Parallel trade puts new crimp on Greek pharma market

The fiscal mess in Greece has been hard enough on drugmakers, not to mention drug supplies for patients. But the government's attempts to budget-cut its way into a solution has put an even bigger kink in the supply chain.

Consider the background first. Greek drug buyers have held onto overdue invoices for months, even years, and when state-funded providers have paid, they've done so in discounted government bonds. Pharma companies have taken multimillion-dollar hits to their Greek sales as a result. Roche ($RHHBY) has gone so far as to demand cash on delivery from some pharmacies, Bloomberg now reports.

So, in this cash-poor drug market, Greece has slashed the prices it pays for pharmaceuticals. The cuts have been so large that some wholesalers are sending their shipments to richer countries where customers do pay--and pay a lot more. "Even Polish people pay more than Greeks for Aspirin," Heinz Kobelt of the European Association of Euro-Pharmaceutical Companies told Bloomberg. "That is the recipe for parallel trade, I'm sorry to say."

Novo Nordisk ($NVO), which has had its own price-related run-ins with the Greek government, says it's shipping the same volume of its insulin drugs now as it did before the price cuts, but pharmacies are running short. "We are competing with our own products," a spokesman told the news service. The company has arranged for special deliveries in some cases where pharmacies call Novo to say they're out of stock.

- read the Bloomberg story