Pharmaceutical News 2.0

If companies want to cut into sales of counterfeit products, they need to understand why consumers buy them in the first place

By  PEGGY E. CHAUDHRY And  STEPHEN A. STUMPF

As the counterfeit trade booms, companies are rolling out massive campaigns to get people to stop buying fakes. But the messages they use are often off the mark.

Companies have tried everything from threatening prosecution to linking phony products with organized crime. But marketers often don’t pay attention to what actually drives people in particular markets to buy counterfeits and what messages will actually work to curb demand of fake goods.

Companies, for instance, might roll out ads in a country stressing that fake products are of poor quality. But those ads might ignore the fact that local consumers have little disposable income and consider knockoffs a bargain—so they are willing to accept a price-quality trade-off. A better approach might be to stress that the phony goods, such as fake cigarettes, are funding terrorism or, in the case of counterfeit pharmaceuticals, are actually killing people.

To figure out how companies can improve their antipiracy marketing, we surveyed consumers in five large markets—Brazil, Russia, India, China and the U.S.—to see what would make them opt for knockoffs. Then we used that information to figure out what messages might get people to stop buying the illegitimate goods.

WHY CONSUMERS BUY

We presented consumers in each market with five possible motivations for buying counterfeits in two categories—movies and drugs—and asked them to rank the factors on a seven-point scale of importance. Here’s what they said about each.

1. Quality and performance. Consumers would buy a fake if they thought it was just as good as a legitimate product.

Only U.S. consumers ranked this as an important factor that would influence them. Elsewhere, this attribute was just “somewhat” important—and Russian consumers ranked it not important at all. Astonishingly, consumers in these country markets valued the quality of the fake medicine less than they did factors such as reduced price and availability.

On the other hand, the quality of bootleg movies was ranked as very important for Russian, Brazilian and Chinese consumers, and less so for people in the U.S. and India.

2. Cost. Consumers would buy a fake because they cannot afford a genuine product.

Not surprisingly, almost all consumers ranked this as a very important motivation for pursuing fake drugs and bootleg movies alike. The two exceptions: Chinese consumers said this factor was only somewhat important when it came to drugs; U.S. consumers said the same about movies.

Read the rest of this article on counterfeit products and fake medicine on the Wall Street Journal Web site.

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By Peter Cohn
August 14, 2009

An effort to elevate trade facilitation as a top priority alongside security and enforcement within U.S. customs agencies for the first time since the Sept. 11, 2001, terrorist attacks, has a good shot at being enacted in the 111th Congress, stakeholders say.

A customs reauthorization bill introduced late last week by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Charles Grassley, R-Iowa, could move in committee this fall, sources said. Finance has been working on a bill since 2006, and lobbyists said the staff work and resources devoted to it are unprecedented.

The measure has drawn support from industries including drug-makers, retailers and video-game developers, as well as cargo carriers, customs brokers and others involved in the global supply chain. Introduction comes “at a time when the United States desperately needs to promote free trade as an engine of economic growth,” said American Association of Exporters and Importers President and CEO Marianne Rowden.

The measure would establish Customs and Border Protection and Immigration and Customs Enforcement within the Homeland Security Department as separate agencies with their budgets. It would also create a office to consolidate trade facilitation duties within CBP as well as a liaison between the agency and the private sector, while requiring consultations with other agencies and industry stakeholders before proposing regulations impacting trade.

The bill would require CBP to identify benefits for voluntary industry participants in programs such as the Customs-Trade Partnership Against Terrorism. “CBP has promised more trade benefits to participating importers, but those benefits have not come to fruition,” said Stephanie Lester, vice president for international trade at the Retail Industry Leaders Association. “We welcome Congress’ guidance that more should be done to encourage public-private partnerships.”

The measure includes new trade enforcement provisions, including creation of an interagency working group on import safety and new training requirements for CBP port personnel. It would create an office within ICE to coordinate federal efforts to enforce intellectual property violations, while requiring CBP to dedicate port staff solely to inspections and, if necessary, seizure of counterfeit drugs, software and other products.

Read the rest of this article consumer medication safety on Government Executive.

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By David E. Rogers, Squire, Sanders & Dempsey L.L.P. and Amy L. Hartzer, IsoPatent
Aug. 12, 2009

International competition is increasing daily. Competitors are nimble and quick to copy, and customers are demanding and looking for the best price. Brand name and personal relationships still carry some weight, but not as in years past. One way for U.S. manufacturers to compete effectively in today’s marketplace is by controlling innovation through intellectual property (”IP”). Given the international nature of business, IP protection should also be international and, to the extent cost effective, coextensive with a business’ current and future market presence.

We suggest a three-step approach to creating an international IP portfolio. First, regardless of location, always utilize contracts and trade secrets with employees and business partners, such as suppliers, distributors and contractors. Second, if practical, use patents to both (i) fortify the protection provided by contracts and trade secrets, and (ii) protect your technology from entities with which you have no contractual relationship. Third, select the countries in which you desire patent protection, which are usually those in which your products are sold or will be sold, and then implement your IP strategy.

Below we explain the IP protection mechanisms, how to select the countries in which patent protection should be obtained, and two case studies that apply these principles.

(1) The IP Protection Mechanisms: Contracts, Trade Secrets and Patents.

(a) Contracts: Whether or not your technology is protected by a patent, it may still be protected by contract. Contracts should always be used with employees and your direct business partners, such as suppliers, distributors and contractors. Contractual protection may even be suitable for customers (for example, if you already enter into contracts with customers to sell industrial machinery.)

Read the rest of this article on pharmaceutical patent and other intellectual property issues on IndustryWeek.com.

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