North Carolina Start-Up’s Software Tracks Fraud in Packaging, Documents

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By snapping a picture with his mobile phone, Hersh Tapadia demonstrated how an app developed by the Durham-based anti-counterfeiting technology company CertiRx Corp. could find fraudulent changes on a prescription drug label.

Within minutes, Tapadia, who is CertiRx’s co-founder and product development director, had a screen pulled up to show how the app could find and highlight counterfeit areas on an example drug label using a deep pink color.

The start-up is working to build a business around marking drug packages, pills, and academic documents for fraud detection and prevention. And it’s also trying to win grant money to continue work on a technology that they’re developing to mark pills or other products with small particles integrated into the drug’s surface or mixed into its formulation.

“We think, on its face, if law-abiding people know substances are traceable (they’ll) handle them more carefully,” said CertiRx Corp.’s president and CEO Thomas J. Mercolino, who is another one of the company’s three co-founders whose background includes work for the medical technology company Becton, Dickinson and Co. and at Johnson & Johnson.

Based out of the First Flight Venture Center, a technology incubator in the Triangle’s business park, the company employs six people. Recently, the company raised $225,000 more in private financing to bring its Series 1 round total to $625,832.

In addition, Mercolino said the N.C. Biotechnology Center, a nonprofit that uses state funds to boost the state’s biotechnology sector, matched some of that private money with a $170,700 strategic growth loan.

The company got the loan to help with the company’s product development and to boost sales.

Mercolino said CertiRx is now marketing TraxSecur, a tool for detecting fraud on drug packaging or individual pill doses using a mobile phone app.

They also have licensed their product AuthentiForm, a document certification technology, to the National Student Clearinghouse.

Rick Torres, the CEO and president of the Virginia-based nonprofit that provides services to higher education institutions, including authentication of education documents, said the nonprofit in an exploratory test stage with the technology.

“The Clearinghouse is involved in both international and domestic electronic exchange of documents, and what we know to be true is that there is, in the world of education which is where we work, there are many varied needs to send authenticated documents,” he said, adding that part of the reason the nonprofit is interested in the technology is that it could detect fraud in documents regardless of language.

Both of the AuthentiForm and TraxSecur products use the same basic security marking system, Mercolino said.

They take geometric shapes that are multiplied according to a unique frequency, arranged into a unique pattern, and printed on a drug package or academic document underneath text that they want to keep secure. Then a computer stores the interface between the pattern and the information.

“What we do is more different with the symbols . from what else is doing,” Mercolino said.

Their third product is only in the research phase. With that product, Mercolino they’re developing a way of marking pills or other products with tiny particles. The idea is to then use a computer to analyze the ratio of those particles to see if they are authentic.

Demonstrating the technology, Tapadia held up a small computer chip in one of the company’s offices with the lights turned off.

The chip was speckled with tiny, fluorescent particles.

Visible under a blue light, Tapadia said the tiny particles can be sprayed in a unique ratio onto the surface of a drug or mixed into its formulation.

The work was funded by a Phase 1 Small Business Innovation grant and also by the N.C. Biotechnology Center. He said they’re applying for another grant to continue the product’s development.