Parallel Trade in Scandinavia
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Parallel Trade in
Scandinavia
Introduction
SMART CLUB
The supply chain
A market, or an ecology
The model, animals in
the woods
Scandinavian
population
Scandinavian PI
markets
Norway
Sweden
Denmark
Differences and
similarities
Pharmacies
14.
15.
16.
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19
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The underlying process
The story
Example of a story
Price structures
Currencies
GBP
NOK
SEK
DKK
The next few years
Next century, the crystal
ball
References
The end, the ecologial
approach
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1
Introduction
• A general phenomenon.
• Confined to EU and EEA,
16th of July 1998, the
Silhouette case in ECJ.
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SMART CLUB
• SMART CLUB, an
example.
• A one stop shop
• A wareouse based on
parallel import for
branded products
• The power is in the retail
part of the distribution
chain
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The supply chain
•
TRADITIONAL
1.
2.
3.
•
PI - a detour
Manufacturers, or
trademark owners
Wholesalers
Pharmacies
PARALLEL
DISTRIBUTION
–
–
–
–
–
–
Evolution = adaption
New steps, 3 new palyers
A large detour
Discounting
Very effective
Societal benefit
Well adapted to changes
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A market, or an ecology?
1. The patient is not informed,
and the decision making
process is split in 3 for
reimbursed medicine
2. Some criteria for an efficient
market:
DTC – Direct to
Customer Marketing,
may be considered an
opportunity to
empower the customer
1. Large number of non-dominant
players
2. Informed customers
3. Rational behaviour
3. The pharmaceutical market is
an agglomeration of
monopolies
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The model, the animals in the
wood
• The market may be
described as an ecology
• The market is governed by
natural selection
• Dinosaurs
• Fat cats
• Birds, examples of
effective down-sizing
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Scandinavia,
population
POPULATION MARKET
PPP
millions
1000 US $ 1998
Norway
4,4
803
Sweden
8,8
2 040
Denmark
5,2
1 010
total
18,4
3 853
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Scandianavian PI markets
Parallel Im port in Scandinavia
12,00 %
10,00 %
8,00 %
SWEDEN
6,00 %
DENMARK
NORWAY
4,00 %
2,00 %
0,00 %
1994
1995
1996
1997
SWEDEN
0,02 %
0,02 %
0,02 %
1,94 %
6,19 %
7,43 %
DENMARK
0,16 %
5,40 %
7,55 %
9,78 %
10,57 %
10,25 %
NORWAY
0,00 %
0,20 %
1,42 %
3,48 %
7,13 %
7,15 %
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1998
MAT.6.99
8
Norway, USD PPP
•
•
•
•
•
•
•
20 on top in Norway
120 000 000
No 1, Astra Zeneca
has decreased
turnover
No 2, Merck is on a
plateau
No 3, Glaxo is
growing
No 4, Pfizer is
increasing rapidly
No 5, Pharmacia
Ujohn grows slowly
No 6, Novartis
decreases
No 7, Paranova, the
largest PI company,
grows rapidly
Astra Zeneca
Merck & Co
100 000 000
Glaxo Wellcome
Pfizer
Pharmacia & Upjohn
Nycomed Amersham
80 000 000
Paranova
Novo Nordisk A/S
Novartis
Alpharma
60 000 000
Weifa
Johnsen & Johnsen
Bristol-Myers Squibb
Lilly
40 000 000
SmithKline Beecham
Rhone Poulenc
Lundbeck
Roche
20 000 000
Octapharma
American Home
0
1
2
3
4
96-97-98 + MAT June 99
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Sweden, USD PPP
20 on top in Sweden
ASTRAZENECA
PHARMACIA & UPJOHN
600 000 000
• The 3 largest
companies,
AstraZeneca,
Pharmacia &
Upjohn and Merck
are all heavily
affected by PI
• Cross Pharma is the
6th largest
company in Sweden
• Medartuum is the
17th largest
GLAXO WELLCOME
MERCK & CO
ROCHE
CROSS PHARMA
500 000 000
NOVO NORDISK A/S
PFIZER
NOVARTIS
JOHNSON & JOHNSON
400 000 000
LUNDBECK
BRISTOL-MYERS SQB.
RHONE POULENC
LILLY
300 000 000
BAXTER INT
MEDARTUUM
AMERICAN HOME
HOECHST
200 000 000
FRESENIUS
NYCOMED AMERSHAM
100 000 000
0
1
2
3
4
96-97-98 and MAT June 99
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Denmark, USD PPP
• The largest
companies are on
a plateau
• Denmark is the
most ”mature” PI
market, the
change lately are
less dramatic than
in Sweden
• No 4, Orifarm, has
a strong growth
AtraZeneca
20 on top in Denmark
Nycomed Amersham
Glaxo Wellcome
140 000 000
Orifarm
Pharmacia & Upjohn
Pfizer
120 000 000
Paranova
Novartis
100 000 000
Merck & Co
Johson and Johnson
Lundbeck
80 000 000
Statens Serum Inst.
Leo
SmithKline Beecham
60 000 000
Lillly
Novo Nordisk A/S
Roche
40 000 000
Bristol-Myers Squibb
Schering AG
American Home
20 000 000
0
1
2
3
4
96, 97, 98 and MAT June 99
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-Differences and similarities
• Culture
– Languages
– Political system
• Business life
– Index of 500 largest/1”
inhabitants
– Clusters
• The national character
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Pharmacies
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2.
3.
4.
5.
6.
7.
Reference pricing (NB
VAT)
Generic substitution and
empowering
Apoteket AB
Apokjeden and LIS
Amgross
Gatekeepers and police
Socialised medicine is
good, market is …
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The underlying process
• Interstate price
differentials
• Currency fluctations
• Cost containment
• Pharmacoeconomics,
PI is cost
minimalisation
• DTC
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14
The story
• Media, or what story do
you have?
• Basic scripts:
– Marketing vs bribery
– Marketing dementia or
flooding
– David and Goliath
• What is the essence of
drama?
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Example of a story
”Wrong use and side effects
of parallel import is
known by 15% of the
health personel”
• It is expensive to tell
• It tries to belittle the PI
industry
• It puts shame on those
selling PI
• Do you think it works?
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Price structures
• Denmark
– Discounts forbidden
– Obligation to sell low cost
• Norway
– Profit share scheme
– Referece pricing
• Sweden, one body
• Reference pricing
• Tenders
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Currencies
• The British story
• The Euros
• Norwegian kroners,
8,12 the 271199
• Swedish kronors
• Danske kroner
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GBP
R%EURGBP=R, Close(Bid) [Line] Monthly
12Oct88 - 18Feb00
Pr
R%EURGBP=R , Close(Bid)
30Nov 99 0.6376
0.83
• The GBP is
strong now
• PI is
booming
0.82
0.81
0.8
0.79
0.78
0.77
0.76
0.75
0.74
0.73
0.72
0.71
0.7
0.69
0.68
0.67
0.66
0.65
0.64
Jan89
Jul
Jan90
Jul
Jan91
Jul
Jan92
Jul
Jan93
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Jul
Jan94
Jul
Jan95
Jul
Jan96
Jul
Jan97
Jul
Jan98
Jul
Jan99
Jul
Jan00
19
NOK per Euro
• Last year, the
krone
became
weaker
• Now it is
relatively
strong
• 261199, it
was 8,12
NOK/Euro
R%EURNOK=R, Close(Bid) [Line] Monthly
12Oct88 - 18Feb00
Pr
R%EURNOK=R , Close(Bid)
30Nov 99 8.1896
8.9
8.8
8.7
8.6
8.5
8.4
8.3
8.2
8.1
8
7.9
7.8
7.7
7.6
7.5
Jan89
Jul
Jan90
Jul
Jan91
Jul
Jan92
Jul
Jan93
Jul
Jan94
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Jul
Jan95
Jul
Jan96
Jul
Jan97
Jul
Jan98
Jul
Jan99
Jul
Jan00
20
SEK
R%EURSEK=R, Close(Bid) [Line] Monthly
05Dec91 - 26Jan00
Pr
R%EURSEK=R , Close(Bid)
30Nov 99 8.6012
9.7
9.6
9.5
9.4
9.3
• Turmoil
beginning
1999
• Stabilised
now
9.2
9.1
9
8.9
8.8
8.7
8.6
8.5
8.4
8.3
8.2
8.1
8
7.9
7.8
7.7
7.6
7.5
7.4
Jan92 May
Sep
Jan93
May
Sep
Jan94
May
Sep
Jan95
May
Sep
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Jan96
May
Sep
Jan97
May
Sep
Jan98
May
Sep
Jan99
May
Sep
7.3
Jan00
21
DKK
R%EURDKK=R, Close(Bid) [Line] Monthly
10Feb93 - 18Jan00
Pr
R%EURDKK=R , Close(Bid)
30Nov 99 7.4336
7.8
• Very strong
Jan 96
• Now stable
7.75
7.7
7.65
7.6
7.55
7.5
7.45
7.4
7.35
7.3
7.25
7.2
7.15
7.1
May 93
Sep
Jan94
May
Sep
Jan95
May
Sep
Jan96
May
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Sep
Jan97
May
Sep
Jan98
May
Sep
Jan99
May
Sep
Jan00
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The next few years
• Legal issues, Bayer, Glaxo
Wellcome, Paranova,
Losec etc.
• Price regulation schemes
in ES and the UK
• Business is opportunistic
• PI companies are very
effective
• Vertical integration
• Generics
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Next century, at the speed of light
• 2010 and later, Bill
Gates
• Flow of goods and
flow of information
• Internet
• Do we need
wholesalers and
pharmacies?
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References
1.
2.
3.
4.
5.
Parallel Imports – Effects of the Silhouette Ruling. Swedish
Competition Authhority, January 1999. Web site www.kkv.se
Pharmaceutical pricing and reimbursement in Europe –1999
Edition, Dr Panos Kanavos, 24th August 1999, by PJB
Publications Ltd
www.sigma.no
www.eaepc.org, catalogue /Members/N-Norway/index.htl
Business at the speed of thought – using a digital nervous sytem,
Bill Gate, Warner books 1999
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Final, the ecologial approach
• The smallest fish: the world is not just
• The middle fish: the world is just sometimes just
• The largest fish: the world is just
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