Parallel trade in Denmark

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Parallel trade in Denmark

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Title: Parallel trade in Denmark
How the financial crisis changed market conditions and how original manufacturers reacted to this
Author: Jensen, Mads
Abstract: This thesis investigates parallel trade of pharmaceutical products, a scenario where parallel distributors legally export patented drugs in low priced markets and then imports to high priced markets. This is done without the consent of the patent owner, but is done under the legal framework of the internal market in the EU. Parallel trade is based on the concept of arbitrage, where parallel distributors takes advantage of price differences caused by different pharmaceutical price regulations across countries. This thesis investigates the country specific factors that make Denmark the country with the highest share of parallel trade in the European Union. Furthermore the performance of parallel distributors is investigated in relation to the financial crisis. This is done to establish whether or not original drug manufacturers should adapt to changes in market conditions. Following the financial crisis several countries, especially Southern European, implemented a range of policies including mandatory price cuts for pharmaceutical products. The thesis investigates why parallel trade should be an important part of strategic considerations. Typically focus is on generic competition, but the thesis argues that parallel trade affects the performance during the growth and maturity phase. The results show an increased performance of parallel distributors in the Danish primary sector. Parallel distributors has gained a stronger foothold, as the share of product categories where parallel distributors are market leader and are holding significant market shares has increased after the financial crisis. Furthermore the performance of parallel distributors increased significantly, over a six year period performance were increased by DKK 1.1 billion compared to the years up until the financial crisis. The increased performance urges original drug manufacturers to evaluate their strategic approach. The initiatives at hand are targeted at price, friction, volume and other long-term activities. Finally the thesis shows the implemented strategic initiatives in the case of Vagifem, a product patented by Novo Nordisk. Findings indicate that the strategic approach has changed after the financial crisis, as a more proactive approach has been adopted.
URI: http://hdl.handle.net/10417/4837
Date: 2015-01-16
Pages: 89 s.
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