Large Pharma Suppliers Forfeit Five Percent of 2018 Revenue

Large Pharma Suppliers Forfeit Five Percent of 2018 Revenue

Nov 9 , 2019. By DIBORA SAMSON ( FORTUNE STAFF WRITER )

Four out of five of the nation’s largest private suppliers of pharmaceuticals have been ordered to pay five percent of their annual revenue generated in 2018. This comes after a case was opened against the suppliers at the Federal Trade Competition & Consumer Protection Tribunal for unfair trade practices.

The Trade Competition & Consumer Protection Authority brought the case against Baker General Business Plc, Dat International Trading Plc, Pharma Berbir Plc, Amba Pharmaceuticals Plc and Caroga Pharmaceuticals Plc.

The Authority accused the companies of inflating the price of their products by nine to 32pc and for making anti-competitive agreements to unilaterally hike prices of pharmaceuticals.

The court summoned the defendants on December 13, 2017. While dropping some of the arguments presented by the defendants, it accepted the rest.

In its defense, Baker General stated that it is unjust to charge only five of the pharmaceutical companies out of the 527 importers in the country. It also affirmed that it did not collaborate with others in the business to create an anti-competitive environment and unfairly inflate prices.

Dat International also made the same defense argument and claimed that the charge against it was not supported by relevant evidence. The third defendant, Pharma Berbir, stated in its defense that its market share was much lower than the other defendants and that its prices were evaluated exclusively.

The fourth defendant, Amba, claimed the Authority did not present evidence of its annual revenue. It also argued that while the Authority claimed that Amba’s market share has been between eight and nine percent for two years, its share is actually under one percent.

The fifth defendant, Caroga, stated that the charges should be dropped, arguing that the Authority did not show how much it added onto the original price in percentage terms.

The court examined the cases after hearing two witnesses of the plaintiff, two witnesses each of Baker, Dat, Amba and Caroga and three witnesses from Pharma Berbir Plc.

The defendants' combined share of the market among private players was 86pc, 83.6pc and 82.1pc in the three consecutive years since 2015, according to documents the Authority presented against them.

“Before making the accusation, the Authority conducted research that took it two years to find out their market share,” said Natnael Teferi, who represented the Authority at the Tribunal.

The defendants did not deny this. But they stated that the government-owned Ethiopian Pharmaceuticals Supply Agency has the largest market share, importing 70pc of all pharmaceutical products into Ethiopia. The court dismissed this defense, stating they should compete with private suppliers and not a government supply agency.

Following an evaluation, the Tribunal passed its judgment on October 15, 2019, ordering four of the pharmaceutical companies to pay five percent of their annual revenue for 2018.

The Tribunal also dropped the case against Pharma Berbir after the Authority failed to produce evidence that the firm’s market share is as high as the others.

Recently, the Authority was also in a dispute at the Tribunal with parties involved in the production and broadcasting of a TV ad. After an earlier decision penalising the parties of five percent of their annual revenues, it was overturned when an appeal was made.

The pharmaceutical companies have a month from the day of the decision to appeal their cases.

PUBLISHED ON Nov 09,2019 [ VOL 20 , NO 1019]