@Risk

Here are some interesting facts on product counterfeiting from a story by Acsis, Inc. Counterfiet products represent a serious risk to brand equity, and point to potential fialures in the supply chain.

Counterfeiting is now one of the fastest growing and profitable industries in the world. With an average of 5 – 7% of the world trade market, it is a $600 billion per year industry. The U.S. Customs and Border Protection (CBP) reports the total number of counterfeit goods increased dramatically in FY 2011 by 24% compared to the prior year, and has increased 325% over the past decade.

The impact and cost across industries is quite staggering. The Federal Trade Commission reported that counterfeit automotive parts total approximately $12 billion and also result in 200,000 fewer manufacturing jobs. Additionally, electronics industry experts stated a loss of between $100 billion and $200 billion annually. Of particular concern is the pharmaceutical industry, which counterfeit drugs account for $75 billion dollars globally.

Underworld trade of counterfeit goods on the rise

Product piracy is occurring in just about every type and grade of consumer goods — shampoo, cosmetics, cigarettes, food, DVDs, perfume, pharmaceuticals, electronics, automotive and airplane parts have all been recent targets.

The ‘business’ of counterfeiting costs everyone

The manufacturing of counterfeits is most prevalent in countries with a strong, inexpensive manufacturing capability, including many nations throughout Asia (such as China and Taiwan), although counterfeit goods are sold around the globe. Often made in developing countries with limited regulatory oversight, the knockoff business drains economies and has been linked to organized crime or criminal activity, which poses serious threats to consumers, companies, and national security.

Some examples include:

• More than 1 million counterfeit electrical products have been recalled in recent years, including extension cords, power strips and batteries. These products can not only destroy electronic devices, but pose a serious fire hazard, says the Electrical Safety Foundation International. According to the U.S. Chamber of Commerce, 64% of counterfeit electrical products are purchased from legitimate shops and retailers. However, many illegitimate power adapters continue to be sold on-line, such as through eBay.
• In January 2010, the FDA warned consumers of counterfeit Alli (weight loss pills) sold over the Internet. Rather than orlistat, the active ingredient in Alli, the counterfeit products contained a controlled substance called sibutramine, a potentially dangerous medication that should not be used without a doctor’s recommendation.
• In 2009, the World Health Organization warned that a counterfeit anti-diabetic medication reached the Chinese market and contained six times the normal amount of its active ingredient, glibenclamide, resulting in nine hospitalizations and two deaths.
• This past year the Food and Drug Administration discovered fake versions of Adderall, a drug used to treat attention deficit hyperactivity disorder, as well as phony vials of the cancer drug Avastin, which had made its way into doctors’ offices.