What drives the pricing of parallel imports available to pharmacies?

Nov 17, 2022 | Parallel Imports

In the UK a major part of the branded medicine supply is provided by manufacturers outside the UK. These products are made for use in the EU but imported into the UK as parallel Imports (PIs) appear in the market within a couple of years of brand launch, and gradually replace the UK supplied brand until they in their turn are replaced by generics.

We have previously seen that the exchange rate is  a key driver of import prices, but we thought we’d have another look at this and at market competition.

As before we saw that the exchange rate is a driver of the market price of Abilify Tabs 10mg 28, but the relationship does not seem to work before March 2015.

To assess the amount of competition for pharmacy orders we counted the number of active wholesalers and importers selling direct each month.

Then to see which factor had the most influence on the market price we used the Correl function in Excel, just looking at Abilify Tabs 10mg 28.

This gives a value for the strength of a relationship. So that a value of +1 would tell us it was perfect and the two factors would appear as a single line on the chart.

Equally a value of 0 would tell us there is no relationship between the factors.

The correlation between the average market price £ and the exchange rate proved to be  0.5004, which signifies a relationship, but not a particularly strong one.

The correlation between the average market price £ and the number of active suppliers each month was much stronger at 0.7539.

So we wondered if the exchange rate was a more powerful driver of the number of active supplies, and looked at the correlation for this.

That gave us a figure of 0.5538 which suggests that the exchange rate only has a moderate effect on the number of active suppliers.

This means that there are lots of other factors wholesalers and importers take into account when they price parallel imports, and although we’ve looked at two here,  factors like the cost of capital, interest rates, inflation, fuel prices and government regulation may all be just as important.


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