Monday, April 23, 2007

Meanwhile in Europe...

The US wholesaler market has been fairly quiet with the exception of regulatory/legal battles over pedigree.

Meanwhile, the European wholesaler market is now undergoing the massive structural changes that I predicted in September. Here's a quick update on three key developments.

LBO Time
The battle for Boots continues, with a rival bidder now challenging KKR’s initial bid. (For background, see Wholesaler LBO Time.) The Sunday Times has a fascinating peek inside the deal called Wrestling over Boots. It also includes a brief history of both Boots and Alliance Unichem.

The Times' business editor is skeptical about the prices being offered (me, too) while noting that Stefano Pessina "...has long-term ambitions to create a global pharmaceutical wholesaler." Hmm....

Meanwhile, Celesio apparently wants to acquire the drug distribution business of Alliance Boots from the winning private equity firm. (See Germans to pounce if Boots is broken up.) Guy Hands, the rival bidder to KKR, is rumored to be planning a break-up of the wholesale and retail units if he wins.

If a break-up were to occur (a BIG if, IMHO), then a combined Alliance/Celesio wholesaler would have more than 60% of wholesaler market share in key countries such as France and the UK. FYI, Europe represents 30% of global pharmaceutical sales versus 48% in the U.S. according to IMS.

AZ's New Distribution Strategy
To add to the excitement, AstraZeneca announced that it is following Pfizer’s model and will limit product distribution to only two wholesalers in the UK. AZ chose the drug distribution arms of Alliance Boots and Celesio, which is ironic given the given the rumors surrounding the Boots deal. Needless to say, the other UK wholesalers are not too happy. (See Wholesaler fury at AstraZeneca drug distribution deal.)


While I will refrain from specifics, let me suggest that future changes in global wholesaler market structure should not come as a surprise to readers of this blog . . .

P.S. Last Friday's post (RFID Un-Hype) generated record traffic for Drug Channels. Check out the thoughtful comments posted by Kevin Leininger, CEO of Integrichain, and Nick Basta, editor of Pharmaceutical Commerce.

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