Friday, July 20, 2007

Harry Potter and the Wholesaler Inventory

Both Pfizer and Wyeth are in the news because of unusual wholesaler buying patterns.

The WSJ Health Blog has a good summary (Inventory Bugaboos Dog and Aid Drug Makers). Relevant excerpts:

  • “On Tuesday, Pfizer blamed wholesalers’ inventory reductions for part of the 25% decline in U.S. sales of cholesterol-fighter Lipitor to $1.38 billion in the quarter…Ian Read, president of world-wide pharma operations at Pfizer, said Lipitor inventories fell to 1.8 weeks on hand at the end of the first quarter compared with almost a month, or 3.8 weeks on hand, at the end of the second quarter.”

  • “But for Wyeth’s heartburn medicine Protonix, the wholesalers appeared be stocking up rather than winding down their supplies in the second quarter. Sales of Protonix, which competes with AstraZeneca’s Nexium, jumped 25% to $550 million in the quarter compared with the year-earlier period, the company said today.”
As you all know -- or should know -- the drug wholesale industry changed over the past few years with the widespread adoption of inventory management and fee-for-service agreements. (Here is my brief summary of this transition.)

These new agreements require wholesalers to provide inventory and shipment data to manufacturers. Most manufacturers use software from either Edge Dynamics or Valuecentric to analyze these incoming wholesaler data.

But according to my sources, neither Wyeth nor Pfizer are customers of either software company.

Perhaps they have been relying on Professor Trelawney for channel data, instead?

P.S. Hope you enjoy an unspoiled Book 7 at 12:01 AM!

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