Closing the Trust Gap: Why Digital Traceability Is the NewCompliance Currency in Emerging Pharma Markets

By Tosin Clegg

The counterfeit-drug trade, once dismissed as a fringe nuisance, is now siphoning more than US $30
billion a year from health systems across low- and middle-income countries and putting millions of
patients at risk, according to World Health Organization estimates. Regulators from Nairobi to New Delhi are responding with an ambitious new mandate: digital, pack-level traceability that can follow every pill
from factory line to pharmacy shelf.
“We are moving from periodic inspections to continuous visibility,” says Kaothar Sotomiwa,
enterprise-sales lead at Lagos-based traceability start-up Chekkit. “Within three years, a
serialisation code will be as non-negotiable in Nairobi as a bar code is in London.”

A wave of regulation – and it’s not only the West
While Brussels and Washington provided the early blueprint, momentum is now firmly global. Nigeria’s
regulator, NAFDAC, begins phasing in GS1-compatible serial numbers on priority medicines next year,
with Kenya, Ghana and Ethiopia following close behind. Manufacturers that miss the timetables face
product seizures, compulsory recalls and fines that can top one per cent of annual turnover.
Traceability 2.0: data, not stickers
First-generation schemes merely printed a code that warehouse auditors scanned during spot checks. The
new generation couples that code to a blockchain-anchored event stream, giving regulators a live
dashboard and letting patients verify authenticity with a tap on a smartphone.

Chekkit’s network alone logged about 185 million verification pings in the twelve months to November
2022, creating a heat map that recently helped one West-African regulator intercept a counterfeit
consignment before it reached hospital pharmacies, Sotomiwa says.

Dollars and naira: why CFOs now pay attention
For drug makers, serialisation is quickly shifting from red-tape cost to margin protection. A West-African
generics firm that adopted Chekkit’s system this year trimmed recall losses by roughly ₦180 million
(£330 000) in nine months after pinpointing where fake stock leaked into its distribution chain.

“Traceability paid for itself within six months; and we recovered market share we didn’t realise we were
losing,
” the company’s supply-chain director tells this newspaper.
Three levers keep surfacing in such pilots: sharply lower shrinkage, a two-to-four-point jump in market
share as prescribers prefer verifiable drugs, and freedom from multimillion-dollar audit penalties.

What leaders do differently
Interviews with eighteen manufacturers suggest a common playbook among the fastest movers:
● Cross-functional PMO. Traceability programmes report jointly to Quality, IT and Commercial
teams.
● Event-stream architecture. Data flow through GS1 EPCIS-ready APIs regulators can query in real
time
● Consumer activation. Companies budget for SMS or in-app rewards that nudge patients to scan
packs, turning every phone into a field inspector.

Firms that treat traceability as a box-ticking QA project, by contrast, struggle with data silos, slow rollout
and user apathy.
Investors and policy-makers take note Private-equity funds tracking the space say traceability vendors that bill transaction fees; pennies per scan, could command two- to three-times revenue valuation multiples once enforcement kicks in.

Regulators, meanwhile, are weighing shared national verification hubs to cut costs for smaller firms, while health-tech researchers in London and Boston mine anonymised scan data to train AI models that may one day predict counterfeit hotspots before fakes leave the factory.

The road ahead Sotomiwa argues 2023 will be decisive.
“Technology costs are now tiny next to the brand damage of a
single bad batch,
” she says. Her advice:

1. Map SKU-level risk to focus on high-volume or frequently counterfeited drugs.
2. Bundle consumer apps early so behaviour change grows with technical rollout.
3. Tie board scorecards to margin recapture and penalty avoidance, not just compliance ticks.
   Bottom line: Digital traceability has moved from pilot curiosity to boardroom imperative. Drug makers
   that embrace it early will not only stay ahead of regulators but also win the trust, and wallets, of patients
   who can finally verify every pill they take.