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How mPedigree built a business by combating counterfeit products

Using mPedigree's technology, consumers can instantly find out if a product is fake, by simply SMSing a code on the packaging to a toll-free number.

Using mPedigree’s technology, consumers can instantly find out if a product is fake by simply SMSing a code on the packaging to a toll-free number.

The mPedigree Network is an African enterprise offering manufacturers the technology to help combat the sale of counterfeit products. It has been particularly successful in protecting both pharmaceutical companies and consumers from purchasing fake medicine in African countries, where the informal distribution and retail channels have made it easy for counterfeits to perforate the market.

The company, founded in 2007 by Ghanaian entrepreneur Bright Simons, has since grown operations to 12 countries, with offices in nine, including India. It has hundreds of clients, including manufacturers of veterinary medicine, electrical products, baby food, cosmetics and high-yield seeds used in agriculture.

How does it work? Using mPedigree’s software, manufacturers can label their product packaging with a random code hidden beneath a scratch-off covering. If a consumer wants to know if their product is fake or not, they can just scratch off the covering and SMS the code to a toll free number. They will then be instantly notified of whether the product is authentic.

One example of success is in the authentication of Postinor, used as a last-line emergency contraception for women. According to Simons, the brand was suffering from a flood of imitations, usually with dangerous side effects. However, with consumers now able to authenticate the product, he said counterfeiters are losing their hold.

The company is also pursuing additional revenue streams by leveraging its existing infrastructure to provide commercial services such as market intelligence in Africa.

How we made it in Africa talks to Bright Simons to learn more about mPedigree’s business model, how it works and where he sees future profits coming from.

Market scalability is key

Of the 12 countries that mPedigree is active in, six have fully-fledged operations that are proving highly lucrative: Nigeria, Egypt, India, Ghana, Kenya, and Uganda. Other markets such as Bangladesh and South Africa have run pilots, but the company has not been able to scale operations yet.

Simons explained this is because the service works best if multiple manufacturers and brands are on board in a market, so that consumers are alerted to the process.

“So in some countries what has happened is that either a very big manufacturer leads the way, and because they are so huge, they have an impact on the market, then we are operating at scale. Or, like in Nigeria, a government gets involved and introduces standards that require companies to deploy in a uniform fashion. And because we are one of the major contractors for this service, they come to us in order to deploy to that standard.”

While mPedigree has piloted its service in South Africa with a vitamin manufacturer and mobile operator Vodacom, Simons explained consumers have to see the service being deployed consistently across several different products in order to embed a culture of using the service to check for counterfeits.

“That uniformity is what is required in the market for the consumer to be alert… If every manufacturer is using completely different approaches then the system will struggle a little bit because consumers will get confused on how to check. So this is a scale business.”

The company also manufactures the scratch-off authentication labels to include smaller clients who cannot afford to print the labels themselves, unlike larger multinationals.

“Our big clients are the tip of the iceberg. Our true commercial [business] is defined by hundreds of small manufacturing companies that can’t afford the equipment needed to print directly. So for these companies, we provide labels they can stick on the products, and we normally produce them in China and India,” he added.

Getting all stakeholders to play the game

According to Simons, one of the most challenging aspects of scaling a service such as mPedigree’s, is getting various stakeholders in a country to work together. Yet it is as vital to business success as the software itself.

While the service might be simple for the consumer to use, setting it up at a national level requires multiple stakeholders. For example, contracts with all the telecommunication companies in the market are needed to ensure the hotline number is deployed uniformly.

“It means having the same number, and toll-free capability of the short code, across the telcos so consumers don’t pay for it. It also means that a telco is connecting to our platform and sending us data with all the data protection and privacy constraints that are agreed across the network, and so on. So all these things have to be in place.”

The service also needs to work with governments and regulators to help combat counterfeits.

“Think about it. This whole fake medicines, fake agrochemicals, fake seeds, fake cosmetics business is not happening in a vacuum, it is happening in the context of politics, economics, etc. In each country you need to have mechanisms that are not solely provided by mPedigree to support the growth of the ecosystem,” he explained.

“So in Kenya and Nigeria, the regulator recognises us as a stakeholder involved in communicating medicine quality to the consumer. That enables us to provide the consumer the assurance not only that the product is original and made by the manufacturer, but there is also some independent certification of the products quality.”

Branching into market intelligence

mPedigree is also leveraging its existing ecosystem and software to provide supply chain traceability and market intelligence for companies. Data analysis can help companies understand consumer behaviour in a market, or how their products compare against a generic.

While in developed countries, and even South Africa, there are many companies offering market research, there is a huge gap in most African markets. And Simons believes that this will prove more profitable than his authentication software.

For example, through mPedigree’s Acodion platform, brands will have the ability to better integrate with the informal retail environment.

“Most people don’t realise that in Africa the formal or modern trade is only about 3-5%. Only 3-5% of the people shop from modern retail environments. Now that is a huge difference compared with the US, EU, Japan and the rest of it, where upwards of 80% of people buy goods from modern retail.”

He added brands in developed markets only need to sign contracts with a handful of retailers to get data.

“But think of the pharmacy trade in Ghana; we have 10,000 outlets of medicine, almost all of them independent of each other, compared to only four companies in the US that retail more than 90% of the medicines sold there. Now if you were Pfizer and you wanted data in the US, you know which four to call… But how are they going to get data from 10,000 pharmacies? How are they going to understand and connect to Ghana’s retail environment?

“Our platform is the chance to do that because we have the capability using mobile, SMS, and web to connect all those 10,000 pharmacies to our platform… We are already doing it, and that is a huge commercial side of the business.”

Read Bright Simons’ eight tips for African entrepreneurs here.

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