Incoterms 2020 for Pharmaceutical Exports: EXW, FCA, CIP or DAP?

Choosing Incoterms for pharmaceutical exports decides who arranges the cold-chain carriage, who handles customs and at which point the risk passes to the buyer. ICC's Incoterms 2020 set has 11 rules: seven for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP) and four for sea and inland waterway transport only (FAS, FOB, CFR, CIF). Medicine shipments by road or air normally use the first group. As the US International Trade Administration points out, Incoterms do not govern when title passes or how and when payment is made; those terms belong in the sales contract.

EXW (Ex Works) puts the least obligation on the seller. ICC's guidance note says that under EXW the seller has no obligation to organise export clearance and only assists the buyer with documents and information. ICC advises buyers who expect difficulty obtaining export clearance to choose FCA instead, where the obligation and cost of export clearance lie with the seller. Under FCA the seller delivers the goods to the carrier nominated by the buyer, and risk passes at that point. Because medicine exports from Turkey involve İTS export notifications and TİTCK rules, FCA, which leaves export formalities with the Turkish exporter, is a practical choice for pharmaceutical shipments.

Under CPT and CIP the seller contracts and pays for carriage to the named destination, but delivery takes place when the goods are handed to the carrier chosen by the seller. Under CIP the seller also buys insurance against the buyer's risk during carriage, and Incoterms 2020 raised the required cover to Institute Cargo Clauses (A). According to ICC's January 2025 report on national barriers, in Azerbaijan and Kazakhstan foreign transport insurance is allowed for CIF and CIP up to the point of entry but not for onward transport inside the country. For high-value, temperature-sensitive goods, it is worth clarifying in advance exactly which leg the policy covers.

Under DAP the seller places the goods at the buyer's disposal at destination, ready for unloading; under DPU the seller also unloads; under DDP the seller additionally clears the goods for import and pays the duties. ICC notes that some countries prohibit foreign entities from carrying out import customs and tax formalities, and that DAP or DPU is then the better option. This matters even more for medicines: Article 252 of Kazakhstan's Health Code limits medicine imports to specific parties such as licensed wholesalers and manufacturers. Whatever rule you choose, GDP duties such as temperature monitoring and excursion reporting should be written into the contract separately. To discuss delivery terms and request a quote, fill in the Medicine Request Form on our website.

Source: ICC, Incoterms 2020 (iccwbo.org); ICC, National regulatory barriers to the Incoterms 2020 rules, January 2025 (library.iccwbo.org); GOV.UK Incoterms guidance (gov.uk); US International Trade Administration, Know Your Incoterms (trade.gov); Code of the Republic of Kazakhstan on Public Health and the Healthcare System, 7 July 2020, No. 360-VI.