Managing Downstream Traceability to Prevent Grey Market Diversion An Exploratory Case Study of Distribution Control in a Global Medtech Company

Abstract

Grey market diversion, meaning the redistribution of genuine products through unauthorised channels, represents a growing challenge for medical technology companies operating in global multi-tiered distribution networks. This study investigates how downstream traceability solutions and organisational practices can help detect and prevent product diversion using an antiseptic product from Mölnlycke Healthcare in the US market as a case. The study adopts an exploratory qualitative approach where semi-structured interviews with both internal stakeholders and external industry experts serves as the main data collection method. The findings show that the primary challenge is not the availability of traceability tools but rather maintaining visibility in complex distribution networks. Batch-level identification, combined with strong economic incentives in the US market landscape, creates conditions where unauthorised resale is difficult to prevent. Item-level serialisation emerges as a potential near-term technical solution, enabling targeted buybacks and deterrence without requiring full supply chain participation. Artificial intelligence could complement this by automating the detection of data anomalies and patterns in existing systems. Organisational and commercial practices are equally as important since without clear ownership, cross-functional coordination and enforcement mandate, enhanced traceability risks becoming an investment without meaningful results. The thesis concludes that downstream traceability should be understood as a strategic capability rather than just an operational tool, requiring engagement from all parts of an organisation.