Parallel Trade in Scandinavia • • • • • • • • • • • • •
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. 17 18 19 20 21 22 23 24 25 26
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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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 – – –
•
Manufacturers, or trademark owners Wholesalers Pharmacies
PARALLEL DISTRIBUTION – – – – – –
PI - a detour
Evolution = adaption
New steps, 3 new palyers A large detour Discounting Very effective Societal benefit Well adapted to changes www.perhamre.com
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A market, or an ecology? •
•
The patient is not informed, and the decision making process is split in 3 for reimbursed medicine Some criteria for an efficient market: – – –
•
DTC – Direct to Customer Marketing, may be considered an opportunity to empower the customer
Large number of non-dominant players Informed customers Rational behaviour
The pharmaceutical market is an agglomeration of monopolies www.perhamre.com
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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 Para lle l Im port in Sc andinav ia
1 2,0 0 %
1 0,0 0 %
8,0 0 % SWEDEN 6,0 0 %
DENMA RK NORWA Y
4,0 0 %
2,0 0 %
0,0 0 % 19 94
19 95
1 996
1 997
1 998
SW EDEN
0,0 2 %
0,0 2 %
0,0 2 %
1,9 4 %
6,1 9 %
7,4 3 %
DENMARK
0,1 6 %
5,4 0 %
7,5 5 %
9,7 8 %
10,57 %
10 ,25 %
NORW AY
0,0 0 %
0,2 0 %
1,4 2 %
3,4 8 %
7,1 3 %
7,1 5 %
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MA T.6 .99
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20 on top in Norway
Norway, USD PPP 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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20 on top in Sweden
Sw eden, USD PPP
ASTRAZENECA PH ARMACIA& UPJOHN
600 000 000
•
•
•
The 3 largest companies, AstraZeneca, Pharmacia & Upj ohn and Merck are all heavily affected by PI Cross Pharma is the 6th largest company in Sweden Medartuum is the 17th largest
GLAXO WELLCOME ME RCK & CO ROCHE CR OSS PHARMA
500 000 000
NOVO NORDISK A/S PFIZER NOVARTIS JOH NSON & JOHNSON
400 000 000
LUN DBECK BR ISTOL-MYERS SQB. RH ONE POULENC LILL Y
300 000 000
BAXTER INT ME DARTUUM AME RICAN HOME HOECHST
200 000 000
FRE SENIUS NYC OMED AMERSHAM
100 000 000
0 1
2
3
4
96-97-98 and MAT June 99
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Atr aZeneca
Denmark, USD PPP
20 on top in Denmark
G laxo Wellcome
140 000 000
•
•
•
The largest companies are on a plateau Denmark is the most ”mature” PI market, the change l atel y are less dramatic than in Sweden No 4, Orifarm, has a strong growth
Nycomed Amer sham
O r ifar m Pharmacia & Upjohn Pfizer
120 000 000
Paranova Novar tis Merck & Co
100 000 000
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 Amer ican 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 • • • • • • •
Reference pricing (NB VAT) Generic substitution and empowering Apoteket AB Apokjeden and LIS Amgross Gatekeepers and police Socialised medicine is good, market is … www.perhamre.com
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The underlying process • Interstate price differentials • Currency fluctations • Cost containment • Pharmacoeconomics, PI is cost minimalisation • DTC
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The story • Media, or what story do you have? • Basic scripts: – Marketing vs bribery – Marketing dementia or flooding – Davi d 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? www.perhamre.com
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Price structures • Denmark – Discounts forbidden – Obligation to sell l ow cost
• Norway – Profit share scheme – Referece pricing
• Sweden, one body • Reference pricing • Tenders www.perhamre.com
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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%EU RGBP=R, Close(Bid) [Line] Monthly 12Oct88 - 18Feb00 Pr R%EU RGB P=R , Close(Bid) 30Nov99 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
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NOK per Euro •
•
•
Last year, the krone became weaker Now it is relatively strong 261199, i t was 8,12 NOK/Euro
R %EU RNOK =R, Close(Bid) [Line] Monthly 12Oct 88 - 18Feb00 Pr
R %EU RN OK =R , Close(B id) 30N ov99 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
Ju l
Jan92
J ul
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] Mon thly 05Dec91 - 26Jan0 0 Pr R%EURSEK= R , Close( Bid) 3 0Nov99 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
Jan9 2 May
Sep
Ja n93
May
Sep
Jan9 4
May
Sep
Jan95
May
Sep
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Jan96
May
Sep
Jan97
May
Sep
Ja n98
May
Sep
Jan99
May
Sep
7.3 Jan00
21
DKK R% E URDK K =R, Clo se(B id) [ Line] Month ly 10Feb 93 - 18Jan 00 Pr R% EURDK K= R , Close(B id) 30Nov99 7.433 6
• •
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
S ep
Jan94
May
S ep
Jan9 5
May
Se p
Ja n96
Ma y
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S ep
Jan97
May
S ep
Jan9 8
May
Se p
Jan9 9
Ma y
S ep
Ja n00
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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 www.perhamre.com
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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 • • • • •
Parallel Imports – Effects of the Silhouette Ruling. Sw edish 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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