronics.

4. Economic Impact:

The sale of counterfeit goods can result in significant financial losses for legitimate businesses. These losses include not only the direct revenue from the sale of the stolen or diverted products but also the long-term effects of brand damage and reduced consumer trust.

“Consumers who are deceived into believing that they bought a genuine medicine when it was in fact a fake, blame the manufacturer of the genuine product when it fails, creating a loss of goodwill.”

The Role of E-Commerce and Globalization

“We see an unfortunate loss of $2.5 million annually due to theft and diversion of products during shipment to our valued customers. On numerous occasions, we've come across our stolen products being sold on Amazon. In a few instances, we've even purchased them just to confirm their authenticity, and without fail, they turned out to be our very own products that were shipped from our facilities” - VP. Pharma supply chain

The rise of e-commerce has exacerbated the issue of product theft, diversion and counterfeiting. Online pharmacies and other marketplaces provide a platform for counterfeiters to reach a global audience with relative anonymity. The complexity of global supply chains also makes it harder to track and verify the authenticity of products, providing more opportunities for illicit activities. 

E-commerce is one of the most resilient channels used by Counterfeits to distribute fake and falsified pharmaceuticals. Businesses fall victim, consumers fall victim, Dispensers fall victim and even government agencies have fallen victim. A scenario that was radically common during the COVID 19 Pandemmic. 

Remember this….

“Online Pharmacies are usually under the radar, and they are the smooth operators of the Dark world of Counterfeiting.The sneaky ninjas operating in the shady world of Counterfeiting”.