Business models in global health: Sproxil

Can Sproxil scale its consumer-driven model of counterfeit drug surveillance? 
Student observations on Sproxil’s success and challenges ahead

In late 2010, a small team of MIT students took a look at the organization from the outside and, as a course assignment, prepared an executive summary aimed at its board of directors. This article presents their overview and assessment of the organization, and their thoughts on challenges and opportunities. Keep in mind that this a class assignment drawing largely on publicly-available materials and in some cases direct, though limited, interaction with the organization. We share the student’s work in the hopes that others will build on it in keeping with the creative commons license.

By Carlos Dedesma, Sarah Park, Tara Thomas, Heather Vital

About Sproxil

Sproxil is a social enterprise focused on addressing the issue of counterfeit drugs. Sproxil’s service allows consumers, patients filling prescriptions in developing countries, to confirm that a drug is genuine at the point of purchase, before they pay for and take the drug.  It works in 3 steps: (1) Scratch off a label on drug to reveal PIN, (2) Text PIN to NAFDAC shortcode 38353, (3) Get a response confirming it is genuine “OK” or “fake.” The service is free to consumers and is paid for by pharmaceutical companies and intermediaries. Revenue is currently generated through the pharmaceutical/manufacturing company paying for the application of the code onto the blister pack.

Unlike competing anti-counterfeit technologies that focus on verification at points along the supply chain, Sproxil’s technology puts drug verification into the hands of the end consumer, through mobile devices.  Sproxil does this with simple scratch-off tags and robust back-end analytics (SMS & Cloud based asymmetric encryption and verification technology).

Sproxil also has ambitions to be a market intelligence company by leveraging the data they collect from consumer use.  Market intelligence products are often used by pharmaceutical companies wishing to fine tune their marketing efforts.  Granular data about consumer behavior also allows companies to understand how consumers use their products.  When the products are treatments for chronic conditions, these insights can impact long-term revenue streams.

Accounting for success

Sproxil recently successfully completed a technological proof of concept (POC) (discussed in following sections).  Their success can be evaluated based on several factors including market penetration for the number of drugs, number of users, number of pharmacies, societal benefit, monetary benefit, and technological reliability.  Additionally, Sproxil should attempt to measure the value they are delivering to society given their mission of being a social enterprise.  Sproxil’s POC provided strong technological results in each of these categories but the remaining impact metrics should be measured and evaluated:

Users Technological Reliability Market Penetration Societal Benefit Monetary Benefit
Total inbound SMS messages (from consumers): 11,320Total outbound SMS messages (to consumers): 11,318 Difference between inbound & outbound SMS messages: 2 (0.0088% of all messages) Number of drugs (Only 1 during POC) 


Number of counterfeit drugs detected

  • Per time period
  • Per retail outlet
  • Per region/country


Revenue reclaimed by both pharmaceutical companies and consumers avoiding a counterfeit sale
New UsersRepeat Users Cloud authentication system responsiveness: 99.9912% Number of pharmacies and retail partners Cost per counterfeit detected

Delivering the service

Sproxil created a simple but effective user experience and secured the appropriate partnerships to drive technological feasibility.

Consumers are texting to confirm authenticity and increasingly insisting on Glucophage with authentication labels.  Consumers SMS a code to a simple text number and receive validation on the validity of the product they are about to purchase.  There are four (4) outcomes of a text:

Genuine Product Fake Product PIN Used PIN Not Recognized
First line response:OK First line response: FAKE, DON’T USE First line response:WARNING: PIN Already Used First line response:PIN NOT RECOGNIZED
  • Easy to understand
  • Direct, actionable instructions
  • Cautious messaging
  • Occurs when blank or alphabetic input is received
  • Message contains NAFDAC Registration Number (NRN)
  • Message contains PIN incase user made error
  • Message contains PIN in case user made error
  • Capitalizes on teachable moment to show user where the PIN is located
  • Message provides consumer with health tips
  • Message provides link to NAFDAC

The user experience is simple but useful and also provides twenty-four hour customer service with a toll-free number helping to drive end-user adoption.

Additionally, Sproxil secured contracts across four mobile networks with MAS having a 97.8% mobile network reliability factor.  MAS implementation costs incurred by BIOFEM have been more than offset by sales recovery and brand retention.  Unsuccessful counterfeiting activities have been easily identified in the field according to Sproxil (May 2010) but data was not released as to numbers or extent of penetration. Due to the success of the POC (discussed below) scale-up plans are currently in progress.

Sproxil completed its first POC in April 2010, which was technically successful.  It focused on a single product (Glucophage 500mg made by Merck Santé s.a.s) that was produced in France and marketed by BIOFEM in Nigeria.  The total drug production for this pilot was 700,000 blister packs, which were all labeled.  This is a relatively large sample size even by global standards.  The pilot was based on 3 major cities: Lagos, Abuja, Port Harcourt through partnerships with 125 participating pharmacies.  It also required partnerships with Mobile Networks including MTN Nigeria, Zain Nigeria, Globacom Nigeria, Etisalat Nigeria (joined April 16, 2010).  The pilot also had a significant NAFDAC Media Launch utilizing Newspapers, Television, Online.  There was also continuous awareness by word of mouth & posters through Pharmacies, Distributors, Wholesalers, Retailers, and Diabetics.  Finally, Sproxil also worked with organizations such as Association of Community Pharmacists of Nigeria (ACPN) and Diabetics Association of Nigeria (DAN) to build awareness.

Challenges for the product

Despite our belief that the product is an elegant and simple solution to a complex problem, there are other ways to conduct anti-counterfeiting activities.  In most situations, eliminating patient involvement is more convenient for most players.  Sproxil’s end-user product use we feel was appropriate given the cultural context of many consumers not trusting their pharmacist and wanting direct control over whether the product they are purchasing is genuine.  However, interventions that decrease complexity (number of steps, required devices) in the verification process may be more convenient for the patient.  Simpler options may include tamper-proof insignia (ink, hologram, security fibers) that do not require a device for signal interpretation.  The directness of language (OK vs. FAKE) may be an advantage of a text based, approached versus interpreting the integrity of an image, symbol or material.  Language, however, may create complexity for the system and patient, in countries with high linguistic diversity.

Other anti-counterfeiting activities driven at the government level may in fact be more effective at a mass level.  However, Sproxil is essentially filling a need where the government has failed, and we are encouraged that there are opportunities to improve the counterfeit drug situation and help protect individuals in these situations.  The potential to regain sales and market share lost to counterfeits drives pharma investment in technologies like Sproxil.  In order to close the loop on delivering value to all the key stakeholders, Sproxil will need to continue to determine what role it and its data has in regulation and enforcement activities driven at the government level.

The value captured by market intelligence is one area that needs to be evaluated more.  We see some concerns around how the value will be captured, as given the dynamics of the system, counterfeits will always need to be present to drive the consumer use and therefore pharma company investment.  If Sproxil is successful in driving out counterfeits in the markets it operates, it will actually limit its own success.  Additionally, consumers may become complacent (thinking “it was OK the last ten times I’ve purchased my drug, I don’t need to check anymore”) therefore consumer use for an individual drug will taper over time.  In order for Sproxil to have a constant revenue stream or growth with its anti-counterfeiting product they will need deliberate portfolio planning (as illustrated grossly by the graphic) but also consider how the data is affected by this consumer use trend.

Challenges for the organization

The technical success of the POC has driven Sproxil to have grand ambitions that may interrupt its operations.  It is relatively unfocused with recent announcements that they are committed to working with the Clinton Global Initiative to track donation of insecticidal nets in India.  They have also made side comments of their technology being applied to malarial and HIV medications but even as far reaching as CDs and DVDs.  In addition to a general product scope issue, Sproxil is currently 12 people with operations in the US, Africa (Nigeria), and India.  Keeping all these individuals on the same page will be a challenge especially with such far-reaching ambitions.  The segregated activities also make them more labor intensive as it cannot be easy to secure contracts with multiple pharma companies and telecom companies (that are in fact fragmented in these developing nations).  Finally, without dedicated revenue streams (as mentioned above) Sproxil is also facing a challenge of securing capital.  Driving more focused operations may in fact help several resolve several of these challenges.

Looking ahead: student thoughts

Sproxil has seemingly been very successful in its young life so far.  Moving forward, we encourage Sproxil to drive further by:

  1. Making one “franchise” work first. Sproxil should determine a product line to focus on and build a strong model on how it delivers value to the various stakeholders that can be strengthened, enhanced and then perhaps licensed out to the various other areas they are pursuing.
  2. Determining the level of resources to support key activities related to focused efforts.Twelve people could be seen as either a high or low number depending on how you evaluate it, but regardless, to support multiple operations in multiple geographies to build out their value chain, understanding eachs’ key role is critical.
  3. Focusing on partnerships to drive patient-level demand and increase the number of participating retail outlets and pharmaceutical companies. The two-sided platform or network effects drive the value of market intelligence.  With Sproxil’s belief that their data is the next step, they need to ensure they are driving the use of the product on both sides to capture that data.
  4. Designing metrics that can be integrated into partnerships to collect desired impact data. The POC showed that the product was technically successful, but impact value will be the true test to Sproxil’s sustainability.  In the partnerships they develop, Sproxil will need to maintain a feedback system to collect the data on the specific societal benefit to make the case for their social enterprise.

Government Action, Regulatory Environment: For patient-driven anti-counterfeit surveillance to have value for the pharmaceutical companies that invest in interventions, government and enforcement agencies must be able to decrease identified counterfeit activity.  Simply identifying counterfeit activity does not close the loop on delivering value to pharmaceutical companies.

Download the accompanying student presentation on Sproxil (pdf).

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