Sproxil aims to make counterfeiting unprofitable in Africa with mobile product authentication

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Counterfeiting is rife in Africa and in many instances – with things like fake drugs and electrical products – it puts lives at risk. Sproxil has come up with a mobile-driven authentication system which it hopes will drive at least some of the counterfeiters from the market. Russell Southwood spoke to its founder Ashifi Gogo.

In Nigeria, the car mechanics offer you the choice between non-branded parts, fake branded parts and the more expensive branded parts. Unfortunately those who find themselves taking ineffective or completely counterfeit drugs are not offered such an honest choice.

Ashifi Gogo did a Phd looking at these issues and conducted a non-commercial pilot with another colleague (Bright Simmons, who went on to found m-Pedigree), using 3000 units of cough syrup in his native Ghana.

”We used this as a platform to ask people questions. Two things were apparent. Firstly, even though patients could see the value of having a way to authenticate the things they bought, they didn’t want to pay for it. It had to be free and this had a huge impact on the potential business model. Secondly, patients felt in part responsible for the availability of counterfeit products.”

Interestingly, a third of respondents said it was the Government’s fault, a third blamed the police for not doing anything , leaving a third of consumers saying they felt responsible because they actually bought the fake drugs.

So in 2008 Gogo launched the company from Cambridge, Massachussets in the USA. It is now present in 17 countries and has attracted funding from social impact investor Acumen. It started in Nigeria where 84 children died because of contaminated cough syrup. He connected with the person running the head of the country’s FDA and with energy and commitment on both sides, the agency decided to launch a mobile authentication scheme. So in 2009, the company was incorporated in both the USA and Nigeria, and the scheme was launched on 22 February 2010.

“When we did pilots to test it, we discovered that there were pharmacies in Abuja that were mixing fake and genuine drugs. With a drug for diabetics, they would put one genuine blister of pills in with several fake ones. The pharmacist said to the customer, you can verify it from one blister (the genuine one). The customer reported this to the call centre that had been set up. The brand owner was able to identify the pharmacy and take action. Overall the orders for genuine drugs went up”.

The system works by supplying unique numbers to brand owners. The customer can then check authenticity by send an SMS with the code to a mobile number and get a message back as to whether it is a genuine code. Over 700,000 products were coded during the Nigerian pilot in 2010, and Sproxil has generated over 120 million codes since then. Sproxil conducted due diligence on companies through the Nigerian FDA, NAFDAC and also to see whether a product had been banned or not.

The business model rests on charging the companies for the unique product code numbers (in the order of a few cents) and there is a monthly charge for the call centre. Gogo says that the company will be profitable in two years time. In 2011, it secured US$1.8 million equity funding and is now present in five countries, including Ghana, India, Kenya, Nigeria and Tanzania.

”Some countries are only just waking up to the problem and it’s helpful for the Government to admit there is a problem and want to address it. A lot of companies sign up because of the financial benefits and it boosts brand loyalty.”

But the service has already been taken to tackle authentication in another product area: electrical cables. The typical scam in this area is that the electrical contractor colludes with a supplier to provide an invoice showing high-standard, approved cabling. In reality, the cabling provided for the rewiring is of a low standard and may actually lead to electrical accidents and fires:”With the scheme we’re running for East African Cables, customers can now verify the cables are genuine. We already have several clients in the area of car spare parts and foam products like mattresses.

So what’s the long term ambition?:”People call our call centres to ask a whole bunch of questions, not just about authentication, because there’s nowhere else to call. They want a service by phone. Currently the call centre agents can give the basic information or refer them to the pharmaceutical companies. So what we’d like to become is the after-sales support for the products we’re authenticating.” In geographic terms, it also wants to expand into South East Asia and Latin America.

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