Aegate steals a march in war against counterfeit drugs

Aegate, the drug authentication business, will move into Ireland in January, strengthening its position ahead of expected EU legislation to fight the growing threat of counterfeit drugs.

The company – which uses barcodes and a bank of computers at a secure facility in Britain to check for fake medicines – already has operations in Belgium, Greece and Italy and is looking to roll out its system in another three to four markets this year, said managing director, Gary Noon.

Its expansion into Ireland involves hooking up all 1,500 chemists in the country. Initially, pharmacists will only be able to confirm the batch that the medicine comes from, but within a year, each individual packet will have a unique 74-digit number.

Spun off from PA Consulting two years ago, and backed by venture capital outfit Ipex Capital, Aegate offers a secure system similar to those used by banks to confirm debit and credit cards used in shops and cash machines.

Counterfeiters have built on their success in selling fake Viagra over the internet and are now targeting the world's top-selling drug, Lipitor, as well as medicines to treat heart attacks, cancer and even schizophrenia. Some packaging is so convincing that it takes a lab test to show that the pills inside are phoney.

The World Health Organisation estimates that 1 per cent of drugs sold through legitimate channels in the developed world are counterfeit. In Britain, over the past three years, the authorities have identified 14 batches of drugs as fakes

Half a million counterfeit medicines were seized at the EU's borders in 2005 and officials expect recent figures to be higher. The WHO estimates the illegal trade will be worth $75bn (£50bn) globally by 2010.

If, as expected, Günter Verheugen, the EU enterprise commissioner, recommends legislation requiring point-of-sale authentication in his pharmaceuticals proposal due to be published in April, Aegate is in a strong position. While several other companies have tested systems, the British firm is the only one in Europe with operations up and running.