Annual Report (2007) on the application of Council Regulation (EC) No 953/2003 of 26 May 2003 to avoid trade diversion into the European Union of certain key medicines
Date: 2008-11-20
Institutions: European Commission
Subjects: customs regulations, customs territory (EU), discriminatory price, export restriction, medicinal product, third country

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.11.2008 
COM(2008) 764 final 

Annual Report (2007) 

on the application of Council Regulation (EC) No 953/2003 of 26 May 2003 to avoid 
trade diversion into the European Union of certain key medicines 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Background .................................................................................................................. 3 

Commission Reporting under Regulation (EC) No 953/2003 ..................................... 4 

Products registered ....................................................................................................... 4 

Countries of destination ............................................................................................... 5 

Diseases covered .......................................................................................................... 6 

Application of Price Formulae ..................................................................................... 6 

Evaluating the impact of the Regulation over time...................................................... 7 

ANNEX 1: Details of volumes of medicines sold in 2007 ........................................................ 8 

ANNEX 2: Volumes of tiered priced products sold by sub-region between 1 January 2007 and 
31 December 2007 ..................................................................................................... 17

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This is the fourth annual report foreseen under Article 11 of Regulation (EC) No 953/20031, 
which  is  designed  to  prevent  parallel  trade  in  discounted  medicines  intended  for  the  least 
developed countries. This report covers the period from 1 January to 31 December 2007.  

1. 

BACKGROUND 

is 

to 

fight 

HIV/AIDS, 

In 2000 the UN Millennium Summit set the Millennium Development Goals (MDGs), one of 
diseases.  
which 
In response to this commitment, on 20 September 2000 the European Commission adopted a 
comprehensive  framework2  to  accelerate  action  targeted  at  the  three  major  diseases  – 
HIV/AIDS,  malaria  and  tuberculosis  (TB).  A  Programme  for  Action  (PfA)3  was  developed 
outlining specific measures to be taken. The state of play with this programme was described 
in the Second Progress Report4 released on 26 October 2004. Subsequently, on 27 April 2005 
the Commission adopted a European Programme for Action to confront HIV/AIDS, Malaria 
and TB through External Action (COM(2005)179) covering the period 2007-2011.  

malaria 

other 

and 

Supplying poor and developing countries with medicines at sustainable low prices is one of 
the  key  objectives  in  the  fight  against  these  major  diseases.  In  order  to  achieve  this,  the 
European Commission has consistently advocated a policy of "tiered pricing" for medicines, 
combined with market segmentation between rich and poor countries. The advantage of such 
a  policy  is  that  it  encourages  manufacturers  to  distribute  the  drugs  in  question  in  the  target 
countries  at  the  lowest  possible  (“tiered”)  price,  while  at  the  same  time  recouping  their 
research and development expenditure with the higher prices charged in developed (OECD) 
countries.  This  approach  is  designed  to  promote  sustainable  supplies  and  continuous 
distribution of life-saving medicines. It is also less prone to the constraints often encountered 
in "partnership schemes". 

To support tiered pricing, specific safeguards were devised to prevent diversion of medicines. 
In May 2003 the EU adopted Council Regulation (EC) No 953/2003 to avoid trade diversion 
into the European Union of certain key medicines5 ("the Regulation").  

1 

2 

3 

4 

5 

Article 11 of Regulation (EC) No 953/2003 foresees: “(1) The Commission shall monitor on an annual 
basis the volumes of exports of tiered priced products listed in Annex I and exported to the countries 
defined  in  Article  1  on  the  basis  of  information  provided  to  it  by  pharmaceutical  manufacturers  and 
exporters.  For  this  purpose  a  standard  form  will  be  issued  by  the  Commission.  Manufacturers  and 
exporters must submit such sales reports annually for each tiered priced product to the Commission on 
a confidential basis. 
(2)  The  Commission  shall  periodically  report  to  the  Council  on  the  volumes  exported  under  tiered 
prices,  including  on  the  volumes  exported  within  the  framework  of  a  partnership  agreement  agreed 
between the manufacturer and the government of a country of destination. The report shall examine the 
scope of countries and diseases and general criteria for the implementation of Article 3.” 
Accelerated  action  targeted  at  major  communicable  diseases  within  the  context  of  poverty  reduction, 
COM(2000)585. 
Programme  for  Action:  Accelerated  action  on  HIV/AIDS,  malaria  and  tuberculosis  in  the  context  of 
poverty  reduction  COM(2001)96.  Update  on  the  EC  Programme  for  Action:  Accelerated  action  on 
HIV/AIDS, malaria and tuberculosis in the context of poverty reduction. Outstanding policy issues and 
future challenges COM(2003)93. 
Second  Progress  report  on  the  EC  Programme  for  Action:  Accelerated  action  on  HIV/AIDS,  malaria 
and tuberculosis in the context of poverty reduction SEC(2004)1326. 
OJ  L  135,  3.6.2003,  pages  5  –  11.  The  Regulation  has  last  been  updated  by  Commission  Regulation 
1662/2005 of 11 October 2005 (OJ L 267, 12.10.2005, pages 19 – 21). 

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2. 

COMMISSION REPORTING UNDER REGULATION (EC) NO 953/2003 

This  report  covers  the  period  from  1  January  to  31  December  2007.  During  the  reporting 
period, no new products were registered. 

The report contains the following information: 

– 

– 

– 

– 

The volumes exported under tiered prices for each product  registered in annex  I of 
the Regulation; 

The sub-regions benefiting from these exports at tiered prices; 

The diseases treated with the products at question; 

An assessment of the application of the price formulae in Article 3 of the Regulation 
in relation to each of the products concerned. 

This report is mainly based on the information received from the applicant under Article 11(1) 
of  the  Regulation.  The  Commission  respects  the  confidentiality  of  the  data  provided  by 
applicants and neither guarantees nor questions their accuracy. 

In  order  to  keep  the  public  informed  of  all  products  registered  under  the  Regulation,  their 
producers,  distinctive  features,  countries  of  destination,  and  other  relevant  details,  the 
Commission has established a website where this information is continuously updated: 

– 

http://trade-info.cec.eu.int/cgi-bin/antitradediversion/index.pl 

The  same  website  also  provides  assistance  to  manufacturers  who  wish  to  register  a  new 
product. 

3. 

PRODUCTS REGISTERED  

The  products  listed  below  were  registered  in  2004  by  GlaxoSmithKline  (GSK),  Brentford 
(UK). 

PRODUCT NAME 

OECD PRICE RANGE 

PRICE OFFERED 

EPIVIR 150 mg x 60 

US$ 121.81 – US$ 395.78  US$ 5.70 

COMBIVIR 300/150 mg x 60  US$ 177.49 – US$ 767.59  US$ 19.50 

EPIVIR 
Oral 
10mg/ml - 240 ml 

Solution 

US$ 33.32– US$ 71.73 

US$ 6.73 

RETROVIR 100 mg x 100 

US$ 104.07 – US$ 219.42  US$ 15.77  

RETROVIR 300 mg x 60 

US$ 125.15 – 295.42 

US$ 17.40 

RETROVIR 250 mg x 40 

US$ 83.84 – US$ 205.16 

US$ 13.27  

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TRIZIVIR 750 mg x 60 

US$ 539.09 – 887.97 

ZIAGEN 300 mg x 60 

US$ 152.64 – 411.42  

US$ 102.006 

US$ 72.907 

RETROVIR Oral Solution 10 
mg/ml – 200 ml 

US$ 17.85 – 73.83 

US$ 7.10 

The  “tiered”  prices  in  the  right  hand  column  are  those  quoted  in  the  application. Medicines 
can be bought from the applicant at these prices in any volume desired, provided that they are 
intended  for  one  of  the  target  countries  listed  in  Annex  II  to  the  Regulation.  Under  the 
Regulation, no distinction can be made between purchasers – public or private - for products 
at  these  prices  in  the  countries  listed.  However,  it  must  be  noted  that  these  prices  are 
indicative. The actual sales prices have not been reported, as Article 11(1) of the Regulation 
places  no  obligation  on  applicants  to  do  so.  It  therefore  cannot  be  excluded  that  in  some 
instances lower prices for the products can be and, indeed have been, negotiated8. 

It  should  also  be  noted  that  the  OECD  price  ranges  shown  in  the  table  above  are  those 
reported  by 
the  applications  were  submitted.  
time  when 
An update of these price ranges can be found in Annex I, together with the volumes sold for 
each product registered under the Regulation. 

the  producer  at 

the 

Over the reporting period, no attempts illegally to re-import tiered-priced products registered 
under the Regulation back into the EU were reported to the Commission.  

As  HIV/AIDS,  Malaria  and  TB  are  chronic  diseases,  purchases  of  medication  have  to  be 
sustainable.  The  Commission  has  been  informed  that  most  sales  are  part  of  long-  standing 
agreements  with  purchasers.  No  exports  under  specific  “partnership  agreements”  have  been 
notified to the Commission.  

4. 

COUNTRIES OF DESTINATION 

In the reporting period, tiered priced products have been supplied to 18 of the countries listed 
in  Annex  II  of  the  Regulation.  These  were:  Armenia,  Botswana,  Burkina  Faso,  Cambodia, 
Democratic  Republic  of  Congo,  Ghana,  Guinea,  Haiti,  Kenya,  Malawi,  Nicaragua,  Nigeria, 
Rwanda,  South  Africa,  Sudan,  Uganda,  Zambia,  and  Zimbabwe.  The  reduction  in  the 
countries  of  destination  (34  in  2006)  can  be  explained  by  the  fact  that  the  producer  is  now 
increasingly signing voluntary licences with generic companies in Africa. These licences are 
now  supplying  almost  twice  the  number  of  their  versions  of  ARVs  than  is  the  original 
producer. This has led to a reduction in the number of countries supplied originally, since they 
are now sourcing from the generic companies in Africa. 

6 

7 

8 

In a press release issued on 30 May 2006, GlaxoSmithKline announced a reduction of its not-for-profit 
price of Trizivir 750 mg x 60 by 31% (from US$ 102.00 to US$ 70.00) The price indicated in the table 
corresponds to the price submitted by the applicant at the time of submission of the application. 
In a press release issued on 30 May 2006, GlaxoSmithKline announced a reduction of its not-for-profit 
price of Ziagen 300 mg x 60 by 28% (from US$ 72.90 to US$ 52.29). The price indicated in the table 
corresponds to the price submitted by the applicant at the time of submission of the application. 
Readers  interested  in  obtaining  information  on  actual  sales  prices  may  find  it  on  the  website  of  the 
Global Fund to Fight AIDS, TB and Malaria. 
http://www.theglobalfund.org/en/funds_raised/price_reporting/default.asp  

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With the exceptions of Armenia, Cambodia, Haiti and Nicaragua, all the countries concerned 
are in Sub-Saharan Africa, the region where the prevalence of HIV/AIDS is highest. 

As  it  was  indicated  in  the  2006  report,  sales  volumes  are  reported  for  8  sub-regions,  as 
follows: Europe and Central Asia, East Asia and Pacific, South Asia, Latin America and the 
Caribbean, West Africa, Central Africa, East Africa and Southern Africa. 

Detailed information on the volumes of exports to each sub-region can be found in Annex 2 to 
this report. 

5. 

DISEASES COVERED 

for 

developing 

HIV/AIDS,  malaria  and  tuberculosis  are  generally  considered  the  gravest  public  health 
concerns 
development.  
and 
This  is  why  EC  development  policy,  including  the  Regulation,  is  specifically  focusing  on 
these  three  diseases.  Considering  that  the  list  of  registered  products  remained  unchanged  in 
2007,  the  diseases  covered  in  this  report  remain  identical,  i.e.  exclusively  treatment  of 
HIV/AIDS. 

a  major 

countries 

obstacle 

to 

However, there are certainly some pharmaceuticals for treating malaria and tuberculosis that 
would  benefit  from  registration  under  the  Regulation.  Medicines  to  treat  opportunistic 
infections  associated  with  HIV/AIDS  are  also  eligible  and  suitable  for  coverage  under  the 
Regulation, but there have been no applications so far. 

6. 

APPLICATION OF PRICE FORMULAE 

To date the application of the price formulae provided for in Article 3 of the Regulation has 
caused  no  practical  problem.  The  applicant  has  not  found  it  necessary  to  avail  itself  of  the 
services  of  an  independent  auditor  in  order  to  protect  sensitive  business  data  (a  possibility 
allowed  by  Article  4(2)(ii)  of  the  Regulation).  For  all  nine  products,  it  proved  sufficient  to 
show that the price offered (i.e. the “tiered” price) was less than 25% of the lowest OECD list 
price. Both the tiered price and the OECD list prices are available to the public. 

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7. 

EVALUATING THE IMPACT OF THE REGULATION OVER TIME 

The  table  below  gives  some  indication  of  the  sales  trends  per  product  registered  under  the 
Regulation over the last three years: 

Product/unit 

2005

2006

Trizivir 750 mg x 60 
Retrovir 300 mg x 60 
Retrovir Oral Solution 10 mg 
Epivir 150 mg x 60 
Retrovir 250 mg x 40 
Epivir Oral Solution 10mg/ml 240 ml 
Combivir 300/150 mg x 60 
Retrovir 100 mg x 100 
Ziagen 300 mg x 60 
Total 

3.119
102.236
365.938
1.274.711
905
173.673
691.466
95.109
33.924
 2.741.081

4.903
48.410
119.807
975.250
585
406.287
397.450
132.176
40.208
2.125.076

2007  % difference 
(2006/2007) 
249%
145%
127%
15%
10%
-62%
-61%
-30%
-11%
-7%

17.102 
118.725 
272.063 
1.125.986 
643 
155.523 
153.793 
92.467 
35.884 
1.972.186 

Of all the products registered, Trizivir 750 mg x 60, Retrovir 300 mg x 60 and Retrovir Oral 
Solution  10  mg  showed  the  biggest  increases  in  volumes  sold  at  tiered  prices,  with  249%, 
145%  and 127%  respectively. Two products,  Epivir  150 mg x 60 and Retrovir 250 mg x  40 
showed a marginal increase; whereas the other four in the table Epivir Oral Solution 10mg/ml 
240 ml, Combivir 300/150 mg x 60, Retrovir 100 mg x 100 and Ziagen 300 mg x 60 displayed 
relatively large decreases in sales volumes. Overall sales decreased by 7 %.  

This  further  decrease  in  20079  was  expected  and  is  again  primarily  due  to  more  customers 
purchasing  ARVs  from  other  producers  and  in  particular  from  generic  manufacturers.  As 
stated in last year's report, GSK has granted voluntary licences to eight generic companies for 
the manufacture and supply of ARVs (Retrovir, Epivir and Combivir, all used mainly as first 
line  treatment)  to  both  the  public  and  private  sectors  in  sub-Saharan  Africa.  This  trend  is 
welcome  as  it  improves  the  availability  of  affordable  ARVs  for  customers  in  developing 
countries and helps to maintain a sustainable supply. In 2007 licencees supplied 183 million 
tablets of their versions of Epivir and Combivir and GSK supplied 85 million tablets making a 
total of 268 million tablets in 2007 compared with a total of 206 million in 2006. It should, 
therefore once again be underlined that, overall, access to preferentially priced medicines has 
increased significantly. 

9 

In February 2008, GSK announced significant new price reductions for its ARVs offered on a not for 
profit basis; sales volumes can thus be expected to increase for 2008. 

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ANNEX 1: DETAILS OF VOLUMES OF MEDICINES SOLD IN 2007 

EPIVIR Oral Solution 10mg/ml – 240 ml 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units)10 
- 1 January 2007 to 31 
December 2007 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Europe and Central Asia 

Latin  America  and  the 
Caribbean 

East Africa 

Southern Africa 

Price offered (per unit): US$ 6.73 

Total no. of packs sold 

per month 

72 

2,016 

137,968 

15,467 

155,523 

12,960 

Highest OECD list price: US$ 86.11 

Lowest OECD list price:  US$ 41.16 

Preferential/highest OECD list price: 7.82%  

Preferential/lowest OECD list price: 16.35% 

10 

In this and the following tables, “units” are the packages in which the products concerned are packed. 
For example, one “unit” of EPIVIR Oral Solution 10mg/ml – 240 ml is one bottle of 240 ml. One unit 
of EPIVIR 150 mg x 60 (see following table) is one package containing 60 tablets. 

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EPIVIR 150 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: lamivudine 

Europe and Central Asia 

Latin  America  and  the 
Caribbean 

East Africa 

Southern Africa 

Price offered (per unit): US$ 5.70 

Total no. of packs sold 

Per month 

Highest OECD list price: US$ 427.09 

Lowest OECD list price:  US$ 153.38 

Preferential/highest OECD list price: 1.33%  

Preferential/lowest OECD list price: 3.72%   

Volumes sold (units) - 
1 January 2007 to 31 
December 2007- 

23 

180 

93,649 

1,032,134 

1,125,986 

93,832 

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COMBIVIR 300/150 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units)  
- 1 January 2007 to 31 
December 2007- 

Europe and Central Asia 

Latin  America  and  the 
Caribbean 

West Africa 

Central Africa 

East Africa 

Southern Africa 

Total no. of packs sold 

Per month 

519 

7,100 

11,516 

850 

16,370 

117,438 

153,793 

12,816 

Disease targeted: HIV infection 

Active ingredient: lamivudine + zidovudine  

Price offered (per unit): US$ 19.50 

Highest OECD list price: US$ 834.82 

Lowest OECD list price:  US$ 315.73 

Preferential/highest OECD list price: 2.34%  

Preferential/lowest OECD list price: 6.18%   

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RETROVIR 100 mg x 100 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2007 to 31 
December 2007- 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

East Africa 

Southern Africa 

Price offered (per unit): US$ 15.77 

Total no. of packs sold 

Per month 

11,354 

81,113 

92,467 

7,706 

Highest OECD list price: US$ 257.15  

Lowest OECD list price:  US$ 106.01 

Preferential/highest OECD list price: 6.13 % 

Preferential/lowest OECD list price: 14.88 % 

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RETROVIR 300 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Europe and Central Asia 

Latin  America  and  the 
Caribbean 

East Africa 

Southern Africa 

Price offered (per unit): US$ 17.40 

Total no. of packs sold 

Per month 

Highest OECD list price: US$ 395.54  

Lowest OECD list price:  US$ 221.56 

Preferential/highest OECD list price: 4.40% 

Preferential/lowest OECD list price: 7.85%   

Volumes sold (units) -
1 January 2007 to 31 
December 2007- 

7 

50 

8,548 

110,120 

118,725 

9,894 

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RETROVIR 250 mg x 40 

Sub-region 

Volumes sold (units) -
1  January  2007  to  31 
December 2007- 

East Asia and Pacific 

Southern Africa 

Total no. of packs sold 

per month 

450 

193 

643 

54 

Date of Approval: 19 April 2004 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Price offered (per unit): US$ 13.27 

Highest OECD list price: US$ 305.78 

Lowest OECD list price: US$ 113.80 

Preferential/highest OECD list price: 4.34%  

Preferential/lowest OECD list price: 11.66% 

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TRIZIVIR 750 mg x 60 

Sub-region 

Date of Approval: 19 April 2004 

Volumes sold (units) - 
1 January 2007 to 31 
December 2007- 

Disease targeted: HIV infection 

West Africa 

Active  ingredient:  abacavir  sulphate  (300  mg)  +  lamivudine 
(150 mg) + zidovudine (300 mg) 

East Africa 

Southern Africa 

Price offered (per unit): US$ 70.00 

Total no. of packs sold 

Per month 

7,337 

5,211 

4,554 

17,102 

1,425 

Highest OECD list price: US$ 1,274.89 

Lowest OECD list price:  US$ 569.03 

Preferential/highest OECD list price: 5.49% 

Preferential/lowest OECD list price: 12.30 % 

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ZIAGEN 300 mg x 60 

Sub-region 

Date of Approval: 20 September 2004 

Volumes sold (units) -
1 January 2007 to 31 
December 2007- 

Disease targeted: HIV infection 

Europe and Central Asia 

Active ingredient: abacavir sulphate 

East Asia and Pacific 

Latin  America  and  the 
Caribbean 

West Africa 

Central Africa 

East Africa 

Southern Africa 

Price offered (per unit): US$ 52.29 

Total no. of packs sold 

per month 

Highest OECD list price: US$ 499.3 

Lowest OECD list price: US$ 266.8 

Preferential/highest OECD list price: 10.47% 

Preferential/lowest OECD list price: 19.60% 

8 

651 

1,200 

1,223 

33 

25,792 

6,977 

35,884 

2,990 

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RETROVIR Oral Solution 10 mg/ml – 200 ml 

Sub-region 

Date of Approval : 20 September 2004 

Volumes sold (units) – 
1  January  2007  to  31 
December 2007- 

Disease targeted: HIV infection 

Active ingredient: zidovudine 

Europe and Central Asia 

East Africa 

Southern Africa 

Price offered (per unit): US$ 7.10 

Total no. of packs sold 

Per month 

108 

202,873 

69,082 

272,063 

22,672 

Highest OECD list price: US$ 88.39 

OECD weighted average price: US$ 41.76   

Preferential/highest OECD list price: 8.03% 

Preferential/OECD weighted average price: 17% 

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ANNEX 2: VOLUMES OF TIERED PRICED PRODUCTS SOLD BY SUB-REGION BETWEEN 1 

JANUARY 2007 AND 31 DECEMBER 2007 

Sub-regions 

Products  

Europe  and  Central 
Asia 

EPIVIR Oral Solution 

EPIVIR 150 mg x 60 

COMBIVIR 300/150 mg x 60 

RETROVIR 300 mg x 60 

RETROVIR Oral Solution 

ZIAGEN 300 mg x 60 

East  Asia 
Pacific 

and 

RETROVIR 250 mg x40 

Latin  America  and 
the Caribbean 

ZIAGEN 300 mg x 60 

EPIVIR Oral Solution 

EPIVIR 150 mg x 60 

COMBIVIR 300/150 mg x 60 

RETROVIR 300 mg x 60 

ZIAGEN 300 mg x 60 

West Africa 

COMBIVIR 300/150 mg x 60 

TRIZIVIR 750 mg x 60 

ZIAGEN 300 mg x 60 

Central Africa 

COMBIVIR 300/150 mg x 60 

ZIAGEN 300 mg x 60 

East Africa 

EPIVIR Oral Solution 

EPIVIR 150 mg x 60 

COMBIVIR 300/150 mg x 60 

RETROVIR 100mgx100 

RETROVIR 300 mg x 60 

RETROVIR Oral Solution 

TRIZIVIR 750 mg x 60 

ZIAGEN 300 mg x 60 

Southern Africa 

EPIVIR Oral Solution  

Units 

72 

23 

519 

7 

108 

8 

450 

651 

2,016 

180 

7,100 

50 

1,200 

11,516 

7,337 

1,223 

850 

33 

137,968 

93,649 

16,370 

11,354 

8,548 

202,873 

5,211 

25,792 

15,467 

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EPIVIR 150 mg x 60  

COMBIVIR 300/150 mg x 60  

RETROVIR 100 mg x 100 

RETROVIR 250mgx40 

RETROVIR 300 mg x 60  

RETROVIR Oral Solution 

TRIZIVIR 750 mg x 60 

ZIAGEN 300 mg x 60 

1,032,134 

117,438 

81,113 

193 

110,120 

69,082 

4,554 

6,977 

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