How can you trust the authenticity of a product? A Hong Kong-based start-up is applying modern technology to this age-old question. For now, Filix Medtech is focusing on the verification of products used in traditional Chinese medicine, but Wong Wai-Kong (WK), its founder and CEO, has explained in an interview with Managing IP how the company hopes to apply its techniques to other sectors.
WK will be offering further insights when he speaks at the Business of IP Asia Forum that will be held at the Hong Kong Convention and Exhibition Centre on December 7–8. Jointly organised by the Hong Kong SAR government and the Hong Trade Development Council (HKTDC), the event brings together intellectual property (IP) professionals and business leaders from all over the globe to discuss the latest developments in IP and to explore business collaboration opportunities. The 13th edition of the forum will be supplemented by on-demand videos for a month.
In a wide-ranging discussion with Managing IP held a fortnight before the event, WK described how trust can be built in a company-consumer relationship and the impact of Filix Medtech winning the IPHatch Hong Kong 2021 Open Innovation Challenge. IPHatch is an open innovation concept that aims to help companies to scale rapidly by leveraging the patented technology portfolios of renowned MNCs. The HKTDC has been co-organising IPHatch Hong Kong with Piece Future, a private IP bank based in Singapore, since 2018.
The opening day of the Business of IP Asia Forum features a breakout session from 2.15–3.30pm conducted by IPHatch, co-organised by Piece Future, on the launch of patent portfolios, including a section on fuelling start-ups’ growth through IP. This article provides a first-hand account of the importance of IP to start-ups and all developing companies.
Traceability of products and verification on the spot
The traditional Chinese medicine market has been estimated to have a market value of $49.6 billion by the end of 2033, according to Persistence Market Research. With the huge range of products and supply chains involved in this multibillion-dollar industry, assessing authenticity represents a considerable challenge. Filix Medtech aims to advance the traceability of products by giving consumers a means of verification at the point of purchase.
For example, ginseng, maybe in the northern part of China, it’s better than other parts
“We offer a product traceability platform which can be applied to many products, but at this moment we focus on Chinese medicines,” WK said. “Many are consumed or purchased in raw material form, like ginseng. These kinds of raw materials vary in quality. This is the main pain point, because consumers have no idea what kind of product they purchase. Chinese medicine is a huge market, but there are quality issues, such as contamination.
“In Chinese medicine, we rely on where a product is grown. For example, ginseng, maybe in the northern part of China, it’s better than other parts. Also, if Chinese medicine is not consumed in raw form, it may be in some processed form, making quality differentiation difficult.”
Filix Medtech is attempting to put the solution to these issues in the palm of a consumer’s hand, using existing technology. “Traceability systems are not new,” WK said. “The big players employ traceability systems, and most of them use blockchain technology to keep track of their records in the supply chain. They capture these records in a digital format, but consumers purchase the physical product, on which there is no direct reference to the record.
“We want to help consumers not just to use a QR code to check the product information – this is very simple – but provide a way for consumers to do verification on the spot; for example, in a retail store they can simply use a handheld device.”
Machine learning and spectrum analysis: how technology yields rapid results
Filix Medtech deploys distributed ledger technology to facilitate product traceability throughout a supply chain. Mobile near-infrared (NIR) spectroscopy technology and advanced data analytics enable on-the-spot verification of traditional Chinese medicine products that could help to foster trust among consumers. Again, the technology is not new, but the point at which it is applied is.
“We use NIR technology,” WK said. “Infrared has been used in laboratories for a long time to do spectrum analysis of material. We have a mobile infrared sensor which we can carry around. That means the application does not just apply to a laboratory, we can take it out to a retail shop, a farm, or a factory to measure quality. The principle is that for a different molecular structure of a natural product, it gets exposed to different absorption and reflection, especially on the carbon, hydrogen, and oxygen bond.
“We base [the findings] on these physical properties of the materials and use our sense to capture the spectrum which we think we can use as a ‘fingerprint’ of the genuine product. For example, if we capture genuine ginseng, then we can have a spectrum for a comparison when our device is used in a retail shop and [the consumer] can do a comparison using our machine learning algorithms. The standard spectrum is already safe in the blockchain, and they can compare the quality.
“The process is quite fast because we use spectrum analysis. It's only a few seconds. It's much faster than a chemical process.”
Recognition from IPHatch and leveraging the benefits
A novel concept supported by the use of cutting-edge technology is one thing, but converting that into a successful business is another matter. That is where outside help may enter the picture. WK explained how Filix Medtech’s success in the IPHatch Hong Kong 2021 Open Innovation Challenge has accelerated its growth through enabling the rapid acquisition of IP assets.
“Every start-up company is striving for growth, some external funding, which we may need to get from the government or from an investor,” he said. “We needed to build up our asset profile. Before we joined IPHatch, our technology was just a concept. I could not show to a potential investor or the government that we had IP assets because it takes time for us to acquire our own IP or patents. We were looking for some way to quickly have IP assets.
“We noticed the IPHatch competition, which I thought was a very good way for us to leverage existing IP or patents from multinational companies, in that if we won the competition and then acquired patents which were related to what we were doing. And then we would have a chance to work with multinational companies as well.
“At that time we were working on traceability and authentication in the supply chain. What we were interested in in the IPHatch competition was technology that could help us on the retail level.
“We are a start-up company and we need to face investors. The first question asked by the average investor is the valuation of our company. Without any IP assets or patents, trademarks, etc., it’s very hard for us to produce a good valuation. Patents or IP assets help us to leverage our valuation.”
How a partner can add value
Recognition through IPHatch creates avenues of access to multinational corporations and business support, including through Piece Future. Such relationships have proved to be a crucial element in Filix Medtech’s development. “[Piece Future] give us advice and we provide our status [in meetings],” WK said. “We receive valuable comments from them to better build up our business model. This is crucial for a start-up company, to have this type of mentorship, which is offered as a free service from them. We really appreciate the support, and they even help us to do networking.
“Also, they have built up a community of IPHatch alumni. Some of the alumni are located in Hong Kong. We think there might be a further possibility to develop networking between our peers and not just with patent owners. We can look for business partners and help. Because most start-ups will be small, if we want to proceed with large corporations, we need to collaborate with other start-ups which are similar, with similar technologies that can help us to better build our product portfolio.”
Filix Medtech is clearly looking ahead and refining its strategy, including the potential for diversification.
Product authentication in construction and beyond
The applicability of the technology used by Filix Medtech extends into other areas, according to WK. “At this moment, we are focusing on the retail side of web authentication,” he said. “We want to focus on building a product that can leverage the patents we receive from IPHatch and we want to further develop the use case.
We want to leverage our technology for not just Chinese medicine but to food, coffee, wine
“Our technology is not just for Chinese medicine, it applies to other areas; for example, in the property technology market. During construction, our traceability system can help to manage fraudulent activities; for example, through the inspection of concrete or materials. We think the patents we got from IPHatch can also apply to those areas.”
The expansion plans do not stop with the construction sector. WK believes that Filix Medtech could help to address environmental and sustainability issues, and has the potential to broaden its geographical scope. “We also want to develop the use case of our fundamental product traceability platform web application in the sustainability area, such as green financing and ESG,” he said. “We want to use this technology to help to bring a better-quality, transparent product to Hong Kong and possibly to mainland China, Asia, and even to the world. We want to leverage our technology for not just Chinese medicine but to food, coffee, wine, etc., and, of course, we are working on construction now.”
With external support in the critical field of IP, a large target market, and the possibility to expand into other sectors and regions, Filix Medtech appears to have sound foundations to build on its early progress.
