SLAM the counterfeiters and become your company’s Authentication Hero!

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Batman’s a guy with some pretty awesome super powers. And, without doubt, a very cool ride. But maybe you didn’t know that he never learned how to tune up the Batmobile. So until his trusted partner Robin came along, the Batmobile spent most of its time gathering dust in the Batcave. Public transit is no way for a superhero to make a quick appearance when a villain is on the loose.

You’re expected to be your company’s authentication hero. You’ve already got awesome powers, to be sure, but maybe you need a resourceful partner to maximize them, just like Batman did.

Because time is the villain you’ve got to wrestle into submission. When you’re waiting to authenticate suspicious products in the field, every hour that ticks by is a threat to patient safety, to your supply chain, and to your brand reputation. And that ticking clock leads directly to lost revenue, too. It’s mighty hard to beat the counterfeiters by yourself. You need the right partner.

Team up to SLAP the bad guys silly.

Authentix can be that trusted partner (seven of the top global pharmaceutical organizations already trust us). We know your company is counting on you to stop the counterfeiters anyway you can, and we can help with our industry-proven program to halt illicit trade anywhere in your supply chain—with just the click of a button.

In other words, we can be Robin to your Batman and help you instantly authenticate a product in the field. Our end-to-end custom solution ensures your organization is protected against counterfeit activities when it happens, when it matters most.

WHAM! All the tools you need are right here.

We offer a comprehensive set of tools to make sure your authentication vehicle is running right:

  • Consultative services
  • Customized solution
  • Third-party certification and support
  • Implementation
  • Training and enablement
  • Ongoing support

With the right partner, you’re on your way to becoming an authentication superhero. You’ll be able to:

  • Instantly identify real drugs from fake ones
  • Digitally capture authentication data
  • Identify lost revenue in order to drive legitimate sales throughout the supply chain

Watch our video and see how you can save the day by getting answers in seconds, not days or weeks!

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6 tips for Selecting the Right Brand Protection Authentication Partner

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If your pharmaceutical products haven’t been counterfeited yet, someone will probably try to soon. That’s why you need the right authentication partner.

By: Cheryl Smith-Johnson, Brand Marketing Manager, Authentix, Inc.

2012: The makers of the cancer-fighting medication Avastin notify physicians that a counterfeit version of the medication has been discovered that does not contain the active ingredient of the drug.1

2008: A counterfeit version of the blood thinner heparin appears. The active ingredient was replaced with a cheaper substance that was suspected to be the cause of up to 81 deaths and resulted in a nationwide recall of the medication. The U.S.-based firm that sold heparin was subjected to 740 lawsuits, and eventually was compelled to sell off the division that marketed the drug.2

Those are the big cases that you are undoubtedly familiar with, and they demonstrate without a doubt that counterfeit medications are a big problem. They cost pharmaceutical companies billions and make people sick, prevent them from getting better, or even kill them. Counterfeits are a pervasive problem. The World Health Organization estimates that up to 30% of the pharmaceuticals sold in parts of Asia, Africa, and Latin America are counterfeit. In 2011, 64% of antimalarial drugs in Nigeria were discovered to be counterfeit. In fact, an estimated 10% of all medicines worldwide are counterfeit.
In most counterfeiting cases, the pharmaceutical companies involved have reacted timely and decisively. But, as with any crime, prevention is infinitely preferable to even the swiftest reaction. That’s not to say that prevention is easy. Keeping counterfeits out of the market is hard. For example, in the U.S., almost 40% of our pharmaceuticals are manufactured elsewhere, and about 80% of their active ingredients are imported. The rise of internet pharmacies, where many consumers turn for lower prices, makes regulation of drug safety more difficult. Many pharmaceutical products pass through a complex, globally-dispersed distribution network, making it easier for counterfeits to enter the legitimate supply chain. What makes counterfeit prevention more difficult than anything else is the fact that drug counterfeiting, due to its high profitability, attracts some very smart people. The “bad guys” can match your product packaging in a blink of an eye, and they’re always looking for new ways to stay one step ahead of you.

As your company’s brand protector, you’re the one standing between the counterfeiters, patient safety and your brand’s reputation. Don’t go it alone. You need a reputable authentication partner to help get you out of “reaction mode” and develop a proactive process that includes instant authentication. Here are six tips for finding the right authentication partner:

1. Pharmaceutical expertise, knowledge and experience are essential

Choose an authentication partner that offers consultative services—it’s critical that your partner has experience with pharmaceutical products and understands your industry inside and out. Your partner should fully understand your challenges, articulate your exact problems, and work with you to set goals for your program. In this way, a trusted relationship can be established that will provide:

  • Common vision for the goals, resources and time management of your authentication plan
  • Knowledge transfer on key topics such as global regulations and advanced technologies
  • Development of a realistic risk assessment matrix
  • Proactive approach to managing your supply chain and preventing problems

2. “Off-the-shelf” won’t work

Select an authentication partner who can fully customize a solution to fit not only the unique challenges of the pharmaceutical industry, but also the needs of your specific organization. Your partner should have the necessary expertise on what types of security features are needed for different types of medical packaging, such as tamper-evidence seals, blister foils, vials, etc. This will allow you to take a proactive approach to combating counterfeit medicines. Look for a partner who offers:

  • State-of-the-art color marking systems
  • Multi-layered security features
  • Monitoring and enforcement plan
  • Ability to function properly in a multi-channel distribution environment

3. Expect outstanding business intelligence

Your ideal authentication partner should provide, in addition to the physical layer, a data analytics platform that can adapt as needed and employs the highest data quality standards. Actionable insights will allow you to make proactive decisions that will protect patients and your brand reputation—and give you the ability to reinvest dollars into other areas. The platform should be able to:

  • Aggregate and analyze data
  • Deliver insights directly to interested parties via their smartphones, tablets, and computers
  • Utilize the M3 (Mark, Monitor and Measure) process

4. Look for an enabler

More than likely, your current supply chain is complicated and has lots of moving parts. A good authentication partner should be able to instantly integrate within that chain. In addition, the partner should be a “third-party agnostic” solution integrator without any prejudice towards other links in your supply chain. This partner will be able to objectively analyze your supply chain, identify where potential problems lay, and make recommendations on correcting them. Look for the following attributes:

  • Third-party printer, logistic partner certification and support
  • Integration with existing systems and manufacturers
  • Trial runs that provide actual samples for testing purposes/quality assurance

5. Remember that implementation is everything

A smart authentication plan is great, but some potential partners are great at planning and not-so-great at implementing their plan. It’s important to link up with a partner with extensive, and documented, experience in implementing a strategy. They should have a resume consisting of several multi-year relationships with their customers. In addition, your partner must understand your business inside out, become an integrated part of your team, and extend that support to your third-party vendors. You need a partner who is flexible enough to adapt to your culture, your challenges, and processes. A good implementation strategy should encompass:

  • Execution across your entire global supply chain
  • Training and enablement for all involved parties
  • Flexibility to expand and grow with your changing needs

6. Build an ongoing relationship

If you think you can find a partner, develop an effective authentication strategy, implement it, and then abandon that partner, think again. The counterfeiters will always be devising new ways of beating you. You need an ongoing relationship with your partner to stay one step ahead of the bad guys. It’s absolutely critical to work with a partner who offers ongoing customer support after the initial deal is done. An established, trusted customer support strategy is the only way for your program to succeed long-term. It should include:

  • Dedicated project manager to handle programs
  • Security features testing
  • Ability to retain sample programs to ensure consistency
  • Ongoing reports and result interpretation that provide actionable insights
  • Regular auditing of third-party vendors for proper use of security materials

Regardless of who you select as your authentication partner, remember to discuss everything of importance up front and in detail. To help you do that, we have developed a downloadable checklist that will help you select the most compatible authentication partner for your pharmaceutical company.

Reducing the availability of counterfeit medicines is not easy—but it is necessary. The only way to get a grip on the pharmaceutical counterfeiting problem is for all the stakeholders involved— those within your company, third-party supply chain vendors, and of course your authentication partner—to cooperate fully in designing and implementing effective authentication methods. As always, timing is everything. Instant authentication can save you precious time when a possible counterfeiting incident occurs. And the time to find your best authentication partner is now. Contact us today.

  1. NCBI/American Health & Drug Benefits, The Health and Economic Effects of Counterfeit Drugs, 2014 Jun
  2. NCBI/American Health & Drug Benefits, The Health and Economic Effects of Counterfeit Drugs, 2014 Jun

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Authentix and HP Indigo to help Brand Owners Combat Global Counterfeiting

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New alliance delivers greater flexibility and accessibility to brand owners in applying covert security marking solutions  

ADDISON, Texas, September 25, 2017 – Authentix®, a leading global authentication and information services company, is pleased to announce it is collaborating with HP Indigo to enhance brand protection programs. This marks the first time Authentix Sherlox™ covert markers have been specifically optimized for the growing market of digital presses and certified to operate on HP Indigo digital presses.

To successfully combat counterfeiting, diversion and other forms of illicit trade, brand owners need a security marking solution that is agile and keeps them one step ahead of the bad actors. Additionally, local labeling and packaging regulations are increasing in complexity, requiring greater flexibility and responsiveness from Printing Service Providers (PSPs).

With Authentix Sherlox’s new HP Indigo certified covert mark, HP Indigo PSPs will now be able to provide:

  • High-quality, affordable covert security features on a variety of packaging
  • Greater flexibility to meet various print requirements, with shorter lead times

“Thanks to HP Indigo and their qualified network of thousands of print service providers, Authentix Sherlox will now reach more brand owners and provide access to a level of security previously unattainable on a digital press,” says David Schneider, General Manager, Authentix Brand Business Unit. “Together with HP Indigo and the PSPs, we have now connected the necessary partners to deliver and execute an effective security program for brand owners.”

Sherlox aggregates, organizes and reports sampling and testing results to identify problem areas within supply chains for companies across multiple health care and life sciences industries, nutraceuticals, safety products, distilled spirits, agricultural chemicals, automotive, electronics, clothing, luxury goods, and other manufacturers of high-value consumer products.

“CCL is continuously adapting to add value to our brand customers,” said Brent Chorneyko, CCL VP & GM. “We have a longstanding partnership with Authentix for labeling healthcare products and a large installed base of HP Indigo devices globally. We were very pleased to conduct the world’s first label test run with Authentix materials on our HP Indigo devices. It was the model of collaboration and a complete success.”

CCL Label is the leader in digital printing for the Pharmaceutical, Nutraceutical, Agriculture, Personal Care and Consumer goods markets, with more than 65 digital presses. Thirteen of the digital presses are uniquely positioned for the pharmaceutical market, utilizing cGMPs processes. Conveniently located all over the globe with over 160 locations on six continents, CCL works with companies of all sizes to develop digital printing and brand protection strategies.

Authentix Sherlox will be demonstrated in the HP Indigo and CCL booths at Pack Expo conference September 25-27 in Las Vegas as well as in the HP Indigo’s booth at LabeL Expo September 25-28 in Brussles.

About Authentix:

Authentix, a leading global authentication and information services company, assists customers in combating illicit trade and managing the integrity of their global supply chains.  With comprehensive end-to-end authentication solutions, we help safeguard customers in refined fuels (e.g., gasoline, diesel, lubes, LPG), and branded products (e.g., pharmaceuticals, agrochemicals, spirits industries, and consumer goods) from counterfeiting, product theft, product diversion, and adulteration. In addition, we help protect currencies for many leading central banks globally.

Headquartered in Addison, Texas USA, Authentix, Inc. has offices in the US, UK, UAE, Saudi Arabia and Africa serving clients worldwide. For more information, visit https://www.authentix.com/offerings/sherlox/.

About CCL Industries Corporation

CCL Label creates innovative packaging solutions for life.  Serving the packaging and promotional industry for over sixty years, CCL Label proves to be the global supply chain leader of innovative premium packaging, promotional vehicles and comprehensive label solutions for the world’s largest consumer, agricultural and healthcare corporations. More information about CCL Label is available at http://ccllabel.com/.

Elevating Your Brand Protection Strategy with Multilayered Security Solutions

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By: Jeff Conroy, Chief Scientist, Authentix

Many companies are thinking more broadly about how to implement coordinated anti-counterfeiting, anti-diversion strategies across their brands and throughout different regions of the world. Just as tamper-evident seals on bottles of pills and liquid formulations became more common due to a tampering scare in the 1980s, attitudes toward anti-counterfeiting technologies are beginning to evolve.

Once viewing such measures narrowly as an “extra feature” that only “added cost” to the bottom line, brand owners are beginning to realize the importance of protecting the integrity of their brands and the most important part of the equation: protecting the safety of consumers. As serialization technologies continue to evolve, the tracking of individual units through the supply chain could enable very secure and traceable evidence of authentic products being supplied by manufacturers and distributors to end users.

Different Features, Different Purpose

Anti-counterfeiting features that can authenticate products are both overt and covert, and they can be applied in numerous ways: on labels, onto closure seals, on cartons where containers of products are stored, into plastic parts of individual packaging, and even onto metal and glass components of packaging.

The different types of features all serve a different purpose, from enabling end users to quickly identify a branded product as genuine, to covert markings that enable a manufacturer or inspector to identify the source of diversion or other illicit activity. When combined with the careful design and production quality controls used in authentic product manufacturing, these features raise the bar of complexity for counterfeiters and make the product a less attractive target.

With that said, it’s worth considering the value of individual security features versus a multilayered approach.

Overt security features: Visible security features serve a valuable purpose in the authentication stack. They offer a way for individuals to inspect packaging without any specialized tools, and the specialized color-shifting inks (similar to those used on currency) are often difficult to reproduce using scanners or reprographic methods. There are other types of optically variable features as well, including holograms, micro-optics (like the blue stripe found on the current US $100 bill), and reflective features.

Visible security features are a starting point, but counterfeiters are extremely creative and clever. Even if a visible authentication feature is hard to recreate perfectly, a counterfeiter only needs to copy it closely enough to confuse a consumer who just gives a package a quick glance. Additional features create layers of security.

Covert security features: High security covert features can be embedded into labels, closure seals, or other features of product packaging. Although such markers are invisible to the naked eye, they can be detected using specialized handheld surface spectrophotometers. Field instruments use proprietary excitation and detection optics and detection algorithms for rapid, secure field authentication. Additional forensic layers of security are also embedded into the materials and can be confirmed through more extensive laboratory analysis. This additional layer of security proves very difficult for the counterfeiter, but easily verified by field inspectors.

Serialization: In the serialization process, a company marks individual units at the point of manufacture (giving each a unique serial number) and implements stations to read those markings, capture the tracking data, and drop that information into a managed database that allows authorized personnel to monitor where products go after they leave the manufacturing facility. You’re probably most familiar with this process as it applies to shipping a package overnight, when you can track it on the Internet until it reaches its destination.

An effective anti-counterfeiting solution contains multiple, layered components

As a brand owner, it’s good to have options. However, the counterfeiter also has options. Fortunately, technology continues to evolve to help you protect your end users. Today’s reality is that one level of security isn’t enough.

Recently a number of technologies have become available that offer the benefit of not having to add any additional features to the packaging, but the imaging requirements on the production lines can be quite demanding and difficult to implement at speed. Once captured, the identification of the package can take place with conventional cameras, allowing widespread authentication and tracking by inspectors, retailers, or even consumers.

Any combination of covert or overt features or serialization enhance your anti-counterfeiting, anti-diversion strategies. Click here to learn more about brand protection. You can also contact Authentix at info@authentix.com.

Inspector Led Authentication’s Contribution to Brand Protection Programs

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By: Andrzej Hornostaj, VP Brand Solutions, Authentix

Identification of an at-risk product and implementing an authentication solution is not the end of the story, it is just the beginning. Constant inspection of the product in the supply chain and marketplace is required to ensure useful actionable insights is generated to minimize counterfeit and diversion practices while protecting your brand and bottom line.

Let’s Begin with Inspection Design

Inspection design is determined by the objectives of the inspection. Let’s consider two relevant approaches. Will the inspection be reactive to a specific counterfeit event, or proactive determining the scale of counterfeiting and generating actionable insights?

Ideally, inspections, like any investigation, should follow a holistic approach involving several stakeholder teams including product, brand protection, investigative, and legal. Each team has its own requirements for the actionable insights generated from an inspection. Some critical stakeholder questions may be as follows:

Product: What’s the scale and location of the counterfeiting problem for a product?

Brand protection: What’s the level of sophistication of the counterfeit operation (production and logistics)? Are security features being copied? Are packaging design changes required?

Investigative: Can the right data be gathered to support investigations into the counterfeit’s supply chain and to identify the manufacturing source? Is the evidence strong enough that it can be passed on to legal and law enforcement to perform raids and prosecutions?

Who will conduct the inspections?

The boots on the ground can either be members of the brand owner’s staff or third-party inspection agencies working on their behalf. Ideally, to infer useful insights from an inspection, the more data collected the better. This need pushes the brand toward engaging a third-party that can provide the coverage and inspector numbers to achieve data volume.

As always, inspector safety is paramount and consideration should be taken as to whether the inspector needs to be accompanied by law enforcement representatives.

Where to direct initial inspection efforts?

I would suggest initial efforts begin at the retail level where products of interest are typically more accessible to covert inspection. This type of insight helps to determine the scale or extent of the problem and generates a suitable baseline against which further inspections and remediation efforts may be compared. As pharmaceuticals are usually not accessible at pharmacies, other locations in the supply chain should be the initial focus.

Once a baseline is established, then testing of supply chain integrity should be performed. Keep in mind, some obstacles may be encountered at this stage as it is not always possible to accurately track the route by which products reach the end user beyond the first tier distributors.

To assist access / auditing of stock at distributors, brands should ensure that cooperation agreements allow for inspections with short notification times. This will prevent suspect items from being removed from the audit location by a guilty party.

Which inspection tools should be used?

Having the right tools during an inspection to automatically capture the data required for each stakeholder is important and ensures that repeat testing is minimised. With the right type of reader paired with a smart device, inspectors are equipped to not only identify counterfeit products, but also capture location data and photographs of the packaging. This complete picture of the scale and sophistication of the counterfeit operation can form the basis of effective enforcement actions.

Click here to learn more about brand protection. You can also contact Authentix at info@authentix.com.

Are Counterfeiters Innovators

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Are Counterfeiters Innovators?

I read an interesting article recently about the long discussed topic of why larger organizations can’t be more like a startup. [1] This topic is often brought up in the context of keeping organizations innovative and open to new markets and ideas outside of the normal focus of that business. But this article was interesting because it put forward a new thought I hadn’t seen in the normal discourse, the idea that startups aren’t bound by the same Iegal constraints of established businesses.

The idea struck me as absurd, what investors would get behind an operation or idea that at the outset appeared to be illegal? The article goes on to illustrate how many companies, including Uber, PayPal, Airbnb, and Tesla all had at least aspects of their business model that appeared to be illegal or at least in a very gray area that ran aground of regulatory restrictions on their industries.

One example the article missed, perhaps because of its age and lack of success was Napster. By developing a user friendly interface that specialized in music files, Napster gave would be consumers of music a taste of what they really wanted in content management; a set of features like platform independence, per track purchase, mobility, and the ability to make playlists. The problem was Napster did this be enabling the general population to become content pirates, clearly running afoul of even the most liberal interpretations of consumers rights to content they owned at the time. The music industry certainly couldn’t support having its content stolen and copied, and Napster was forced to shut down in 2001 amid copyright settlements less than three years from inception.

Yet it took Apple to drag the industry forward into digital distribution two years later rather than an internal industry response. The music industry was threatened because they didn’t know how they could monetize digital sales the way they had with physical media. And the industry suffered greatly for over a decade, with replacement revenues from digital media and streaming services just now reaching levels of the pre-Napster world. But the truckloads of CDs, associated manufacturing and logistics, and other cost structures in the industry have now been revolutionized. Digital content distribution is very high margin, with a higher percentage of revenues going to artists, and spurring on all new industries of content creation and entertainment. The future is very bright for this industry.

So what does this have to do with counterfeiters? Well, I think we can agree that counterfeiting is illegal and dominated by “startups” that can ignore the legal norms of doing business. That is not that surprising. And the technological innovations that have led to widespread outsourcing and high quality manufacturing around the globe are now being turned against the same industries that have benefited from them. Internet distribution of products have accelerated sales, but at the same time opened the door to counterfeit products being sold direct to consumer. Counterfeiters are extremely quick to exploit all these “innovations” to create an opportunity that established companies can’t exploit.
So what can we learn from this? I think the biggest takeaway from previous lessons is that there is no quick fix to the competitive threat. Fighting off the examples given will require a giant shift in how those industries do business. And the innovations of counterfeiters in the last 10 years will require companies to think beyond the simple fixes of applying a hologram or monitoring an online presence. It will require an examination from the ground up of how they source, manufacture, distribute, and ultimately sell to consumers.

In previous articles I’ve talked about the changing threats coming to CPG because of online retailers. [2] We’ve talked about both consumer and inspector led authentication, and the challenges both have. [3] An overall brand protection program that includes monitoring contract manufacturers, distributors, and retailers to gain visibility into the flow of products to consumers is becoming ever more important with the continued growth of counterfeiting. A holistic approach to fight these “innovators” is needed. Companies need to stop thinking about anti-counterfeiting solutions as a standalone effort, and think of the principals of securing supply chains and distribution as they think about the principles of quality, efficiency, and sustainability in their operations.

[1] https://hbr.org/2017/06/why-you-cant-just-tell-a-company-be-more-like-a-startup
[2] https://authentix.com/blog/preparing-for-the-pendulum-to-swing/
[3] https://authentix.com/industries/spirits/inspector-led-authentication/

There Are no Shortcuts to Safe Medicines

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The Partnership for Safe Medicines® recently hosted a panel briefing of several former federal law enforcement officials and public health experts to discuss the merits of recent prescription drug importation proposals[1]. The panel highlighted one of the often overlooked aspects of these proposals aimed to quickly reduce the cost of prescription drugs to patients in need in the United States: the safety of these drugs that would circumvent current FDA regulated domestic supply chains.

Certainly the promise of lower cost prescription drugs is a powerful message to an electorate that sees the costs of these medicines continue to rise while stories of lower cost drugs in other parts of the developed world also make headlines. But those other countries have carefully negotiated and managed supply chains with pharmaceutical companies that ensure the safety of their drugs and often make it illegal to fill a prescription from outside the country. Such is the case in Canada, where Canadian pharmacies cannot fill prescriptions for U.S. patients. Instead, internet pharmacies that claim to be Canadian import drugs or counterfeits sell them to unsuspecting consumers. Like it has for so many other industries, the internet has enabled easy access of buyers and sellers, but with little accountability for product quality or authenticity. Consumers are left to trust the supplier is legitimate, often with no means for recourse if there is a problem.

So why not simply empower the FDA with oversight on importation of drugs from other countries to help ensure safety? That’s a reasonable proposal, but one that will undoubtedly add to the cost of importation. Furthermore, this is not a U.S. only policy problem. For example, if the U.S. and Canada were to legalize the import/export of drugs between the two countries, what would be the effect on Canadian drug prices? In 2014, total Canadian expenditures on prescription drugs was estimated to be $29B[2]. By comparison the United States spent $374B[3]. Even a mild influx of orders from the U.S. could stress the Canadian system, more importantly Canadians, affect pricing since drug companies will be forced to negotiate with Canada as an international supplier, and not a domestic single payer system, certainly driving up costs for Canadians.

The U.S. has left the pharmaceutical industry largely unregulated when it comes to pricing. We have no single payer system, we do not place limits on pricing, and we let the profit motivation of the free market system drive pricing, profit, investment, and innovation. And while we can certainly feel the effects of rising drug costs, we can also see that this system has of its own accord driven us to greater and greater innovation for treatments and cures, and has created a very secure supply chain for the sale and distribution of those medicines. There is almost certainly some kind of change and reform coming to healthcare costs in the U.S., and the pharmaceutical industry will have its part to play, but compromising safety cannot be part of the equation.

Counterfeiting and diversion of medicines and medical products are global issues that affect all countries. These illegal activities threaten the health and welfare of the citizens who receive fake or substandard product, as well as threaten the revenues of brand owners. These activities also undermine the efforts of the government to ensure the availability of affordable drugs to its citizens, thus enabling the proliferation of disease, which can lead to development of drug resistant pathogens.

Authentix is dedicated to the development of products and services that allow the authentication of products and their packaging in supply chains around the world. Authentix provides integrated programs that enable manufacturers to protect their products in complex supply and distribution chains, and informatics to monitor and report on problems as they become apparent.

For more information visit https://authentix.com/offerings/sherlox/.

1.) http://www.safemedicines.org/2017/04/the-fallacy-of-drug-importation.html
2.) https://www.cihi.ca/en/canadians-spent-288-billion-on-prescription-drugs-in-2014
3.) http://www.latimes.com/business/la-fi-drug-costs-20150414-story.html

Preparing for the Pendulum to Swing

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With the proliferation of internet trade and globalization of manufacturing the pendulum has swung in the favor of counterfeiters as far as ease of access to markets and manufacturing capabilities. And no one has been a bigger lightening rod for criticism around this swing than Alibaba founder Jack Ma. Some of this criticism is well deserved, like the time Mr. Ma suggested:

“The problem is the fake products today are of better quality and better price than the real names,” he said at Alibaba’s investor day in Hangzhou. “They are exactly the same factories, exactly the same raw materials but they do not use the names.”(1)

And I suppose if one puts no value on the skills required to do market research, design and test products, develop quality plans and raw material specifications, then yes, contract manufacturers produce the exact same goods whether they carry the added logo and identification of the innovative companies that create the intellectual property and trademarks that people come to know and trust.
But recently Jack Ma wrote an open letter to China’s “parliament” suggesting that harsher enforcement against counterfeiting was key to fighting the problem.(2) It is no coincidence this change in focus from the quality of counterfeits to fighting the scourge of illicit goods comes at a time when The Office of the United States Trade Representative (USTR) reinstated the Alibaba TaoBao platform on its blacklist of “notorious markets” for selling fakes.(3)

But Mr. Ma does in fact have a point here. As reported in the article:

Alibaba says it handed over 4,495 leads on counterfeiting in 2016 that crossed the threshold of goods worth at least 50,000 yuan ($7,250). Of those, the authorities took on 1,184. That resulted in a scant 33 convictions. Alibaba has launched high-profile efforts, such as a push with the police in the city of Shenzhen and the luxury-goods brand Swarovski to shut down merchants selling fake watches. But some lawyers say those efforts amount to showboating.

But the sheer size of the problem of counterfeit distribution through an essentially frictionless market like Alibaba or Amazon Marketplace and Ebay make the follow-up on potential cases overwhelming for enforcement agencies. An activity that used to require some level of distribution and brick and mortar storefront to move counterfeit goods that could be investigated and raided is now replaced by digital entities that can literally appear and disappear with a few keystrokes. Traditional approaches to fighting illicit goods are overmatched.

So, what can a brand owner do to battle this enormous problem? The reality is that in the 21st century if you are a brand owner creating value from those intangible product qualities of design, style, quality, and ultimately reputation, you need to be investing some degree into the further differentiation of your finished good from that of your contract manufacturer. In our twenty years protecting brands we most often see hybrid and multi-layered solutions as effective means to enable different levels of inspection, from the internal security expert, all the way down to the consumer. And with the proliferation of smart devices and internet access, new tools are becoming available set to swing the pendulum back into the favor of brand owners to track the location of their products and possible illicit goods are a rate commensurate with the new internet economy. What is important is that brands consider equipping their goods with an overall brand protection program that includes monitoring and sampling contract manufacturers, distributors, and retailers to gain visibility into the flow of their products to consumers.

For more information visit https://authentix.com/offerings/sherlox/.


1. http://blogs.wsj.com/chinarealtime/2016/06/15/jack-ma-says-fakes-better-quality-and-better-price-than-the-real-names/

2. http://realmoney.thestreet.com/articles/03/08/2017/alibaba-urges-china-get-real-fakes

3. https://ustr.gov/sites/default/files/2016-Out-of-Cycle-Review-Notorious-Markets.pdf

4. http://realmoney.thestreet.com/articles/03/08/2017/alibaba-urges-china-get-real-fakes

Counterfeit cosmetics – a solvable problem.

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A recent story on the problem of counterfeit make-up is just the latest example of an industry plagued by fake products and lost sales to illicit trade. Cosmetics are an interesting problem, because many of the products have relatively small size relative to their value. The real estate with which to carry serialization or overt authentication features such as holograms is very limited, and the product image and look is extremely important to marketing and brand differentiation. While the outsourcing of production to low cost places like China has created economic benefits, they are to some degree offset by that same manufacturing capability being used to create large amounts of counterfeit goods of seemingly high quality.

But even the smallest of cosmetic products like nail polish and lipstick require some information to be carried for the consumer. There are a number of solutions to help with the easy identification of counterfeit and authentic product carried through printing technologies. These approaches, from overt color shifting ink to covert markers read by simple devices, all enable the stakeholders in the supply chain an opportunity to authenticate goods easily and cost effectively. When supported by stakeholder education and product surveillance, these features are effective deterrents to counterfeiters who fear their illicit product may be identified and not be accepted into the supply chain.

The different types of features all serve a different purpose, from enabling consumers to quickly identify a branded product as genuine, to covert markings that enable a manufacturer to identify the source of diversion or other illicit activity. When combined with the careful design and production quality controls used in authentic product manufacturing, these features raise the bar of complexity for counterfeiters and make the product a less attractive target.

Solutions exist today to solve counterfeiting in the beauty and skincare market. It is just a matter of matching the cost of the solution with the value of the product. In our twenty years protecting brands we most often see hybrid and multi-layered solutions. In the case of a $5 tube of lipstick a simple overt solution for less than a cent per unit may be appropriate while in the case of a designer skin care product a more robust solution is appropriate that can be designed to enhance the brand image as well as brand protection. What is important is that they both be incorporated as a part of an overall brand protection program that includes monitoring and sampling retailers.

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