Increasing cross-border and in-market trading have significantly complicated European trade flows of leading pharmaceutical brands in recent years. Perfectly legal in the European Union, the practice of Parallel Trade - diverting products from their intended markets to sell in higher priced markets - has become a sizeable issue in Europe.
A sizeable problem in Europe
Parallel Trade is currently valued at around $5billion per annum at import market prices. As downward pressure on prices and the shift from primary care to higher price specialist care portfolios continues, attractive opportunities are likely to persist, creating significant and ongoing challenges for market measurement and the management of performance and trade.
It is generally driven by price arbitrage opportunity between lower and higher priced countries. Traditionally focused on high volume on-patent products intended for primary care prescription, in recent years as cold chain has become more common place, virtually all types of products have fallen prey to the parallel traders.
Parallel Trade, both import and export, may occur at any point in the supply chain. A country may be an importer, an exporter or even both since the demand for cheaper imports in one country can only be met by firstly availability of supply from another country and at a suitably cheaper price point. Hence product availability is as important as the right price.
