PAD stands for Paper Analytical Device. A PAD is a piece of paper, about the size of a business card, that has been impregnated with a chemical reagent(s). When an analyte (e.g. a suspicious antibiotic) is applied to the PAD it will interact with the reagents in such a way that, if the sample is legitimate, certain colors will be produced. If the analyte is a counterfeit, then the wrong colors (or no colors) will form.
Counterfeit drugs may contain the incorrect dosage of active ingredient, expired active ingredient and/or excipients which may or may not be biologically harmful.
A picture can then be taken of the PAD and sent to a central computer system. The computer will then send back an automated response saying that either the tests were all successful and the pharmaceutical appears to be valid OR that one or more of the tests has indicated that something is wrong and the drug is likely counterfeit. At this point, further instrumental analysis can be done to determine exactly what chemical compounds are present if desired.