Thursday, September 28, 2006

Pfizer's UK Deal: Change is Here!

2006 will go down as the year EU drug distribution began to change.

Pfizer just announced the consolidation of UK product distribution with the retail/wholesaler Alliance Unichem. (See "Drug giant will sell direct to beat the counterfeiters.") Since the agreement is described as "direct," I presume that it is an agency agreement -- a pure non-margin fee-for-service model.

The Unichem move solves two related problems bedeviling Pfizer:
  1. The lost revenue from parallel importing -- According to GIRP data, about 75% of drugs are delivered by full-line wholesalers while 16% are from "short-line wholesalers" a.k.a. parallel importers. (See Curious about European Drug Distribution? for more on the EU channels.
  2. The risk of counterfeits entering the supply chain -- I wrote about Pfizer's Lipitor problems in my August post London Calling: Fake Drugs Get Real.
Pfizer is now considering changes in other countries. (See this morning's Dow Jones story "Pfizer Mulls Distribution Options In Several European Countries."

Free market innovation has already improved the safety and security of the US drug distribution channel. (See my June post FDA blind to the supply chain’s evolution.) Looks like the market will evolve in the EU even sooner than I predicted!

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