API and Sigma, which along with privately-owned group Symbion were the US drug major’s main distributors in Australia, have seen the value of their shares fall more than 20 per cent since the news was announced late last week.
Pfizer said the plan, which will see it sell medicines direct to pharmacies after January 31 through an expanded Australian sales team and exclusive logistics partnership with DHL, will meet market challenges and the impact of impending patent loss.
John Latham, Pfizer Australia’s managing director, said: "In order to develop stronger partnerships with pharmacists and better adapt to the changing environment, we have decided that a dedicated field force with specific pharmacy experience and a direct distribution model for all our prescription medicines.”
The “market challenges” include the Australian government’s recent decision to cut A$1.9bn ($1.89bn) from the prescription benefits scheme (PBS) as part of a healthcare reforms designed to encourage physicians to prescribe more non-branded pharmaceuticals..
Observers suggested the move fits with Pfizer's recent worldwide efforts to expand its generics business, reasoning that moving away from the wholesale distribution model in Australia will help sideline competitors with established networks.
Further support for this idea came from Lathams’ comments in a BusinessDaily interview, when he predicted that the size of the non-branded drug market would double to a value of more than A$500m over the next five years as a result of the PBS reforms.
API, which runs its own pharmacy network in addition to the distribution business, said it is analysing the implications of Pfizer’s plan and promised further comment “as soon as is practicable.”
Sigma, which sold its pharmaceuticals business to South Africa generics firm Aspen Pharmacare for $900m in August, also said it is assessing the impact of the decision on its revenue.
Pfizer’s move is in direct contrast with the recently announced restructuring of its US distribution operations. Earlier this month the firm said it would hand over is Vonore distribution unit to Excel and outsource distribution to Deutsche Post DHL.