Vremya Novostey

April 26, 2002
Page 3

Tablets Need Protection
Medicines producers have to spend money on the fight against counterfeits

By Oleg Volkov

According to the results of a survey conducted by the Association of International Pharmaceutical Manufacturers (AIPM) and the Coalition for Intellectual Property Rights (CIPR), more than half of the major pharmaceutical companies working in the Russian market have encountered counterfeits of their products or obvious copying of their trademarks. Fifty-three companies participated in the survey (48 foreign and 5 domestic), representing more than 50% of Russia's entire pharmaceutical market.

Even though the campaign against medicine counterfeits has been going on for nearly a year now, the results of the survey seem astonishing. Although counterfeiters usually produce only the most popular medicines, only 34% of the respondents answered that they had not seen counterfeit variants of their products on the shelves of Russian pharmacies. Moreover, according to Consumer Union co-Chairman, Eugenie Myasin, many companies are reluctant to publicly reveal their problems with counterfeits, as they fear a decrease in sales of their other products.

"While the counterfeiting of medicine is not yet at epidemic proportions, it is a problem that is growing exponentially and needs immediate attention before it becomes a crisis," says Robert Rosen, AIPM's Executive Director. "The quantity of counterfeits and look-alike medicines is constantly rising," he says. According to the Association, 12% of pharmaceutical companies complain that the amount of counterfeits increased after the introduction of 10% VAT for medicines and medical equipment. It was a real surprise for Peter Necarsulmer, The PBN Company's head, that the Russian pharmaceutical producers gave answers similar to those given by their foreign colleagues, who complained about counterfeits and expressed worry. Foreign pharmacists treated their Russian colleagues with suspicion, as the majority of counterfeits are produced in the Russian Federation. The quality of these goods proved that the counterfeiters used modern equipment to produce them. According to Mr. Necarsulmer, the loss from counterfeit drugs sold on the Russian market amounts to $250 million, and 26% of respondents believe their companies lose half of a million annually to counterfeiting, with 18% citing a sum of $1 to 3 million. Only 2% of companies incurred losses of up to $5 million.

Due to the increase in counterfeit medicines, Robert Rosen expressed sympathy for the deceived Russian consumers, producers, and the RF Government that is deprived of tax payments. However, the AIPM Executive Director did not mention anything about another important issue that was revealed by the survey. The majority of pharmaceutical companies are not too fond of the efforts made by the Russian authorities, including the State Duma, Ministry of Health, Ministry of Internal Affairs, Prosecutor's Office, and the arbitration courts. The pharmaceutical market tends to rely solely on itself for compensation, by conducting independent raids in pharmacies, carrying out investigations, organizing educational programs for pharmacists and executives, registering trademarks and filing law suits against pirates.

Specialized packing equipment is one common means of protection. For instance, Schering AG Russian Office head, Victor Gaysler, states that he has hardly ever encountered counterfeits of his products. One reason for the lack of counterfeits is that the "packing is produced on high-tech equipment in Western Europe." However, these additional measures result in higher costs for producers and distributors, which may affect the retail price of products protected from counterfeiting.