Why does parallel trade exist in Europe?
The legalities of parallel trade are dictated by the traders’ right to resell products that have already been placed on a particular market by the manufacturer — as it was probably not the intention of the manufacturer for these products to be sold elsewhere by another company. This concept is often referred to as “exhaustion of intellectual property rights.” As the manufacturer researched the product, it has certain rights (intellectual property rights) that mean it can benefit financially from its investment in an exclusive manner so that it can recoup its development costs. Thus, when parallel traders resell a particular product that they themselves did not research and develop, this angers manufacturers, who see them as having profited from their discovery. Much to the annoyance of the pharma industry, the EU operates a system of regional exhaustion, which means that manufacturers’ intellectual property rights are exhausted on first sale of the product in any EU member state. Thus
