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Authentix's technology spots fake fuel and drugs—and could help millions of poor people.

The problem is about basic economics: Each month, the Indian government ships about a billion liters of deeply subsidized kerosene for hundreds of millions of people to use for cooking and heating. But about a third of the supply is stolen by gangs who mix it with diesel to sell to gas stations, which resell the fuel for big profits.

This 15-year-old phenomenon hurts the poor and costs the government as much as $5 billion annually in lost revenue. So last fall, India began rolling out an ambitious solution—using nano-scale chemistry to detect the stolen fuel. "The economic incentive [to cheat] is what we're trying to remove," says Pramod Nangia, director of India's Ministry of Petroleum and Natural Gas.

India's partner is Authentix, a Dallas-based nano-engineering company. Authentix already marks 48% of the branded fuel supply in the United States, and also does authentication work for tobacco, consumer goods, and pharmaceuticals. The company claims to have saved clients in those industries $3 billion since its founding in 2003. "We use technology to provide information on who's cheating and who's not," says CEO David Moxam. "It's a little like watching CSI."

How it works: Before the kerosene is distributed, it's injected with molecule-sized "markers" at a rate of a few parts per billion. The markers can't be detected by chemical analysis—but they can be by field testers using Authentix's handheld equipment, which spots impurities as low as 1%. So even small amounts of stolen fuel mixed with diesel show up.

Authentix says it will be up to a year before it has hard results on its impact on corruption. Meanwhile, it's starting on the next big crisis: counterfeit prescription drugs in Africa, which leave millions of sick people with the wrong medicine—or none at all. Authentix has already developed an organic molecular marker, recently approved by the Food and Drug Administration, that can be injected into authentic drugs to distinguish them from fakes. Commercial versions may start appearing within 18 months. Authentix is ramping up plans to coordinate with African governments, learning from its experience with India. Says Moxam: "It's this concept of fiscal transparency that's meaningful." And good medicine for curing social ills.

Data Dump

Counterfeit drugs account for 60% of all pharmaceuticals sold in developing nations.

Source: World Health Organization

A version of this article appeared in the March 2007 issue of Fast Company magazine.