The financial benefits of parallel distribution are divided into two categories: direct savings and indirect savings. Direct savings are the amount saved by purchasing parallel distributed products instead of the originator products. Indirect savings are harder to quantify but include aspects such as the lowering of the originator product prices due to competition from parallel distributed products.

Direct savings accrue to social health insurance and national health services in every country with incoming parallel distribution. This is because national governments and/or their national health providers have introduced various measures to guarantee savings through parallel distribution.

In a 2011 a study of parallel distribution in medicines was published by the Centre for Applied Health Services Research and Technology Assessment at the University of Southern Denmark. Entitled "Parallel imports of pharmaceuticals in Denmark, Germany, Sweden and the UK, 2004 – 2009: An analysis of savings”, it found that parallel distribution generated direct savings to the four countries of €2.5 billion in the time period 2004 – 2009, the annual average of savings during that period amounting to €418 million per annum. (Ulrika Enemark and Kjeld Moller Pedersen, Parallel imports of pharmaceuticals in Denmark, Germany, Sweden and the UK 2004-2009: An analysis of savings, Centre for Applied Health Services Research and Technology Assessment, University of Southern Denmark (November 2011))

Estimated direct savings from Parallel Distribution 2004-2009. In € Million











































The differences in direct savings can mainly be explained by the different regulatory environments in the four countries which provide different incentives for prescribers, dispensers and consumers and hence different demand for PD products. There are also other factors such as the variability of currencies in the UK and Sweden in 2008-2009 and aggressive price competition in Sweden in 2008.

In Denmark the parallel distributed product that had the highest amount of direct savings were versions of Losartan and diuretics (used to treat high blood pressure). The parallel distributed versions were estimated to have created 17.8 million Dkr (approx. €2.4 million) in direct savings in 2009, 13% of the total direct savings generated by parallel distribution that year.

Indirect savings arise because competition in price decreases (or reductions in price increases below the level expected without competition) or because the potential competition leads to limit pricing (where the manufacturer chooses to reduce the domestic price to a level at which it is less profitable for parallel importers to enter the market). (Ulrika Enemark, Kjeld Moller Pedersen, Jan Sorensen, The economic impact of parallel import of pharmaceuticals, Centre for Applied Health Services Research and Technology Assessment, University of Southern Denmark (June 2006))

Incoming parallel distribution creates general price erosion, benefiting all buyers in all markets, by bringing an important, dynamic competitive element to bear, especially in the otherwise price uncompetitive patent-protected segment, the part of the market that generics cannot reach. There is an absence of competition in the medicines market, especially on price. As such, innovative medicines generally retain a high - even dominant - market share.

The availability of a parallel-distributed medicine, or even the presage of them, can result in lower prices for the domestic equivalent. A 2011 study from the School of Business, Economics and Law at the University of Gothenburg found that drugs facing competition from parallel distribution are found to have on average 17% to 21% lower prices than they would have had if they had never faced such competition. (David Granlund and Miyase Yesim Köksal, EU Enlargement, Parallel Trade and Price Competition in Pharmaceuticals What’s to Blame? Derogation or Perception?, School of Business, Economics and Law, University of Gothenburg (May 2011)) The resultant savings are almost certainly much larger than those achieved by parallel distribution directly, but are difficult to measure.

“In principle, indirect savings are calculated from the quantity sold of the original product multiplied by the price differential between the original manufacturer’s product as it would have developed in the absence competition from parallel imports and the actual development after introduction of parallel imports in the market. It is not known, however how prices would have developed in the absence of parallel imports”. (Ulrika Enemark, Kjeld Moller Pedersen, Jan Sorensen, The economic impact of parallel import of pharmaceuticals, Centre for Applied Health Services Research and Technology Assessment, University of Southern Denmark (June 2006))

A 2016 paper from the Melbourne Institute of Applied Economics and Social Research at the University of Melbourne “Parallel Trade of Pharmaceuticals: the Danish Market for Statins” (medicines used in the treatment found for high cholesterol) hypothesized what a ban on parallel distribution would mean for the industry:

“Eliminating parallel trade yields the following results. First, a prohibition of parallel trade reduces unweighted average prices but results in higher prices for both original products and generic products. Second, eliminating parallel trade leads to substitution from parallel imported products towards original products. Third, consumer expenditures as well as government expenditures increase absent parallel trade. Finally, banning parallel imports reduces consumer surplus and increases firm profits, on balance leading to an overall decrease in welfare.”

According to EAEPC’s 2013 report “The Parallel Distribution Industry: A closer look at savings” some of the indirect savings from parallel distribution were generated as follows:

  1. France – In March 2009 the PD competitor version of Fosavance (a medicine that helps prevent osteoporosis) was introduced. At the time the originator product was roughly €87 per pack, by January 2012 this price had gone down to roughly €44.48 per pack. It was also estimated that in 2011 the total indirect savings were as much as €39m.
  2. Poland – In November 2005 the PD version of Cilest (a contraceptive pill) entered the Polish market. At this time the originator drugs was sold at 20PLN (€5) per pack of 21 tablets. By September 2009, downward pressure exerted by the cheaper PD equivalent of the drug had led to a drop in the price of the originator version (as well as the PD equivalent) of the medicine to a price of just over 10 PLN (€2.3) per pack. This marked a total decrease over the four year period of over 50% of the original mark-up. It was also estimated that in 2009 the total indirect savings were as much as €22m.
  3. Ireland – In 2010, the Irish Government forced pharmaceuticals companies to reduce their prices by an average of 10%. Most manufacturers decided to target products and modulate prices that were in competition from the generics and PD industry. Pfizer decreased the price of its Zoton drug (used for decreasing acid build-up in the stomach) by 40% while this particular drug had a PD market penetration of 61%. Pfizer also reduced the prices of Lipitors by up to 47% of the original price, with 47% of the Irish Lipitor market being covered at the time by PD. By making these reductions, it is estimated that the savings on all Pfizer products for the Irish government worked out at almost 16% of pre-reduction costs.
  4. Italy – PD has been shown to have a “stabilising effect” on the price of originator medicines on the Italian market. An example of this is the case of Daflon, a compound produced by French manufacturer Servier to mitigate the effects of varicose veins. Although after the introduction of the PD version of the product was introduced in 2000, the price of the originator product augmented considerably, since 2007, the price increases of the originator have decreased incrementally, due to the impact of the presence of cheaper PD alternatives on the market. Since 2007, there have been no further price increases and the price of the originator product has flattened out. This pattern is true for many Italian products. All of the Italian products covered in the analysis saw no price increases in the period 2007-2011.

Parallel distribution generates gains for importing and exporting countries as well as increasing the choice of medications doctors can prescribe and lowering costs for patients. Thus four groups gain from parallel distribution.

“That PI generates savings in Europe is not disputed any longer. The question is more how much savings it generates, to whom these savings accrue and whether the patient, and the final payer – in most cases the health insurance system – draw a significant benefit from the commercial practice of parallel distribution” (EAEPC, The Parallel Distribution Industry: A closer look at savings (January 2013))

“The distribution of any savings in drug prices will depend on the regulatory environment and health care financing system. Ultimately, however, all patients pay for health services through contributions, taxes and direct fees and therefore gain either directly or indirectly, if savings materialise” (Ulrika Enemark, Kjeld Moller Pedersen, Jan Sorensen, The economic impact of parallel import of pharmaceuticals, Centre for Applied Health Services Research and Technology Assessment, University of Southern Denmark (June 2006))

Importing countries do:

  1. In the UK - the National Health Service recovers funding via the "clawback" mechanism, a sliding scale of rebate based on prescription volume.
  2. In Ireland and Sweden - a parallel distributed product must offer savings to the state before it is reimbursed
  3. In the Netherlands and Norway - the cost difference between the domestic product and its parallel- distributed equivalent is split between the dispensing pharmacist and the payer
  4. In Germany and Denmark - the sick funds and government respectively oblige pharmacists to dispense cheaper synonyms, including parallel-distributed forms, when certain levels of savings are possible

As do exporting countries:

  1. Wholesalers in exporting countries are legally obliged to meet domestic demand first - in fact most countries impose, through national law or a voluntary code of conduct, a so-called "public service obligation"
  2. But the distribution chain - wholesalers and community pharmacies - needs a certain level of income to provide the prompt and highly efficient service European patients have come to expect. Additional income from margins with parallel distribution sales lessens the burden on the social healthcare system of exporting countries

So do patients:

  1. In Belgium, Denmark, Finland, France, Greece, Luxembourg, Norway, Portugal, Spain, Sweden the majority of patients pay a share of the cost of prescribed medicines they consume, so use of cheaper parallel- distributed products will mean lower out-of-pocket expense
  2. WIdO, the statistical arm of the AOK, the Federal Association of Local Sick funds in Germany, is on the record as saying that women in Germany can save 54% on the pharmacy-selling price of Stediril D, an oral contraceptive, by purchasing it in parallel distributed form (Wissenschaftliches Institut Der AOK (WIdO): Importierte Arzneimittel können jährlich 450 Mio. (December 2002)).

Finally, doctors and pharmacies also benefit:

  1. It has been estimated that office-based doctors in Germany can save between €2500 and €5000 on their drug budget each year by prescribing parallel- distributed versions, all of which are priced on average 10% less (some can be even 30% less) than their domestic equivalents.
  2. It is no coincidence that parallel distribution penetration is highest where pharmacies are either financially rewarded for the use of parallel distribution (Netherlands) or penalised for not doing so (UK, Germany)