The Influence of parallel importation of drugs on competitive pricing strategies in the Kenyan pharmaceutical industry

Abstract

While parallel importation of pharmaceutical drugs is legal in Kenya, the prices of medicines in Kenya are still high, which contributes to their inaccessibility and shortages. Studies on the influence of parallel importation on competitive pricing differ in concepts, contexts, and methodologies. To address these knowledge gaps, this study aimed to analyze the influence of parallel importation on competitive pricing in the Kenyan pharmaceutical industry. The specific objectives were to assess the effect of altered, unaltered, repackaged and rebranded PIs on competitive pricing in the pharmaceutical sector. The study was grounded in the theory of price as the anchoring theoretical framework. Positivism philosophy guided the methodology of the study. The study adopted a descriptive cross-sectional design to examine the relationship between competitive pricing as the dependent variable and forms of parallel imports, including altered, unaltered, rebranded, and repackaged product imports as the independent variables. The population of the research consisted of the 52 active pharmaceutical companies in Kenya. Judgmental sampling was used to select participants from the 52 pharmaceutical companies in Kenya. The target sample size was 104 managers – two from each pharmaceutical company. Primary data was used for this research, which was collected using structured questionnaires administered to participants using a crop-and-pick approach. Data was analyzed using multiple linear regression to model the relationship between competitive pricing and parallel imports in the Kenyan pharmaceutical industry. Findings indicate that altered and unaltered PIs have a significant positive effect on competitive pricing, whereas the impact of repackaged and rebranded PIs is positive but not significant. Therefore, this research concludes that altered and unaltered PIs are significant determinants of competitive pricing. The study recommends encouraging parallel imports to increase the supply of drugs and improve the favorable pricing of these drugs.