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Abstract:
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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. |
