Reports &
studies

Spanish consulting firm analysed the effects of competition from parallel imports on the reduction of the prices of pharmaceuticals in Germany and Sweden.Indirect savings in Germany were found to represent 16.7% of the originators’ revenues for those products with negative correlations that faced parallel trade entry within the analysis period. This can give a better idea of the dimension of the savings in relation to the market. The results for Sweden are similar, with parallel trade representing 12.3% of the market supplied by originators.

This study analysed the potential effects of removing parallel imports on prices and government and patients’ health expenditure. The researcher from the University of Melbourne developed a model based on the Danish Market for Statins and found out that a ban on parallel imports would increase the prices of patented medicines and also generics, although this increase would be even larger if the medicine is still under patent protection. The healthcare expenditure of the government would increase while the consumers’ welfare would decrease.

This study calculated direct savings for Denmark, Sweden, Germany and UK that added up to €441,4 million in 2004. They also estimated the indirect savings for Denmark and Sweden for a combined €24,7 million. It is very likely that these indirect savings are underestimated due to methodology constraints.

This study concludes that even the manufacturers can benefit from parallel trade if certain conditions are met. The results are based on the assumption that, when competitive retailers must order inventories before they know the realisation of the demand, the ability to trade the unsold products incentivise them to make larger orders, to the profit of the manufacturer.