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  • 14 Feb 2012

New security features in printed packaging

Thaddeus Bowen (pictured, left), senior managing consultant, Kodak Services for Business, looks at the challenges brand owners face from counterfeiting and product diversion, and discusses how the brands and their package printers can stay one step ahead
 
Billions of dollars are lost every year to counterfeiting, product diversion, product tampering and patent and trademark infringement. The worldwide trade in counterfeit products alone is estimated to be worth US$1 trillion a year, with product diversion reported by Deloitte LLP to cost businesses billions of dollars in revenue each year.
 
Advances in technology make it easier for others to replicate packaging or alter serial numbers in order to counterfeit or divert products. In the face of such challenging issues for brand owners, staying one step ahead of the counterfeiters and diverters to protect their brand, their products and their reputation is of paramount importance.
 
In order to retain the lead against such fraudulent activity, brand owners will often look to third parties to assist in reducing risk by taking measures to secure their products and brand. As a packaging or label company, opportunities exist to extend the portfolio of your offering to provide your customers with a wide range of security solutions. This in turn positions you as a provider of value-added services to your customer base, and can assist in differentiating yourself from your competitors. But what solutions are available, and how can they be implemented?
 
The good news is that there a wide range of security options available which can be used independently, or combined to create a multi-layered solution. Security solutions typically include:
 
Overt – those visible on packaging or labeling that required no tools, such as holograms
Semi-Covert – field detection with simple tools such as ultra-violet fluorescing ink
Covert – field detection with taggants and specialized readers.
 
One industry where counterfeiting has a distinct personal impact for the end user is the pharmaceutical industry. Counterfeit pharmaceuticals can be found in every country in the world. The World Health Organization (WHO) forecasts that sales of counterfeit drugs were expected to reach €56 billion in 2010, which would have been an increase of more than 90 percent from 2005. The problem exists for both branded and generic goods, and ranges from counterfeit off-the-shelf painkillers to prescription medicines used to treat chronic illnesses. In all cases the impacts are the same – the expected treatment could fail or the medicine could have adverse effects that ultimately could be deadly.
 
Production of counterfeit medicines is obviously unregulated, and therefore the content of such products is unknown. The content can range from harmful, toxic substances, to inactive and ineffective mixtures. Examples from WHO include a case in 2009 where an anti-diabetic traditional medicine, used to lower blood sugar in China, was found to contain six times the normal dose of glibenclamide. The result was two deaths and nine people hospitalized. In Tanzania, an anti-malarial drug, found in forty pharmacies, lacked sufficient active ingredient in order to be an effective treatment.
 
This situation obviously causes a reputation risk for the brand owners of the genuine drugs, even more so in today’s multi-channel media world, where information is shared instantly on a global platform, with little time for damage control. Such situations can lead to a loss of short and long-term market share to competitors, as well as additional marketing spend required to regain the consumer’s trust, which may or may not return to status quo.
 
At the ultra-covert level is an authentication marker designed for ultra-high security anti-counterfeiting, which is suitable for use in the pharmaceutical industry. The authentication marker can be provided in a brand owner’s ink or varnish. The solution could be deployed as a security varnish concentrate that is added to the overcoat varnish normally used, or deployed within the existing inks used in the packaging and labeling process. Sophisticated handheld readers can then be used to inspect production in the office or out in the field to confirm authenticity.
 
Ultra-covert solutions are economically deployed on products and packaging, even at high volume. They drop easily into the existing production process and are highly secure and hard to replicate. In addition to being applied as a varnish or in ink, the proprietary marker material can be used on a wide range of material types including foils, corrugated packaging, flexible packaging, labels and documents.
 
It can even be extruded into plastics used in packaging, or threads used in labels and apparel. Additionally, customized programming and specific ‘signatures’ of the authentication marker for tracking purposes, allows the brand owner to regionalize and localize their brand protection strategy.
 
Ultra-covert solutions are not just limited to deterring the counterfeit threat; they can also help brand owners deal with the challenges of product diversion. Also known as "the grey market" or "parallel importing", product diversion can be considered a fraudulent means of inflating profits for participating distributors, while reducing brand owner revenue.
 

Diverters capitalize on surplus inventory, lower manufacturing costs, fluctuating distribution costs, economic conditions and currency exchange rates by exporting goods without the permission of brand owners. The diverters then undercut the prices of authorized domestic distributors by selling at lower price points, while achieving similar or higher profit margins due to the lower cost of product acquisition in the originating countries.
 
The net effect of the grey market is two-fold. First, the local distributors are forced to compete with artificially lowered prices by the grey market activity, causing significant conflict and supply chain demand issues within the authorized sales channels. Second, product revenue streams for brand owners become unbalanced, causing inflated sales metrics in some regions, while incurring reduced revenues in other regions.
 
In many cases, well-known retail stores may acquire grey market products through non-traditional channels, bypassing the brand owner’s distribution network altogether.
 
Essentially, grey market activity disrupts the invisible hand of competition in a given sales region, by luring purchasers and consumers away from authorized channels, and creating artificial demand for goods imported by unauthorized means. To avoid detection, diverters will often look to remove all forms of overt serialization or tracking mechanisms from the packaging.
 
One ultra-covert solution, called Kodak Traceless AD and targeted at product diversion, allows invisible serialization to be added to the package, label or product as easily as changing the ink on your end-of-line inkjet printer. The serialization is not visible under any forms of natural light or ultra-violet light, and is only detectable by a handheld secure viewer. It will be as clear as day to you, invisible to anyone else. Product tracking and authentication marks can be added easily and securely in the production facility, using the Kodak proprietary clear security ink. The brand owner doesn’t even need to make a design change to their packaging. By pairing visible and invisible codes on the same product, the brand owner can gain additional security that is easy to implement with their existing serialization and tracking database.
 
In the semi-covert space a range of security products exist including hidden image technology and ultra-violet fluorescing ink. Hidden image solutions can easily be deployed in pre-press artwork for conventional or digital printed jobs. They can include images that are only visible utilizing a credit card sized plastic lenticular lens, where the lens is placed over the artwork, rotated and the "hidden image" is revealed. The small cost of the lenses mean that these can be deployed in large quantities. In some geographies they are even supplied with products to allow the consumer to perform their own validation.
 
The overt range of security solutions includes holograms, thermal reactive inks and colour shifting inks – inks that reflect various wavelengths in white light differently, depending on the angle at which they are viewed, producing an effect that the human eye will observe as a change of color. Overt solutions allow end users to be involved in a level of product authentication as no tools are required, with the covert and ultra-covert solutions typically reserved for the brand owners and third parties involved in the brand protection process.
 
Offering this service to your customer base will allow you to strengthen your position as a partner of choice, allow you to differentiate your company from your competitors, and ultimately help your customer stay one step ahead of the counterfeiters and diverters.