Executive Summary
GBI Research, the leading business intelligence provider, has released its latest research, “Impact of Counterfeits on Pharmaceutical Industry - Counterfeiting Poses Threats to Patient Safety and Revenues of Pharmaceutical Companies”. The report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts. The report provides in depth analysis and information on the rising threat of counterfeit medicines all over the world. The report also provides the global scenario of counterfeit medicines and gives comprehensive information about access points of counterfeit medicines in the legitimate drug supply chains. Furthermore, the report provides an account of factors encouraging the counterfeit medicines and discusses the global initiatives and technologies used to detect and prevent the counterfeiting in pharmaceuticals. This report also provides a comprehensive insight about the parallel trade in Europe and in the US and also discusses factors that encourage the parallel trade in pharmaceuticals, and provides information about the parallel trade policies in Europe and the US. Furthermore, the report also offers a comprehensive analysis of the impact of counterfeiting and parallel trade.
Counterfeiting in Pharmaceuticals has become a Global Program and Almost no Country is Immune to it
Even though the extent of counterfeiting and its harmful consequences are more concentrated in developing and poor countries, it is not exclusive to them. Counterfeiting of pharmaceuticals is increasing all over the world, and has breached the legitimate drug supply chain in many countries, including the US. The US FDA estimates that more than 10% of the global medicines are counterfeits, and these are present in both developed and developing countries. In some countries, more than 50% of the drug supply is made up of counterfeit drugs. The incidents of seizure of counterfeit medicines are rising each year and affecting the various regions of the world, as shown in the figure below.
Impact of Counterfeits, Number of Incidents of Counterfeiting by Region, 2009
Source: GBI Research, Pharmaceutical Security Institute (PSI)
According to the data from PSI, in 2009, Asia and Latin America were the top regions that most often encountered incidents of counterfeiting of pharmaceuticals, followed by Europe, North America, Eurasia, the Near East and Africa.
The countries of Europe and North America that have effective law enforcement and strict inspection programs by various drug regulatory agencies could not escape from the attack of counterfeiting. The countries that have the highest number of incidents are not necessarily those with weak regulation and low law enforcement, although it may also indicate the efforts taken by the government and national organizations to fight against counterfeiting. At the same time, countries which seemingly have low incidence of counterfeiting are not necessarily safe or at lower risk of counterfeiting of pharmaceuticals, but due to weak law enforcement, lack of political will, lack of funding and inadequate regulatory structures, the act of counterfeiting often does go unrecognized in certain parts of the world.
In certain developing countries, counterfeit medicines are available for almost all diseases, ranging from children’s cough syrup to antimalarial drugs. The condition is worse in poor countries where the legal and regulatory oversights are the weakest, and counterfeit medicines are available to treat certain life-threatening conditions such as malaria, tuberculosis and HIV/AIDS. Therefore, the counterfeiting of pharmaceutical products is a very serious issue and collective efforts from various levels are necessary to combat it.
Price Differences among Various Countries Encourage Parallel Trade in Pharmaceuticals
Impact of Counterfeit Medicines, Factors Encouraging Parallel Trade
Source: GBI Research
Parallel trade in medicines becomes the most debated issue in the healthcare realm due to its beneficial and adverse effects. Various factors encourage the parallel trade in pharmaceutical products, and the most important among them is price differences across various countries. Price differentials may exist due to government price control policies, or drug manufacturers may impose different drug prices to incur the maximum profit that a market can bear. The parallel import of pharmaceuticals mostly occurs in countries when price difference is significantly high, as potential gains obtained by parallel trading are large enough to compensate for the transaction costs, including shipping costs and complying with customs regulations. The availability of multiple importation options to source the medicines at cheaper rates and the supportive legal framework in many countries significantly contribute to the parallel trade in pharmaceuticals.
Counterfeiting of Pharmaceuticals and Parallel Trade of Medicines has a Significant Impact on Legitimate Drug Supply and Patient Safety
Counterfeiting of pharmaceuticals can pose a serious threat to patients in terms of direct harm, treatment failure, or drug resistance cases, all of which can seriously affect patient safety. Drug manufacturers also suffer from counterfeiting of pharmaceuticals and experience loss of market share and revenue. The brand integrity is seriously affected and often companies have to bear the cost of products recalled to prevent any further harm from counterfeit versions of their products.
Moreover, national government too cannot escape from the serious adverse effects of counterfeit medicines, such as increased law enforcement costs, loss of foreign investments, and increased burden of public healthcare crisis.
Parallel trade of medicines has raised several issues due to its significant impact. The practice of repackaging in the parallel trade may pose serious threats to patient safety due to human error during packaging, and may affect the product stability. The industry claims that they lose a considerable amount of revenue due to parallel trade, and this deprives the incentive to invest in R&D. Parallel trade may hinder the product recalls and may act as a vehicle for the entry of counterfeit medicines into the legitimate drug supply chain.
Abstract
Impact of Counterfeits on Pharmaceutical Industry - Counterfeiting Poses Threats to Patient Safety and Revenues of Pharmaceutical Companies
Summary
GBI Research’s report, “Impact of Counterfeits on Pharmaceutical Industry - Counterfeiting Poses Threats to Patient Safety and Revenues of Pharmaceutical Companies”, provides in-depth analysis of trends, issues and challenges in this industry. The report analyzes the effects of counterfeits on the pharmaceutical industry in the US, Europe and the Rest of the World. Further, the report provides an analysis on the technologies and solutions that are used to eliminate or prevent counterfeiting of drugs. This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts.
Scope
The scope of this report includes -
• Challenges facing the pharmaceutical industry
• Sources of counterfeiting in the pharmaceutical industry
• Analysis of the impact of counterfeiting in the pharmaceutical industry
• Key technologies and solutions that are developed to reduce counterfeiting.
• Competitive benchmarking of leading technology solutions companies in the market
Reasons to buy
The report will enhance your decision making capability. It will allow you to -
• Assess impact of counterfeiting on pharmaceutical sales, distribution and other functions
• Identify solutions and technologies that are useful against counterfeiting of drugs
• Identify best practices in the industry through analyses of solutions developed by industry leaders
• Strengthen security of supply chain through case studies of implementation of technologies.
Table of Contents
1 Table of Contents
1 Table of Contents 4
1.1 List of Tables 7
1.2 List of Figures 7
2 Impact of Counterfeits on Pharmaceutical Industry - Introduction 8
2.1 GBI Research Report Guidance 9
3 Impact of Counterfeits on Pharmaceutical Industry - Counterfeiting in the Pharmaceutical Industry 10
3.1 Introduction 10
3.2 Extent of the Problem - A Global Scenario 11
3.3 Counterfeits and Pharmaceutical Distribution Chains 14
3.3.1 Possible Access Points of Counterfeit Medicines into Legitimate Distribution Channels 14
3.4 Targets for Counterfeits 18
3.4.1 Bulk Ingredients 18
3.4.2 Finished Products 18
3.4.3 Examples of Counterfeiting (2005-2009) 21
3.5 Factors Encouraging the Counterfeiting of Pharmaceuticals 24
3.5.1 High Profits and Low Risk in Counterfeiting (Relatively Small Risk and Low Penalty) 24
3.5.2 Rising Demand for the Prescription and Lifestyle Drugs 25
3.5.3 Proliferation of Online Drug Sale Channels 25
3.5.4 Price Controls by the Government 26
3.5.5 Availability of Sophisticated Tools for Counterfeiting 26
3.5.6 Deregulation and Lack of Tools for Law Implementation 26
3.5.7 Lack of Awareness among Patients 27
4 Impact of Counterfeits on Pharmaceutical Industry - Countries and Counterfeiting of Pharmaceuticals 28
4.1 Developed countries 28
4.1.1 The US 28
4.1.2 Canada 29
4.1.3 Europe 30
4.1.4 Developing Countries 31
5 Impact of Counterfeits on Pharmaceutical Industry - Global Initiatives Against Counterfeiting in Pharmaceuticals 37
5.1 Key Challenges to Fight against Counterfeits 37
5.2 Anti-Counterfeit Platforms 37
5.2.1 WHO and International Medical Products Anti-Counterfeiting Taskforce (IMPACT) 37
5.2.2 European Alliance for Access to Safe Medicines (EAASM) 39
5.2.3 European Federation of Pharmaceutical Industries and Associations (EFPIA) 40
5.2.4 Pharmaceutical Security Institute (PSI) 41
5.2.5 Verified Internet Pharmacy Practice Sites (VIPPS) 43
5.2.6 Verified-Accredited Wholesale Distributors Program (VAWD) 44
5.2.7 The US FDA 44
5.2.8 China 45
5.2.9 India 46
5.2.10 Russia 46
5.2.11 Africa 47
5.2.12 Pharmaceutical Industry 47
6 Impact of Counterfeits on Pharmaceutical Industry - Anti-Counterfeiting Strategies 49
6.1 Introduction 49
6.2 Overt (Visible) Technologies 50
6.2.1 Holograms/Diffractive Optical Elements 50
6.2.2 Optical Variable Device (OVD) 51
6.2.3 Sequential Product Numbering 51
6.2.4 Security Graphics 51
6.2.5 On Product Marking 51
6.2.6 Color Shifting Security Inks and Films 51
6.2.7 Film Wrappers 51
6.2.8 Shrink Seals and Bands 51
6.2.9 Breakable Caps 51
6.2.10 Sealed Tubes 51
6.3 Covert (Hidden) Technologies 52
6.3.1 Invisible Printing and Watermarks 52
6.3.2 Hidden Marks and Printing 52
6.4 Forensic Markers 52
6.4.1 Chemical Taggants 53
6.4.2 DNA Fragments 53
6.4.3 Micro-Particle Taggants (Nanotaggants) 53
6.4.4 Isotope Ratio 53
6.5 Mass Serialization/Track and Trace Technologies 53
6.5.1 Serialization 54
7 Impact of Counterfeits on Pharmaceutical Industry - Parallel Trade in Pharmaceutical Distributions 57
7.1 Introduction 57
7.2 General Pathway of Parallel Trade 57
7.3 Factors Encouraging Parallel Trade in Pharmaceuticals 59
7.3.1 Drug Price Difference across Various Pharmaceutical Markets 60
7.3.2 Government Price Controls Policy 62
7.3.3 Supportive Legal and Regulatory Framework to Parallel Trade in Medicines 62
7.3.4 Availability of Multiple Importation Pharmaceutical Markets 62
7.4 Parallel Trade in Pharmaceuticals - A Controversial Issue 63
7.4.1 Research and Development 64
7.4.2 Product Shortage 64
7.4.3 Parallel Trade and Benefits to Patients 64
7.4.4 Product Recall 65
7.4.5 Counterfeit Medicines 65
7.5 European Parallel Trade - Current Perspectives 66
7.5.1 Price Differences in Europe 69
7.5.2 Legal and Regulatory Framework Supporting Parallel Trade in Medicines 72
7.5.3 Opposition to Parallel Trade in Medicines in Europe 73
7.5.4 The UK 74
7.5.5 Germany 76
7.5.6 Sweden 77
7.5.7 Spain 77
7.5.8 Greece 78
7.6 Parallel Trade in the US Pharmaceutical Market 78
7.6.1 Parallel Trade and the FDA’s Perspective 79
8 Impact of Counterfeits on Pharmaceutical Industry - Impact Analysis of Counterfeit Medicine and Parallel Trade in Pharmaceutical Distribution 81
8.1 Impact of Counterfeit Medicines 81
8.1.1 Impact of Counterfeit Medicines on Patients 81
8.1.2 Impact of Counterfeit Medicines on Drug Manufacturers 83
8.1.3 Impact of Counterfeit Medicines on Governments 84
8.2 Impact of Parallel Trade in Pharmaceutical Distribution 86
8.2.1 Parallel Trade Reduces Revenue and Incentives to Invest in Research and Development 87
8.2.2 Pharmaceutical Companies May Delay or Refrain From the Launch of New Products Due to the Impact of Parallel Trade 87
8.2.3 Parallel Trade Hinders Effective Batch Recall 87
8.2.4 Product Shortage 87
8.2.5 Human Error in Repackaging Undermines Efficacy of Medicines 88
8.2.6 Product Stability can be Hampered by Repackaging of Drug Products 88
8.2.7 Price 89
8.3 Counterfeit Medicines and Parallel Trade in Pharmaceuticals 89
9 Impact of Counterfeits on Pharmaceutical Industry - Appendix 91
9.1 Market Definitions 91
9.2 Abbreviations 91
9.3 Research Methodology 95
9.3.1 Coverage 95
9.3.2 Secondary Research 95
9.3.3 Primary Research 95
9.3.4 Expert Panel Validation 96
9.4 Contact Us 96
9.5 Disclaimer 96
9.6 Sources 97
List of Tables
1.1 List of Tables
Table 1: Impact of Counterfeits, Issued Drug Alerts Related to Counterfeit Medicines, 2005-2009 21
Table 2: Impact of Counterfeits, Examples of Counterfeit Medicines, 2005-2009 21
Table 3: Impact of Counterfeits, Prevalence of Counterfeit Medicines in Developed Countries 28
Table 4: Impact of Counterfeits, Prevalence of Counterfeit Medicines in Developing Countries 32
Table 5: Impact of Counterfeits, Verified Internet Pharmacy Practice Sites 43
Table 6: Impact of Counterfeits, Pros and Cons of Overt Features 50
Table 7: Impact of Counterfeits, Pros and Cons of Covert Features 52
Table 8: Impact of Counterfeits, Pros and Cons of Forensic Markers 52
Table 9: Impact of Counterfeits, Pros and Cons of Track and Trace Technologies 53
Table 10: Impact of Counterfeits, Drug Price Difference by Country, 2009 61
Table 11: Impact of Counterfeits, Short and Long Term Effects of Parallel Trade 63
Table 12: Impact of Counterfeits, Share of Parallel Trade in the Pharmaceutical Industry, Europe, (%), 2005-2008 67
Table 13: Impact of Counterfeits, Pricing and Reimbursement Methodologies in Selected EU Countries 70
List of Figures
1.2 List of Figures
Figure 1: Impact of Counterfeits, Counterfeit Medicine, Key Facts 10
Figure 2: Impact of Counterfeits, Number of Incidents of Counterfeiting by Region, 2009 12
Figure 3: Impact of Counterfeits, Global, Number of Incidents of Counterfeiting, 2002-2009 13
Figure 4: Impact of Counterfeits, Possible Access Points of Counterfeits in the Legitimate Drug Distribution Chain 14
Figure 5: Impact of Counterfeits, Reasons for Purchasing Medicines From Online Pharmacies 15
Figure 6: Impact of Counterfeits, Targets for Counterfeits, 2009 19
Figure 7: Impact of Counterfeits, Factors Encouraging the Counterfeiting of Pharmaceuticals 24
Figure 8: Impact of Counterfeits, Lack of Awareness Among Patients about Medicines 27
Figure 9: Impact of Counterfeits, Access Points of Counterfeits in the US Drug Supply Chain 28
Figure 10: Impact of Counterfeits, Product Verification at the Point of Dispense Flow Chart 40
Figure 11: Impact of Counterfeits, PSI Members 41
Figure 12: Impact of Counterfeits, Quantity of Fake Medicines Seized, (%), 2009 42
Figure 13: Impact of Counterfeits, Arrest Data for Counterfeiters, (%), 2009 42
Figure 14: Impact of Counterfeits, General Parallel Trade Pathway 58
Figure 15: Impact of Counterfeits, Factors Encouraging Parallel Trade 59
Figure 16: Impact of Counterfeits, Lipitor Price Difference by Country, 2009 60
Figure 17: Impact of Counterfeits, Nexium Price Difference by Country, 2009 61
Figure 18: Impact of Counterfeits, Share of Parallel Trade in the Pharmaceutical Industry, Europe, 2008 66
Figure 19: Impact of Counterfeits, Share of Parallel Trade in the Pharmaceutical Industry, Europe, 2005-2008 67
Figure 20: Impact of Counterfeits, Share of Parallel Trade in the Total European Pharmaceutical Industry, 2005-2008 68
Figure 21: Impact of Counterfeits, Plavix Price Difference by Country, 2009 69
Figure 22: Impact of Counterfeits, Share of Parallel Trade in Germany, 2008 76
Figure 23: Impact of Counterfeits, Impact of Counterfeiting of Drugs on Patients 81
Figure 24: Impact of Counterfeits, Effect of Counterfeiting of Drugs on Pharmaceutical Companies 83
Figure 25: Impact of Counterfeits, Effect of Counterfeiting of Drugs on Governments 84
Figure 26: Impact of Counterfeits, Negative Impact of Parallel Trade 86
Figure 27: Impact of Counterfeits, Complex Network of Parallel Trade in Europe 89
