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Message in a Bottle

Packaging is the quickest route to success in the world of drug counterfeiting. If you can replicate a drug’s box or bottle, most consumers won’t notice what’s inside.

Fake Viagra is a huge global business: Millions of counterfeit Viagra pills are manufactured each year and sold for tens of millions of dollars. But to understand why Viagra is one of the world’s most faked drugs, you have to understand the costs that go into making the knockoff blue pills. In both China and India, a kilogram of sildenafil citrate, the active ingredient in Viagra, costs $60. Diluted into thousands of fake tablets and slipped into the United States for sale, that single $60 kilogram can be worth as much as $300,000. (That’s a higher markup than cocaine, with lower penalties for getting caught.) Even if a Viagra counterfeiter in India makes pills at 100 percent strength, he will still probably spend more on packaging than pills. He can produce a 30-pill bottle for about 33 cents, spending 15 cents on the tablets and 18 cents on a near-perfect label and bottle. Of course, if the counterfeiter uses sugar or chalk instead of the active ingredient, the price of production plummets. Then, packaging might take up nearly 90 percent of manufacturing costs.

It is widely believed that if pharmaceutical companies would simply lower their prices on drugs, counterfeiters would have less incentive to make fakes. Intuitively, it makes sense; smaller profit margins should be a deterrent. Unfortunately, it doesn’t work that way. Counterfeiters can accept tiny margins on each product sold — as long as they move millions of pieces of merchandise. Take a Johnson’s bar of soap, like one I saw recently in a Delhi market. The genuine product can be bought in a shop for just 60 cents, but the soap on sale that day was a fake. The bar itself was made of low-grade cleanser; the packaging, however, was nearly identical to the real thing. The counterfeiter may only make a cent or two in profits on each bar of soap, but he will manufacture and sell thousands, perhaps millions, of bars. If counterfeiters will go to this much trouble to fake a bar of soap, the cost of genuine drugs — no matter how cheap — will always make it worth their time. 

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