“Now I’m going to show you a beautiful fake,” she said with a smile. These words were spoken to me by a PhD-level scientist and computer vision engineer who develops AI-based technology to detect counterfeits. She has seen thousands of scans of fake pharmaceutical packaging, and this one stood out.

What impressed her was how well the counterfeit matched the real thing, down to the smallest details. The technology still flagged it as a fake, but it was nearly indistinguishable from the genuine article. Even an experienced analyst may not have been able to spot the difference upon manual inspection. And forget about a patient or healthcare professional being able to tell the difference.

Counterfeiters thrive on deception, fraud, and avoiding detection, and, as this anecdote demonstrates, they keep getting better at it. It’s not just higher-quality packaging reproduction, though that is an area that gets a lot of their attention. We’re seeing increasing sophistication across the entire illicit value chain—from manufacturing to logistics to commercialization and money laundering. Combating counterfeiting and illicit trade is a cat-and-mouse game, with organized crime demonstrating increasing adaptability, ingenuity, and operational maturity.

Beyond “beautiful fakes” and the well-known proliferation of illicit trade online, fraudsters are employing a variety of other tactics to take advantage of market disruptions, adapt their supply chains, and exploit mechanisms designed to facilitate and enhance legitimate global trade. They target whatever gaps and vulnerabilities they see to infiltrate legitimate trade networks, making detection even more difficult.

Exploiting market disruptions and geopolitical conflicts

Counterfeiters are opportunists. Economic instability, currency devaluations, drug shortages, sanctions, and geopolitical conflicts all create fertile ground for illicit trade. When legitimate supply chains falter or prices spike, counterfeit networks step in to fill the void. During the global COVID-19 vaccine shortages, for instance, several regions saw a wave of falsified vials entering online and private-market channels.¹ Criminal networks know that constrained access and urgent demand make buyers more vulnerable—and less critical—when evaluating product authenticity.

The atomization of illicit logistics

One of the most significant evolutions in recent years is the shift toward small-parcel shipping. Instead of moving counterfeit medicines in bulk, many networks now rely on thousands of micro-shipments sent through postal services and express couriers. According to OECD/EUIPO analysis, 79% of all counterfeit shipments now contain fewer than ten items.² This long-tail logistics model overwhelms inspection capacity, reduces the risk to perpetrators, and makes meaningful interdiction extremely difficult for regulators and law enforcement.

FTZs: The counterfeiter’s playground

Free-trade zones (FTZs) are vital enablers of global commerce, but they also offer blind spots. Counterfeiters exploit FTZs to obscure product origin, assemble and repackage goods, and commingle authentic and illicit goods. Several major pharmaceutical counterfeiting investigations have revealed FTZs in the Middle East, Africa, and Latin America being used repeatedly as repackaging and transshipment hubs.² Their rapid turnaround times and limited oversight make them ideal environments for illicit traders seeking to erase tracks and confuse provenance.

Illicit manufacturing goes local

We are also seeing an increase in localized production, as illicit manufacturers move their operations away from “hot spots,” such as China, to avoid enforcement actions and increase profits. Local production reduces transportation risk, shortens lead times, and allows counterfeiters to tailor packaging, labeling, and serial numbers to local regulatory expectations. This decentralized model complicates investigations and makes illicit production harder to detect through traditional enforcement triggers.

A moving target

These tactics remind us that illicit trade in pharmaceuticals is a dynamic and innovative business; it evolves with markets, supply chains, global forces, and efforts to stop it. Criminal networks have a distinct advantage in that they are typically more agile and able to adapt faster to exploit opportunities than legitimate businesses and stakeholders. Indeed, they are a formidable adversary, and one we must continue to fight every day to protect patients and the integrity of our products and supply chain.

About the Author

Sean O’Hearen is the founder and principal consultant at 1st Line Partners.

References

1. Schuster S. "Tip of the Iceberg": Interpol Says Fake COVID-19 Vaccines Were Smuggled Across Continents. TIME. March 3, 2021. https://time.com/5943581/interpol-face-covid-vaccine/

2. Mapping Global Trends in Fakes: Global Trends and Enforcement Challenges. OECD. May 7, 2025. https://www.oecd.org/en/publications/mapping-global-trade-in-fakes-2025_94d3b29f-en.html