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Globalisation, trade facilitation, and the rising economic importance of intellectual property are all drivers of economic growth. However, they have also created new opportunities for criminal networks to expand the scope and scale of their operations, free-riding on intellectual property and polluting trade routes with counterfeit goods. The consequences for the economy and for citizens are serious. Trade in counterfeit goods not only damages economic growth but also undermines good governance, the rule of law and citizens’ trust in government, and can ultimately threaten political stability. In addition, in some cases, such as that of fake pharmaceuticals, counterfeit goods can have serious health and safety implications for citizens.
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Illicit trade in fake goods is a significant and growing threat in a globalised and innovation-driven economy, undermining good governance, the rule of law and citizens’ trust in government. It not only has a negative impact on the sales and profits of affected firms and on the economy in general, but also poses major health and safety threats to consumers.
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Illicit trade in counterfeit and pirated goods is a growing and significant problem. Globalisation opens up new opportunities for criminal networks to expand the scope and scale of their operations in illicit trade in counterfeit and pirated goods. Trade in counterfeits also undermines good governance, the rule of law and citizens’ trust in government, and can ultimately threaten political stability.
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The pharmaceutical industry is an important and growing sector for many economies. This chapter charts its growth and importance, and describes the geographical distribution of the major companies. It then outlines the trends in international trade in pharmaceuticals, and finishes by highlighting the high intellectual property intensity of the sector.
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Pharmaceuticals are particularly vulnerable to counterfeiting. This chapter looks at the scale of the counterfeiting challenge, drawing on customs seizures and enforcement action data to track the recent growth in incidents. It also reveals the types of products most commonly counterfeited, and maps the intellectual property rights holders most affected. It then reports on analysis into the main trade routes for fake pharmaceuticals, including making the distinction between countries which produce the fakes and those which act as transit points on their way to their final markets.
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Weak links in fragmented global supply chains allow counterfeiters of pharmaceuticals to succeed. This chapter analyses the nature of the fake pharmaceutical supply chain and describes the elements which allow this trade to go largely undetected. This includes a focus on the modes of transport chosen (small packets sent by post), and the sales channels – including the growing role of the Internet. Finally, it explores the role of free trade zones in helping counterfeiters to disguise their activities.
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Many initiatives are underway to tackle the growing problem of counterfeit pharmaceuticals. This chapter summarises the main global efforts, including crime-fighting programmes run by INTERPOL and the World Health Organization. It also outlines the various legislative measures in place to protect consumers and producers from fake medicines.
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This study has compiled and analysed a unique international set of customs seizure data and other enforcement data, combined with structured interviews with industry, trade and customs experts, to quantitatively assess the value, scope and trends of the trade in counterfeit pharmaceutical products. It finds that world trade in counterfeit pharmaceuticals accounted for as much as USD 4.4 billion in 2016, which represents 0.84% of world trade in pharmaceuticals. Furthermore, the range of affected medicines is growing.
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