Not so sure now........times have changed since the previous merger attempt between API & Sigma.
Government policies have now made it almost unviable for three full line wholesalers in this country. Competition has nothing to offer an industry that has margins dictated to by the government. The Wholesalers are virtually privately owned government agencies now.
Wholesalers have virtually no commercial leverage to compete with now. Margins are so low that discount terms, extended credit etc are no longer the bargaining tools they were. Service and loyalty are about the only things left.
Having been in the industry for 40 years I have seen many times attempts by manufacturers to take back distribution of their products. It does not work. It is alright for Pfizers large volume PBS item being distributed to near city pharmacies where they can be delivered once a week or so. However, unless they can provide overnight delivery to perepheral and regional pharmacies for their lower volume PBS products (which full line wholesalers can do under CSO arrangements).
If Pfizer can manage their distribution in a more cost effective manner (without CSO subsidies) than going through our major wholesalers I will be "shocked". Pfizer management who have made this decision will be soon on their way and they will revert back to the only sensible means of distribution.
It would not surprise me if the Government steps in here as their are some strict obligations on PBS listing to ensure efficient supply to patients for all products. The Government's cost saving mentality has relied heavily on Australia's efficient wholesaler distribution and Pfizer's decision is a "chink" that threatens this.
With Pfizers No 1 product Lipitor coming off patent very soon maybe Pfizer is in for some hard times. See the big US boss just got "removed".
SIP Price at posting:
40.0¢ Sentiment: LT Buy Disclosure: Held
