Process of Procuring Anti-Counterfeit Devices

In any business sector a company s worth is measured by the collective value of its brands. Companies make great effort to build their brands which can take many years to become household names. Yet as soon as success is on its way scene is clouded by counterfeits of the brand. If not checked in time then prevalence of counterfeits could ruin the brand. Counterfeiters are only interested in profit, they do not care for the brand nor for the customer whom they dupe with shoddy quality products. The counterfeiting menace causes no cash loss to the business, there is no column in the balance sheet or the profit and loss statement for losses due to counterfeiting. Therefore, and often no timely action is taken to curb counterfeiting. This is because there are no brownie points to be had on what at the time may be perceived as a possible threat and could it be difficult justify except that the sales are not growing or showing a downward trend and normally this is the only evidence. In corporate world people who save money get recognised rather than those that propose spending in intangible matters. Counterfeiting directly impacts the profitability of the company, so it is a matter for the company people who have direct responsibility for profit. That usually means the chairman, CEO, senior directors, etc. Action to curb counterfeiting can be effectively taken when one of the senior management is in charge for implementing the company s anti-counterfeit project. Many companies loose the plot even when they take action against counterfeiting. Companies realise that they must take appropriate action to curb counterfeiting and so they develop a solution and then the purchasing department puts out a tender complete with specifications to find the lowest cost vendor as it does with all their requirements. The management not realising that such action is not appropriate for procuring anti-counterfeit devises. This purchase process advertises the action the brand is taking, making it public knowledge and allows even the counterfeiter to take appropriate action in time to copy the security device. (It does not matter if the device is patented, your product is patented yet there are counterfeits; a patent is no protection against counterfeiters, only against law abiding competitors). The security cover is blown. Failure of the selected device to protect the brand from counterfeiting is blamed on the solution and not on the flawed procurement process. One of the best processes for finding and procuring an anti-counterfeit solution was demonstrated by one of our clients. The company is a pharmaceutical company that was suffering complaints from the market and stagnant sales, so the chairman of the company himself lead and constituted a team to address the problem and find an effective solution. His team was made up of himself as the leader, technical director, quality and regulatory director, Production director, packaging development manager, marketing & sales director, key vendors and the author was invited to join the team. From the formation of the team, to developing an anti-counterfeit solution (in this case a hologram on a label) and implementing it, the time elapsed was just six weeks. The company enjoyed 100% growth in sales within two and half years. They did not put out a tender. They adopted a system that addressed 80% of their concerns that cost less than 0.5% of the retail MRP. They were pragmatic and understood that 100% security though possible, would be too expensive

for the brand. The lesson here is the speed of action, cross discipline team of highest level and involving the vendors and reliable supplier of anti-counterfeit devices lead by a person of authority and responsibility. When combating counterfeits, speed and positive action are very important to achieve success. Selecting anti-counterfeit device vendor your current vendors, interviewing selected vendors from data base of appropriate trade associations, reading trade press and building a profile of shortliste d vendors (remember you will be trusting them with your brands future). Process is time consuming but required. Further security and trust building could be the signing of a Non Disclosure Agreement (NDA) to communicate that you regard the matter as critically important. Today there are many methods and technological options to choose from to combat counterfeits and the choice is bewildering and can be confusing. (see table below). Currently there is considerable euphoria for supply chain traceability, like there was when the bar codes were introduced as an answer to all counterfeiting problems. It is wise to note that security is an additive process. n analogy I often use is the one of one s house. We all protect our homes with several layers of security eg: bolt, high quality door lock (even when we know that every lock can be picked very easily), window & door grills, electronic sensors, CCTV, etc. Similarly there is no single answer to protecting the brand from counterfeiting. One must use as appropriate technologies as required to protect against the risks encountered at the most economical costs and which address key concerns. Authentication Techniques A through brand authentication system has three levels : 1. Deter a highly visible device to deter counterfeiters and is known as overt security. 2. Detect a device that is not easily visible, often hidden and known to the manufacturer only, known as covert security. 3. Forensic this device would also be hidden and would require special equipment or test in a laboratory to verify its authenticity. This is also a covert device. To have a successful brand authentication device, one does not necessarily require all the three elements to be incorporated into a system. In many cases, it would not be practical and probably for most applications uneconomical. In practice, just the fact of applying a deterrent device is sufficient to stop most counterfeiting activity. It is very much like protecting one s house just by locking the doors and windows with adequate locks. But if more security is required then one adds grills, bars across doors, 24 hour security guard, CCTV, etc. Similarly if your brand is likely to be at great risk of being counterfeited then one must incorporate a range of overt, covert and forensic features in the authentication system. The method chosen must be optimal , not too much and not too little, but just right. Just right can be achieved by reviewing and assessing the risks likely to be faced by the brand. Establishing terms of reference, then setting goals and key objectives that must be met. Then selecting the right set of authentication and security devices, taking care to see that the device is easy to validate, easy of incorporate, cost effective, etc. In such a situation it is good to apply the Pareto principle to achieve one s goals. In order to approach the process of arriving at a logical decision it may be beneficial to

use a spider chart to compare the various methods and combination of methods being investigated. By comparing various options on the same chart one can see where they overlap and where they compensate each other. What is important is to set clear non negotiable objectives to meet goals set for the brand.
y y

Clear objectives Budget for buying and implementation (some devices are cheap to buy, but very expensive to implement). Select devices that address most of your requirement use the Pareto principle; Monitor incidences of counterfeiting and progressively improve the deterrence.

y y

Table showing Features and Benefits of various authentication systems

DEVICE SUBSTRATE FEATURE
Watermarked paper

BENEFIT
Controlled supply

REMARKS
Needs to be purchased in large quantities, & excellent stock control Other then thermochromic, all others need special test

TYPE
Detect, Deter and Forensic

INKS

UV, IR, colour changing, coin reactive, thermochromic Special chemical markers, chemical reaction Holograms, optical images, diffractive effects, etc

Wide range, easy to use, incorporate and economical

Detect and forensic

CHEMICAL MARKERS DIFFRACTIVE OPTICAL VARIABLE IMAGE DEVICES RFID

Ideal for forensic testing

Specialist laboratory use

Detect and forensic

Cost effective, easy to use, and incorporate

Most successful authentication device to deter counterfeiters over 88 currencies have holograms Expensive electronic infrastructure required; max 95% read rates

Deter, Detect & Forensic

Data collection and transmission by radio frequency

Excellent automatic data collection/ transmission; no human intervention Versatile, adaptable, can be machine readable, cost effective

Deter and Detect

TRACK & TARCE

Mass serialisation, telephone response

Needs very accurate entering of the unique number by the buyer

Detect

Companies looking to address counterfeiting situation should consider establishing a multi disciplinary team, preferably headed by a director, to work on the issue. Successful implementation is typically the result of careful team work with all the stakeholders within the company and the vendors also. When deciding on the level and type of brand authentication required, the company needs to make sure the solution they choose is compatible with their existing set up. From the above table, one can see that there are many different ways to protect and the right selection will depend on your goals and objectives. A review of the types of security devices suitable for use in India: Substrates: Watermark paper, incorporating special micro-tagants and fibres in the paper can provide excellent security. Typically this special substrate affords very high level of security. However, as the substrate has to be custom made and has to be purchased in large quantities, this means that there would be a large stock of special substrate that needs to be held under tight security; this can be expensive. Inks: wide range of special inks are available at relatively economical rates, needing special test by an expert, or equipment and cannot easily be detected by the buying consumer. It is ideal for, back to base testing and forensic use. Excellent when multiple security techniques are used in combination. Chemical Markers: This is basically a back to base test and verification as it needs special chemicals to conduct the required tests and this usually renders the package un-saleable, but suitable when multiple security techniques are used. Diffractive Optical Variable Devices: technical term that encompasses many optical systems and particularly the hologram. Hologram is very versatile, it is overt, with bright kinetic colours, very difficult to duplicate (that is why over 88 currencies around the world have holograms on them to combat the counterfeiters the Pound Sterling, Euro, Swiss Franc, etc), can have covert features within the image at several levels and is machine readable. For value for money and the security afforded, there is nothing to date to beat the hologram. RFID: excellent technology for tracking large shipments, but it has not yet met the standard for item wise application in the pharmaceutical arena. Also it requires tremendous electronic infrastructure and that makes it very expensive for most medicines. Track & Trace: Ideal system to track and trace the medicine using mass serialisation from the producing factory to the sales point (with mobile telephone interrogation and response). The application of the mass serialisation, though very economical, but may not be practicable as it also requires costly electronic infrastructure and cooperative consumers to ensure complete traceability. From the above it can be seen that the hologram appears to be the best and economical all rounder and has proven itself, hence its use on currency notes around the world. Why is the hologram successful? 1.0 Hologram is based on optical technology. 2.0 Cannot be scanned or electronically transmitted

3.0 4.0 5.0 6.0 7.0

Hologram is viewed by refraction of light impossible to photocopy. Cannot be simulated by any known printing technique. Involves the viewer Image is kinetic image moves, colour changes, different images at different angles. Economical unit value of a hologram is low compared to its effectiveness. Holograms combined with other technologies makes it a formidable combination for brand authentication.

It is being agreed internationally, that counterfeiting is prevalent (solution to any problem is to first recognise that there is a problem and then act to find a solution) and pharmaceutical manufacturers must take protective action and prevent it s product brands from being counterfeited. The experience of companies that have taken a lead in protecting their brands is very positive. International companies use overt anti counterfeit systems like holograms because they are able to make a return of 600% - 2000% or Rs.6 to Rs.20/- for every Rupee invested in the hologram security to protect the brand. The returns are real and tangible. Corporations the world over and in India continue to use the hologram because they make returns, which far outweigh the input costs. The key to successful brand authentication is to take preventive action and if this is not possible to take immediate action by applying a brand authentication device and then observing and improving and applying a combination of devices where necessary. You can only win by protecting your valuable brand.

********************************************************* End. 2,138 words For more information contact: Rohitt D Mistry email: rohit@holotechonline.com Mob: 098200 11569; Tel: 022 6735 1000