Pfizer Tries to Choke Demand for Parallel Imports

Mmmmm, rats. They’re not just for breakfast anymore!

Pfizer has started a new advertising campaign in the UK that’s designed to educate consumers about the dangers of counterfeit drugs. Watch the video for yourself at realdanger.co.uk or by clicking the picture below.

Warning: Don't watch it on an empty stomach.

Although the ad is stomach churning, it’s not really controversial. Is there anyone out there touting the benefits of counterfeit drugs?

To me, Pfizer’s ad campaign only makes sense if you also understand its UK distribution channel strategy. Otherwise, you will miss the as-yet-unstated goal of this campaign – eliminating the demand for parallel import product.

BAITING THE TRAP

Pfizer uses a "direct-to-pharmacy" distribution model in the UK. A single wholesaler -- Unichem -- operates as a fee-for-service logistics provider. Pharmacies are direct customers of Pfizer, not a wholesaler. I described Pfizer’s implementation plans in Behind the Scenes of Pfizer UK. You can also read the official FAQ from Unichem.

In my opinion, Pfizer has two different objectives for its direct-to-pharmacy model:

1. Lower the risk of counterfeit products entering the supply chain
2. Recapture lost revenue from parallel importing (since the UK is one the primary destinations for parallel trade product)

Unfortunately, a British pharmacy could still choose to purchase parallel import and gray market products, while a consumer could choose to bypass a pharmacy and buy from an online seller. So while Pfizer can guarantee the security of its own direct supply chain, the company can not force pharmacies (or consumers) to buy through the legitimate channel.

CLOSING THE RAT HOLE

Note that Pfizer’s channel strategy has created two side-by-side systems for drug dispensing:

• A consumer can purchase through a Pfizer-supplied pharmacy for a guaranteed legitimate product.
• Alternatively, a consumer can buy from an online website or from a pharmacy that lacks secure sourcing practices. The risk is that the pharmacy might be selling a parallel import (or outright fake) Pfizer product.

The rat ads imply (correctly, IMO) that diverted drugs -- such as parallel imports -- are suspect. Thus, Pfizer’s ad campaign lays the foundation for dealing with demand-side counterfeiting problems while also reducing any remaining parallel import demand.

For example, Pfizer could set up an “authorized pharmacy program” in the UK to help consumers identify pharmacies that buy exclusively from Pfizer. As the Pfizer's Real Danger web site states: "One in 10 UK men interviewed recently admitted to purchasing prescription-only medicines from unregulated sources, without a prescription." Your local British pharmacy could turn out to be one of those nefarious sources.

FOILED AGAIN

Did you know that Pfizer already used this strategy in counterfeit-laden Nigeria? As I wrote in 2007's Lessons from Nigeria, Nigerian pharmacies could earn a designation that signaled the availability of “genuine” Pfizer products. At the time, Pfizer’s Marketing Director said:

“We want to have strong allies who will say no to clones, no to parallel imports, no to fakes or counterfeits.”

So keep an eye on this campaign, which combines an innovative channel strategy with creative consumer marketing.

Plus, the next round of ads promise to be equally revolting given other ingredients often found in counterfeit drugs – paint, cement, anti-freeze, etc. BARF!