Parallel Trade in Pharmaceutical Products - GlaxoSmithKline Unlimited - Case Study Example

GSK had several arguments in its defense. First, it argued that it was not breaching any competition laws since national governments already controlled and restricted the pharmaceutical sector (Schultz & Killick 2006, p.2). Secondly, GSK averred that opening up the pharmaceutical sector to parallel market operations would negatively impact their revenues; hence, hampering their role in research and development. In addition, parallel market operations tended to create shortages of medicine in low-price countries as businesses were buying them from such countries and shipping them off to high-price countries within the EU in order to rake in huge profits.

Nevertheless, some arguments clearly compromised GSK’s position. To begin with, GSK could not be exempted from Article 81 of the European Union that outlaws any activity that restricts trade among member states (Covingon & Burling 2005). Limiting parallel market operations would amount to undermining competition within EU member states (Morgan Lewis 2009, p. 1). Secondly, pharmaceutical companies, especially GSK, were not contributing towards the improvement of the production and distribution of medical products. Moreover, GSK had not been party to the promotion of technical and economic growth in their countries of operation. Consequently, the giant pharmaceutical corporation lost the case.