Benefits of Parallel Trade in the Pharmaceutical Sector

Benefits of Parallel Trade in the Pharmaceutical Sector

04-03-2021

In our first article regarding the parallel trade practices in the pharmaceutical industry we have included general information about the definition of the concept and the legal validity of the model. In this article, which is the second of the series that we prepared to discuss the concept of parallel trade in different aspects, we will explain the benefits of parallel trade.

It is clearly acknowledged by the European Commission that parallel trade increases the competitive environment in the pharmaceutical sector in accordance with the internal market principles. Competition is essential to creating a healthy domestic market economy. As the competitiveness in the pharmaceutical industry increases, the countries find the possibility to save directly or indirectly in the short and long term.

Let's explain how the parallel pharmaceuticals trade saves money:

Since the products imported under this model are much cheaper than existing products in the market, it is a fact that parallel trade will provide savings. Because the products sold in the country through parallel trade are sold at more affordable prices than the products of the same brand in the local market and are preferred by the buyers. Increasing competitiveness in the market creates a pressure to lower the current prices in the country. Thus, sudden increases in prices are prevented and savings are achieved.

According to the data measured in 2004, the total amount of savings achieved through parallel trade exceeded 440 million Euros and therefore the savings advantage offered by parallel trade is substantial.

Another benefit of parallel trade is the well-being effect on individual consumers. As a result of the competitive environment in the market, patients or healthcare systems can access medical products at much more affordable prices. As a result, considering that the procurement of pharmaceutical products is made with public funds, it would be correct to say that this model will contribute to the increase of the welfare of the societies with affordable price advantages it offers.

In our next article, we will discuss the protection of quality standards and legality elements in the parallel trade model.