Euro Parallel Imports' Market Share Set To Rise

In no European market do parallel imports account for as much as 10% of drug sales, and in fact the trade really exists in only Denmark, Germany, the Netherlands and UK. But it will grow significantly in Germany, its biggest market by value, and throughout Europe market share will rise from 1.2% in 1993 to 2.0% in 1997, says a new Datamonitor study.

Price differentials for identical drugs in different countries need to be about 20%-25% to be worthwhile for the parallel importer. Thus, the four main countries have high-priced drug markets. Parallel importers are subject to the fluctuations of exchange rates, which affect price differentials in different countries, and variations in exchange rates are often cited as the greatest impediment to the trade. Recent fluctuations in Europe have hit trade sharply, especially of drugs sourced from italy, but parallel importers are small and entrepreneurial and thus adaptable to new circumstances, changing their sources with much smaller disruptions than larger firms face, says Datamonitor.

The study says that relative prevalence of the trade depends not only on price differentials but also on each country's regulatory structure and government attitudes. The governments of the four major parallel import markets are in favor of the trade, as it lowers drug prices and thus cuts their drug bills. But levels of active encouragement vary, and bureaucratic obstruction is still an important factor. For example, Germany particularly encourages parallel imports, while the UK is notably slow in granting them licenses. The European Union policy towards the trade looks set to remain permissive.