Novartis wants to ramp up its blockchain focus. The company has been working on pilot projects for the last two years and aims to go live in 2020.
“We are now at the point where we say, we want to go live,” says Marco Cuomo. He is the blockchain lead at Swiss pharmaceutical giant Novartis. The company has announced to ramp up its focus on blockchain in 2020.
Since 2016, Novartis has already been exploring the technology. There are currently around 20 people at Novartis who are actively working on blockchain-based solutions. After a range of successful pilots in 2017 and 2018, the company now wants to test some of its applications in a productive environment.
Blockchain brings a new paradigm of data sharing
The first applications Novartis tested were in supply chain, especially anti-counterfeit applications. With the entire counterfeit market being estimated about $200 billion in size – that means 1 out of 10 drugs globally could be counterfeit – blockchain could make a significant difference.
Other use cases explored by Novartis were clinical trials, drug development, and health data. Dan Fritz, Supply Chain Domain Architect at Novartis, explains, “Anytime there is a problem or a pain-point where we don’t have to involve a lot of external parties or an ecosystem, where a standard centralized database solves a problem, blockchain is not the solution. We have to find a problem that requires ecosystems of multiple parties.”
Such use cases are mostly found where complex supply chains are involved or where client data has to be shared across multiple parties. “We are looking for transformational use cases,” says Fritz. “It doesn’t make sense to apply blockchain if we only get a five percent return on investment or just move incrementally. This has to be something that is truly transformational and ultimately disruptive in terms of business models.”
Cuomo says blockchain brings a new paradigm. It’s about sharing data and building a joint platform. “The first question we ask is: Can we just solve this problem with a centralized database,” he says. If the answer is yes, blockchain is not the right solution. In 90% of all cases, says Cuomo, the problem can be solved using traditional databases.
Blockchain is a team sport
Novartis is also leading a blockchain healthcare consortium as part of the Innovative Medicines Initiative. The initiative is publicly funded and has onboarded 28 entities including 11 pharma companies.
“Blockchain is not something you can do at home alone; it’s a team sport,” says Cuomo. He believes on this level, pharma companies are not competitors but work together. Also, as the initiative is publicly funded, it ultimately has to benefit the patients.
In the consortium, pharma companies, universities, and hospitals work together and share their data and resources. The work should ultimately benefit the entire consortium. As more use cases get validated, the value of each solution grows as more participants join and adopt it. As a result, the costs will go down.
Swiss pharma companies can benefit from the knowledge in the crypto valley
Novartis hasn’t announced which application it will go live with in 2020, but the company wants to start by digitizing manual processes to increase efficiency. Everything with a stamp on it should be machine-readable, explains Cuomo.
In the near-term, the greatest value for pharma companies will likely be in automation. More processes need to become machine-readable and digital.
In the long-term, blockchain will create new and disruptive business models; for example patient data markets and applications revolving around the patient’s control of his data. Startups are already working on such applications today, but they ultimately need the involvement of big pharma.
Switzerland could be an excellent place for these developments, as there are both big pharma companies as well as blockchain startups. Cuomo says, “We want to benefit from the knowledge in the crypto valley. We are participating now in the Swiss Blockchain Federation because we think Novartis can contribute something there.”