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European Pharmaceutical Contractor
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In an industry traditionally confined to Europe, evidence suggests that parallel trade is now expanding globally. This relatively young, yet highly controversial industry sector is breaking free from the confines of the EU and is taking a foothold in non-EU countries such as Russia, South Africa, India, and the Philippines, according to a new report published by Reuters Business Insight. Within the EU, parallel trade is also shown to be expanding as a result of increased numbers of parallel import licences granted, EU enlargement, national cost-containment drives on drug spending, and litigation victories for parallel traders - activities that are forecast to drive the parallel trade market to a US$7.4 billion industry by 2006. In The Global Parallel Trade Outlook, 2001-2006, new trends in parallel trade are identified along with potential new market opportunities that the industry has created under the current political, legal and regulatory framework of 27 countries. The report's author provides a short commentary on how parallel trade is expanding and what this could mean for the global pharmaceutical industry.
In the EU, parallel trade or parallel distribution has been a legitimate industry since the 1970s, when drugs were bought from low-priced countries and sold in high-priced countries despite the availability and distribution of locally manufactured equivalents in the import and export countries. There are a number of advantages and disadvantages to parallel trade. The most obvious and important is the financial reward from selling cheaply purchased drugs to higher priced economies. In addition, parallel trade stimulates competition and benefits the health care provider and patient through lower drug prices. The downside, however, includes the loss of revenue for the manufacturer, erosion of domestic sales, and not least is the point that parallel trade is a highly litigious practice costing firms millions of dollars each year.
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