Editorial

From the desk of the editor

Welcome to the April home page edition of i2P. A lot certainly happens over a month in pharmacy and health-related activities.
When we first started publishing our primary concern was to cover pharmacy issues within Australia, delivered monthly. Eleven years on we now cover global pharmacy and associated health issues on a daily basis, but delivered weekly.
New areas embracing climate change, food growing and processing and information technology are all increasing areas of health concern. Their impacts translate into systems that affect health negatively or positively and for all such contemporary issues, pharmacists need to have a working knowledge and understanding that translates into an effective pharmacy service
This month we are introducing a new column called Pipeline, and you will find it near the top of the centre column of the i2P home page.

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Through the Pfizer Looking-Glass

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	Peter Jackson articles by this author...
Peter works in the pharma industry and has a specialty interest in pharmaceutical supply systems and logistics. He is based in Sydney with his wife and two children.

Analysts specialising in Big Pharma have begun to look at what may happen when they (the Big Pharma's) begin to fall over the “patent cliff” typified by Lipitor – the biggest selling drug of the largest drug manufacturer in the world.
In the rarefied atmosphere of the Pfizer’s of this world that have been allowed to grow so big they become insulated from the problems of lesser mortals i.e. what the small to medium companies have to endure to maintain their place in the sun.

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Mark-ups of 1-15,000 percent are not uncommon for Big Pharma depending on the drug and the country it is marketed in.
With 45% of Australian pharmacies now showing a gross profit percentage of around 26 percent, Pfizer is positively healthy by comparison and showing good prospects to boot!

Excessive mark-ups became evident and identified when AIDS dugs were needed in Africa and US drug companies would not assist with price until a generic company based in India stepped in to provide the necessary drugs – but even they had an average of 600 percent mark-up.

So it is horrifying to the likes of Pfizer to have to think of managing their champagne tastes on a beer budget.
But give them their due, they are looking at adjusting their business model by closing off unproductive research laboratories (raising shareholder value) and looking to retain a larger percentage of the generic version of their lucrative molecules.

One analyst writing for Forbes Magazine thinks Pfizer indicators will look something like the following table:

So sales will be slightly down, costs will be well down, net income will be slightly down but earnings per share will show a healthy growth.

In Australia, and other parts of the world, Pfizer will be keeping a tight rein on the supply chain to ensure that it squeezes every dollar out of it for its shareholders.
You can’t blame them for thinking that way and they simply become disruptive (for areas like community pharmacy) because they can!

So what were the top selling products for Pfizer in 2010?
The following table shines the light on Pfizer drug performers.

The consensus estimates on sales were based on the estimates from analysts on the sell side at six Wall Street banks.

While the pecking order for product sales will shift post patent expiry there is disagreement by analysts as the degree of this effect.
There’s broad agreement that Prevnar 13, a vaccine against pneumococcus bacteria that came from Pfizer’s acquisition of Wyeth, will be the company’s biggest product in 2015. If a big study of using Prevnar in adults being conducted in the Netherlands yields strong results, these estimates could be low.
The table below illustrates the possible scenario:

Another surprising conclusion: Lipitor will still be around for some time. As far out as 2015, it is still expected to be one of Pfizer’s top five products by annual sales.

And why shouldn’t it be?

If Pfizer does the normal process and be competitive on price combined with strong advertising and support why shouldn’t it be a top performer?

It must be reassuring to Pfizer management that major analysts still look favourably on their company. Australian pharmacists will not reflect that “warm and fuzzy” feeling as they attempt to reconstruct their own business model to adjust the balance of power. One thing is for sure, Pfizer will have to fight for every Lipitor sale it can get.
But there’s more!
A significant number of other patents are due to expire in the short-term future.

The analysts obviously believe Pfizer will overcome the obstacles created when it damaged the supply chain balance – we will just have to wait and see.

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