Pfizer's decision to sell drugs to pharmacies rather than use Australian wholesalers has sent the share price of the country's leading wholesalers into a tailspin. Sigma Pharmaceuticals' shares down about 20 percent, while Australian Pharmaceutical Industries' fell roughly 10 percent after Pfizer unveiled its radical distribution model, according to the Sydney Morning Herald. A third company, Symbion, is privately owned, but will also be affected. The three companies each earn millions annually from selling Pfizer's drugs, the Herald Sun points out.
The move is part of an effort to shield Pfizer's portfolio of branded drugs, which includes Lipitor, that will soon face generic competition. It also comes as a result of Pfizer having to examine its business model "to meet some of the challenges in the healthcare environment including Pharmaceutical Benefits Scheme (PBS) reform," the company says in a statement.
According to The Australian, Sigma is assessing the full impact of Pfizer's move on its future earnings. "Given the significance of this change, combined with the impact of the recent PBS (Pharmaceutical Benefits Scheme) reform legislation, this will accelerate the need for Sigma to further reduce its customer trading terms," Sigma said. Pfizer's move will most seriously affect Sigma, which is close to selling its drug manufacturing arm to South African company Aspen Pharmaceuticals, the Sun Herald reports.
API says it will analyze Pfizer's plan and will provide an update "as soon as practicable."
A newly established pharmacy field force will start visiting pharmacists to explain the new business model, how to sign up for an account with Pfizer and answer any questions they may have before the new model goes live. Pfizer will begin its new program starting Jan. 31, 2011, according to its statement. According to the SMH, Australia's wholesale pharma sector could be decimated if other drugmakers follow Pfizer's lead.