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GSK Wins Partial Victory in EU Drug Export Case


Posted on 2006-09-27 08:43:00



GlaxoSmithKline won a partial victory from a European Union court on Wednesday in its bid to stop Spanish drug wholesalers from re-exporting the British group's medicines at a fat profit.

The drugs industry says the practice -- known as parallel trade -- is worth around $5 billion a year, cutting into company profits and undermining incentives for innovation in the research-intensive pharmaceuticals sector.

Legal experts said the verdict was a boost for the wider branded drugs industry and could force the European Commission to rethink its attempts to enforce a single market in medicines.

"This opens the door for pharmaceutical companies to claim that restrictions on parallel trade are justified," Gavin Robert, a partner at London law firm Linklaters, told Reuters.

"As a result, it is likely to be welcomed by many pharmaceutical companies as a step in the right direction."

The European Court of First Instance said the Commission's main conclusion -- that the aim of sales conditions imposed by Glaxo on the wholesalers was to restrict competition -- was incorrect.

"It cannot be presumed that parallel trade tends to reduce prices," the European Court of First Instance said in a statement.

"However, the court considers that GSK has not succeeded in invalidating the Commission's subsidiary conclusion that the general sales conditions have as their effect the restriction of competition," the EU's second-highest court said.


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