s PFIZERWATCH – Understanding Why Pfizer Deals Direct | I2P: Information to Pharmacists - Archive
Publication Date 01/07/2014         Volume. 6 No. 6   
Information to Pharmacists

Editorial

From the desk of the editor

Welcome to the July 2014 homepage edition of i2P (Information to Pharmacists) E-Magazine.
At the commencement of 2014 i2P focused on the need for the entire profession of pharmacy and its associated industry supports to undergo a renewal and regeneration.
We are now half-way through this year and it is quite apparent that pharmacy leaders do not yet have a cohesive and clear sense of direction.
Maybe the new initiative by Woolworths to deliver clinical service through young pharmacists and nurses may sharpen their focus.
If not, community pharmacy can look forward to losing a substantial and profitable market share of the clinical services market.
Who would you blame when that happens?
But I have to admit there is some effort, even though the results are but meagre.
In this edition of i2P we focus on the need for research about community pharmacy, the lack of activity from practicing pharmacists and when some research is delivered, a disconnect appears in its interpretation and implementation.

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News Flash

Newsflash Updates for July 2014

Newsflash Updates

Regular weekly updates that supplement the regular monthly homepage edition of i2P. 
Access and click on the title links that are illustrated

Comments: 1

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Feature Contribution

Woolworths Pharmacy - Getting One Stage Closer

Neil Johnston

It started with “tablet” computers deployed on shelves inside the retailer Coles, specifically to provide information to consumers relating to pain management and the sale of strong analgesics.
This development was reported in i2P under the title Coles Pharmacy Expansion and the Arid PGA Landscape”
In that article we reported that qualified information was a missing link that had come out of Coles market research as the reason to why it had not succeeded in dominating the pain market.
Of course, Woolworths was working on the same problem at the same time and had come up with a better solution - real people with good information.

Comments: 5

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Intensive Exposition without crossing over with a supermarket

Fiona Sartoretto Verna AIAPP

Editor's Note: The understanding of a pharmacy's presentation through the research that goes into the design of fixtures and fittings that highlight displays, is a never-ending component of pharmacy marketing.
Over the past decade, Australian pharmacy shop presentations have fallen behind in standards of excellence.
It does not take rocket science - you just have to open your eyes.
Recently, our two major supermarkets, Woolworths and Coles, have entered into the field of drug and condition information provision - right into the heartland of Australian Pharmacy.

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The sure way to drive business away

Gerald Quigley

I attended the Pregnancy, Baby and Children’s Expo in Brisbane recently.
What an eye and ear opening event that was!
Young Mums, mature Mums, partners of all ages, grandparents and friends……...many asking about health issues and seeking reassurances that they were doing the right thing.

Comments: 1

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‘Marketing Based Medicine’ – how bad is it?

Baz Bardoe

It should be the scandal of the century.
It potentially affects the health of almost everyone.
Healthcare providers and consumers alike should be up in arms. But apart from coverage in a few credible news sources the problem of ‘Marketing Based Medicine,’ as psychiatrist Dr Peter Parry terms it, hasn’t as yet generated the kind of universal outrage one might expect.

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Community Pharmacy Research - Are You Involved?

Mark Coleman

Government funding is always scarce and restricted.
If you are ever going to be a recipient of government funds you will need to fortify any application with evidence.
From a government perspective, this minimises risk.
I must admit that while I see evidence of research projects being managed by the PGA, I rarely see community pharmacists individually and actively engaged in the type of research that would further their own aims and objectives (and survival).

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Organisational Amnesia and the Lack of a Curator Inhibits Cultural Progress

Neil Johnston

Most of us leave a tremendous impact on pharmacies we work for (as proprietors, managers, contractors or employees)—in ways we’re not even aware of.
But organisational memories are often all too short, and without a central way to record that impact and capture the knowledge and individual contributions, they become lost to time.
It is ironic that technology has provided us with phenomenal tools for communication and connection, but much of it has also sped up our work lives and made knowledge and memory at work much more ephemeral.

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Academics on the payroll: the advertising you don't see

Staff Writer

This article was first published in The Conversation and was written by Wendy Lipworth, University of Sydney and Ian Kerridge, University of Sydney
In the endless drive to get people’s attention, advertising is going ‘native’, creeping in to places formerly reserved for editorial content. In this Native Advertising series we find out what it looks like, if readers can tell the difference, and more importantly, whether they care.
i2P has republished the article as it supports our own independent and ongoing investigations on how drug companies are involved in marketing-based medicine rather than evidence-based medicine.

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I’ve been thinking about admitting wrong.

Mark Neuenschwander

Editor's Note: This is an early article by Mark Neuenschwander we have republished after the soul-searching surrounding a recent Australian dispensing error involving methotrexate.
Hmm. There’s more than one way you could take that, huh? Like Someday when I get around to it (I’m not sure) I may admit that I was wrong about something. Actually, I’ve been thinking about the concept of admitting wrong. So don’t get your hopes up. No juicy confessions this month except that I wish it were easier for me to admit when I have been wrong or made a mistake.
Brian Goldman, an ER physician from Toronto, is host of the award-winning White Coat, Black Art on CBC Radio and slated to deliver the keynote at The unSUMMIT for Bedside Barcoding in Anaheim this May. His TED lecture, entitled, “Doctors make mistakes. Can we talk about it?” had already been viewed by 386,072 others before I watched it last week.

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Dispensing errors – a ripple effect of damage

Kay Dunkley - BPharm, Grad Dip Hosp Pharm, Grad Dip Health Admin, MPS, MSHPA

Most readers will be aware of recent publicity relating to dispensing errors and in particular to deaths caused by methotrexate being incorrectly packed in dose administration aids.
The Pharmacy Board of Australia (PBA), in its Communique of 13 June 2014, described a methotrexate packing error leading to the death of a patient and noted “extra vigilance is required to be exercised by pharmacists with these drugs”.
This same case was reported by A Current Affair (ACA) in its program on Friday 20 June
http://aca.ninemsn.com.au/article/8863098/prescription-drug-warning

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Take a vacation from your vocation

Harvey Mackay

Have you ever had one of those days when all you could think was, “Gosh, do I need a vacation.”
Of course you have – because all work and no play aren’t good for anyone.
A vacation doesn’t have to be two weeks on a tropical island, or even a long weekend at the beach. 
A vacation just means taking a break from your everyday activities. 
A change of pace. 
It doesn’t matter where.
Everyone needs a vacation to rejuvenate mentally and physically. 
But did you also know that you can help boost our economy by taking some days off? 
Call it your personal stimulus package.

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Explainer: what is peer review?

Staff Writer

This article was first published in the Conversation. It caught our eye because "peer review" it is one of the standards for evidence-based medicines that has also been corrupted by global pharma.
The article is republished by i2P as part of its ongoing investigation into scientific fraud and was writtenby Andre Spicer, City University London and Thomas Roulet, University of Oxford
We’ve all heard the phrase “peer review” as giving credence to research and scholarly papers, but what does it actually mean?
How does it work?
Peer review is one of the gold standards of science. It’s a process where scientists (“peers”) evaluate the quality of other scientists' work. By doing this, they aim to ensure the work is rigorous, coherent, uses past research and adds to what we already knew.
Most scientific journals, conferences and grant applications have some sort of peer review system. In most cases it is “double blind” peer review. This means evaluators do not know the author(s), and the author(s) do not know the identity of the evaluators.
The intention behind this system is to ensure evaluation is not biased.
The more prestigious the journal, conference, or grant, the more demanding will be the review process, and the more likely the rejection. This prestige is why these papers tend to be more read and more cited.

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Dentists from the dark side?

Loretta Marron OAM BSc

While dining out with an elderly friend, I noticed that he kept his false tooth plate in his shirt pocket. He had recently had seven amalgam-filled teeth removed, because he believed that their toxins were making him sick; but his new plate was uncomfortable. He had been treated by an 'holistic dentist'. Claiming to offer a "safe and healthier alternative" to conventional dentistry, are they committed to our overall health and wellbeing or are they promoting unjustified fear, unnecessarily extracting teeth and wasting our money?

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Planning for Profit in 2015 – Your key to Business Success

Chris Foster

We are now entering a new financial year and it’s a great time to reflect on last year and highlight those things that went well and those that may have impacted negatively in the pursuit of your goals.
It's also a great to spend some time re-evaluating your personal and business short, medium and long term goals in the light of events over the last year.
The achievement of your goals will in many cases be dependent on setting and aspiring to specific financial targets. It's important that recognise that many of your personal goals will require you to generate sufficient business profits to fund those aspirations

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ReWalk™ Personal Exoskeleton System Cleared by FDA for Home Use

Staff Writer

Exoskeleton leader ReWalk Robotics announced today that the U.S. Food and Drug Administration has cleared the company’s ReWalk Personal System for use at home and in the community.
ReWalk is a wearable robotic exoskeleton that provides powered hip and knee motion to enable individuals with Spinal Cord Injury (SCI) to stand upright and walk.
ReWalk, the only exoskeleton with FDA clearance via clinical studies and extensive performance testing for personal use, is now available throughout the United States.

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Attracting and Retaining Great People

Barry Urquhart

Welcome to the new financial year in Australia.
For many in business the past year has been described as a challenging period.
Adjectives are a key feature of the English language.  In the business lexicon their use can be, and often is evocative and stimulate creative images.  But they can also contribute to inexact, emotional perceptions.
Throughout the financial pages of newspapers and business magazines adjectives abound.
References to “hot” money draw attention and comment.  The recent wave of funds from Chinese investors, keen to remove their wealth from the jurisdiction and control of government regulations is creating a potential property bubble in Australia.

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Updating Your Values - Extending Your Culture

Neil Johnston

Pharmacy culture is dormant.
Being comprised of values, unless each value is continually addressed, updated or deleted, entire organisations can stagnate (or entire professions such as the pharmacy profession).
Good values offer a strong sense of security, knowing that if you operate within the boundaries of your values, you will succeed in your endeavours.

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Evidence-based medicine is broken. Why we need data and technology to fix it

Staff Writer

The following article is reprinted from The Conversation and forms up part of our library collection on evidence-based medicines.
At i2P we also believe that the current model of evidence is so fractured it will never be able to be repaired.
All that can happen is that health professionals should independently test and verify through their own investigations what evidence exists to prescribe a medicine of any potency.
Health professionals that have patients (such as pharmacists) are ideally placed to observe and record the efficacy for medicines.
All else should confine their criticisms to their evidence of the actual evidence published.
If there are holes in it then share that evidence with the rest of the world.
Otherwise, do not be in such a hurry to criticise professions that have good experience and judgement to make a good choice on behalf of their patients, simply because good evidence has not caught up with reality.

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Laropiprant is the Bad One; Niacin is/was/will always be the Good One

Staff Writer

Orthomolecular Medicine News Service, July 25, 2014
Laropiprant is the Bad One; Niacin is/was/will always be the Good One
by W. Todd Penberthy, PhD

(OMNS July 25, 2014) Niacin has been used for over 60 years in tens of thousands of patients with tremendously favorable therapeutic benefit (Carlson 2005).
In the first-person NY Times best seller, "8 Weeks to a Cure for Cholesterol," the author describes his journey from being a walking heart attack time bomb to a becoming a healthy individual.
He hails high-dose niacin as the one treatment that did more to correct his poor lipid profile than any other (Kowalski 2001).

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Culture Drive & Pharmacy Renewal

Neil Johnston

Deep within all of us we have a core set of values and beliefs that create the standards of behaviour that we align with when we set a particular direction in life.
Directions may change many times over a lifetime, but with life experiences and maturity values may increase in number or gain greater depth.
All of this is embraced under one word – “culture”.
When a business is born it will only develop if it has a sound culture, and the values that comprise that culture are initially inherent in the business founder.
A sound business culture equates to a successful business and that success is often expressed in the term “goodwill” which can be eventually translated to a dollar value.

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ReWalk™ Personal Exoskeleton System Cleared by FDA for Home Use

Staff Writer

Exoskeleton leader ReWalk Robotics announced today that the U.S. Food and Drug Administration has cleared the company’s ReWalk Personal System for use at home and in the community.
ReWalk is a wearable robotic exoskeleton that provides powered hip and knee motion to enable individuals with Spinal Cord Injury (SCI) to stand upright and walk.
ReWalk, the only exoskeleton with FDA clearance via clinical studies and extensive performance testing for personal use, is now available throughout the United States.

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Pharmacy 2014 - Pharmacy Management Conference

Neil Johnston

The brave new world of health and wellness is not the enemy of Pharmacy, it is its champion.
Australian futurist, Morris Miselowski, one of the world's leading business visionaries, will present the Opening Keynote address on Pharmacy's Future in the new Health and Wellness Landscape at 2.00pm on Wednesday July 30.
Morris believes the key to better health care could already be in your pocket, with doctors soon set to prescribe iPhone apps, instead of pills.
Technology will revolutionise the health industry - a paradigm shift from healthcare to personal wellness.
Health and wellness applications on smartphones are already big news, and are dramatically changing the way we manage our personal health and everyday wellness.

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Generation and Application of Community Pharmacy Research

Neil Johnston

Editor’s Note: We have had a number of articles in this issue relating to pharmacy research.
The PGA has conducted a number of research initiatives over the years, including one recently reported in Pharmacy News that resulted from an analysis of the QCPP Patient Questionnaire.
Pharmacy Guild president, George Tambassis, appears to have authored the article following, and there also appears to be a disconnect between the survey report and its target audience illustrated by one of the respondent comments published.
I have asked Mark Coleman to follow through, elaborate and comment:

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PFIZERWATCH – Understanding Why Pfizer Deals Direct

Neil Johnston

articles by this author...

Neil Johnston is a pharmacist who trained as a management consultant. He was the first consultant to service the pharmacy profession and commenced practice as a full time consultant in 1972, specialising in community pharmacy management, pharmacy systems, preventive medicine and the marketing of professional services. He has owned, or part-owned a total of six pharmacies during his career, and for a decade spent time both as a clinical pharmacist and Chief Pharmacist in the public hospital system. He has been editor of i2P since 2000.

During the "silly season" I have found that the impact created by Pfizer in imposing Direct to Pharmacy (DTP) distribution had its roots in some very serious problems that impacted Pfizer back in 2006 in the UK.
These problems set up a train of events that are still unfolding.
They are of global consequence and I have put together a fairly long reference article that I invite you to print out, share with a colleague or use as a basis for your pharmacy strategy over the next five years.
I believe the issues are of paramount importance.
While we in Australia have been vaguely aware of activities such as parallel importing of drugs, the Internet sale of prescription drugs without a prescription, the manufacture of “fake drugs” and their introduction into the regular supply chain, we have generally been ignorant (as pharmacists) of the massive damage and disruption borne by drug manufacturers.
Added to the above are the ongoing attacks on Pfizer intellectual property in the form of drug patents and the growth of generic equivalents.
It is a company that feels it is under siege.
In 2006 these activities had grown to such an extent that Pfizer in the UK was forced to take action to protect its market base, and introduced one measure -Direct to Pharmacy (DTP) distribution.

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Parallel importing is more appropriately titled supply chain diversion.
Diversion opportunities are created whenever there are price differences between identical products being sold at different prices in different markets.
Drug importation is nothing more than supply channel diversion, often sanctioned by governments.
While diverted products are not always counterfeits, all counterfeits enter via diversion in the secondary market.
In the United States, drug diversion is the entry point for every case investigated by the FDA involving counterfeit drugs going into legitimate pharmacies.

Europe provides an interesting study.
Combining the European Union’s market integration principles with national price controls has created an enormous cross-border opportunity for supply chain diversion.
Wholesalers in countries such as Spain and Greece sell to importers in higher priced countries such as Germany and the U.K.
Drugs may pass through dozens of hands before reaching their destination.

The big winners from diversion are not the consumers, especially in countries with flat rate patient co-payments (like the UK and Germany, also Australia).
Nearly all the price difference is absorbed by wholesalers and importers.

Community pharmacies also win through imports from low cost countries.
Reimbursement is usually identical for a drug irrespective of its source.
However, there is a corresponding downside for pharmacies as well.
I recently Googled DHEA to find an economical Australian source for this item.
I expected to find compounding pharmacies among the top rankings, but instead found a company called “Biovea”.
This did not appear to be an Australian Internet pharmacy and there seemed to be no requirement for a prescription for some restricted items advertised.
The only contact details were an email address, a fax number and a Sydney street address.
There are no Yellow/White pages listing for a local phone number for this company.
When this company was emailed as to why a prescription was not required, the response was:

“Thank you for your email.

Our products come from the US where they are sold freely and without restriction. We do not have more information on the status of these products in Australia, however we do dispatch our products to Australia daily without any issues.

Kind regards,

Claudia
Biovea Customer Support”

It seems to be that easy to obtain DHEA without prescription in Australia (at one-third the Australian price), so one is led to assume it may be just as easy to procure Pfizer products from Spain or Greece.

Perhaps it really is time for our drug authorities to be more vigilant for sites like Biovea that are a real drain on the Australian economy. All consumers pay for this type of revenue leakage and all Australian retailers are already complaining at the moment, that GST should be applied to all Internet sales because of the damage being done during the normally profitable Christmas trading period.

Cross-border supply chain diversion leads to billions in lost revenue, and the manufacturers’ costs go up because they cannot allocate production or distribution properly due to inaccurate market data.
This also limits funds for future research and development.
GlaxoSmithKline and AstraZeneca all have announced plans to overhaul drug distribution in the U.K, Europe’s top destination for supply chain diversion, and this may flow on to Australia as was the case for Pfizer.

In August 2006 a major alert was generated in respect of counterfeit Lipitor 20mg tablets. The following is an extract from a BBC report dated 3rd August 2006

“The UK's medicines watchdog is recalling a batch of a heart drug after more fake tablets are discovered.

The Medicines and Healthcare products Regulatory Agency (MHRA), with Pfizer, is now recalling Lipitor 20mg tablets bearing the lot number 067404K3.
In July 2005 and again in July 2006 the agency recalled another Lipitor batch, 004405K1, because of counterfeits found in the pharmaceutical supply chain. Patients should not take tablets displaying either of these lot numbers.”

A total of 73 fake packets of Lipitor with the lot number 004405K1 were seized last year and 320 fake packets carrying the same lot number have been discovered since July this year.
Overall, 120,000 packets, each containing 28 tablets, were involved in those two incidents.
Pfizer, which makes Lipitor, called for more effort to be made by authorities in the UK and Europe to ensure the safety of medicines
Kate Lloyd, medical director of Pfizer UK, said: "Patient safety is our primary concern and we are seriously concerned at yet another discovery of counterfeit product masquerading as one of our medicines in the UK."
Pfizer UK's managing director Dr Olivier Brandicourt said: "Enough is enough, and we are calling for the MHRA and law enforcement agencies to conduct a full and thorough investigation into this incident and the general vulnerability of the medicines supply chain."
More than a million Britons are believed to take Lipitor for cardiovascular conditions.”

That event triggered the Pfizer response that eventuated in DTP distribution, cutting out wholesaler participation in Pfizer products supply services.
Of course, the problem was relatively minor in Australia until a number of counterfeit Viagra tablets emerged in 2009 through Symbion Wholesalers who, in 2008 became part of the Swiss Zuellig Group, a large, privately owned family enterprise.
This seemed to be the trigger to institute the DTP system in Australia that had been developed for the UK.

Wholesalers are under pressure because of DTP arrangements and have limited choices.
They can:
* Merge with a more efficient wholesaler to gain economies of scale.
* Go global
* Form partnerships with specialty manufacturers

The era of global wholesaling is dawning.
Already the US based Cardinal Group have entered China through acquisition of the Zuellig Group’s China operation (trading as Yong Yu) that has been in place for just over 17 years.
It’s primary asset is its well-developed distribution system, and current revenues exceed $1 billion.
Yet it is only the ninth-largest wholesaler in the fragmented Chinese market.
The acquisition represents the first major distribution investment outside of North America by one of the Big Three U.S. wholesalers.

China is a logical growth platform for U.S. wholesalers and maybe for some Australian wholesalers, and Symbion in Australia has obviously benefited through its Zuellig ownership.

Why China?
China, which is predicted to grow 25-27 percent to more than $50 billion in 2011, is now the world’s third-largest pharmaceutical market. (source)
That growth rate is slightly faster than the U.S. market.
 IMS Health projects that China will be the world's second-biggest pharmaceuticals market after the United States in 2015. (source)

China needs foreign know-how.
The Chinese drug distribution system is fragmented and inefficient, which is one reason that the Chinese authorities have been encouraging consolidation and outside investment.
Zuellig's business is more advanced given its heritage.

Asian acquisition activity is heating up.
European wholesalers are shopping, too.
Read Alliance Boots plans major push into China, which states that Alliance Boots is "considering a number of acquisitions of wholesale pharmaceutical companies in the country."
Alliance Boots is the significant player in the UK that won Pfizer’s contract to provide logistics support for their product
Sanofi-Aventis recently acquired BMP Sunstone, a Chinese wholesaler with its own portfolio of branded pharmaceutical and healthcare products.

How will multinational manufacturers work with global wholesalers?
Global wholesalers have an opportunity to gain more negotiating power against both brand-name and generic manufacturers.
Time will tell whether and how this will occur, but players like Cardinal will be looking for "synergies."

Wholesalers earn two separate margins within their distribution channels- a “buy side” margin from the manufacturers, and a “sell side” margin from pharmacies.
Because wholesalers have strength in both China and the US, “buy side” margins are significant.
Since the move to China, Cardinal and Alliance Boots have been in discussion, so we may see a mega-merge somewhere down the track.

It appears that globally, the largest wholesalers are positioning themselves as indispensable intermediaries in the supply chain and staking out a powerful position in high-growth channels for specialty drugs. Pharmaceutical manufacturers (including Pfizer) must understand these evolutionary forces to negotiate and collaborate successfully with pharmaceutical wholesalers.
It also appears inevitable that Australian wholesalers will have to develop a strong alliance with one or more of the major global wholesale players.

The following significant trends that will affect the drug wholesaling industry during the next five years:

Consolidation of the Pharmacy Industry—Independent pharmacies are strategically important and profitable to wholesalers despite representing only a small percentage of wholesalers’ total sales (compared to franchised groups). The ongoing consolidation of the pharmacy industry will continue to pressure wholesaler “sell side” profit margins from drug distribution. Larger chains and mail-order pharmacies, which have much lower profit margins on brand-name drugs for wholesalers, continue to grow faster than other segments of the market. Consolidation also hurts wholesalers because large, self-warehousing customers bypass wholesalers to purchase more-profitable generic drugs.
Chemist Warehouse in Australia is one such group building up to this position.

Slowdown in Pharmaceutical Spending—Revenues of drug wholesalers are linked to growth in prescription drug spending rather than overall economic cycles. As such, the projected slowdown in drug spending will keep wholesaler’s revenue growth rates below historical levels. Although the slowdown in prescription drug spending will reduce drug wholesalers’ revenue growth, the additional profits from generic drugs will cushion the profit impact on wholesalers, although this area has also come under threat under PBS reforms here in Australia.

Pressure on Generic Profitability—Although wholesaler revenues are linked most closely to sales of brand-name drugs, the majority of wholesaler profits come from generic drugs. Pressure on pharmacy profits from generic drugs is rising as payers learn more about channel economics, implement new payment benchmarks and use novel cost-plus contracting strategies.
In the US the retail prescription price war launched by Walmart also threatens the overall profitability of generic prescriptions for pharmacies.
Drug wholesalers will face margin pressure on generic drug sales because pharmacies will be more price sensitive and require bigger discounts to remain competitive.
To balance this pressure, wholesalers will attempt to improve buy side margins but this has suddenly been made more difficult by the Pfizer DTP move here in Australia
Discount generic programs are shifting retail market share away from wholesaler-supplied dispensing channels into self-warehousing retailers (buying groups).

The Battle for Control of Specialty Drug Spending—The complex channels for specialty drugs make it hard for payers to get full visibility on specialty drug spending or to manage drug utilization effectively. Drug wholesalers and specialty distributors play the biggest role in the distribution of specialty drugs to healthcare providers, but wholesalers have a more limited role in the distribution of self-administered specialty products to specialty pharmacies.

In the US some pharmacy benefit managers (PBMs) are developing services
that shift responsibility for specialty drug management from the medical benefit to the pharmacy benefit.
In a slightly different way, this could occur in Australia.
 If successful, these programs will reduce the importance of specialty distribution channels by reducing the influence of physicians in the purchase decision.

Manufacturer Consolidation and Value of Fee-For-Service Agreements—Recent mergers of brand-name pharmaceutical manufacturers could reduce wholesaler payments under fee-for-service agreements. The consolidation of manufacturers is generally negative for wholesalers because a larger drug maker would have additional leverage in a fee-for-service negotiation.

Supply Chain Regulation and Compliance Costs—Wholesalers must comply with a range of state and Federal regulations regarding the supply chain. There is substantial uncertainty regarding both future regulations as well as the potential impact on wholesaler business practices and operating costs.
The CSO subsidy here in Australia is one such quandary.
How can wholesalers guarantee their PBS obligations when a major manufacturer such as Pfizer has dropped out of their sight?
And other manufacturers obviously looking to follow suit depending on the overall success of Pfizer’s strategy.

Australian pharmacies are but a dot on the map compared to the total global movements in the pharmacy market.
Yet each of us is influenced greatly as pharmaceutical power becomes more concentrated.
Someone sneezes in a global boardroom and a small Australian independent pharmacy contracts pneumonia – perhaps terminal.
So what will be the necessary strategies for Australian community pharmacies for this brave new world?
Suggested is:

1. Join a regional buying group (not a wholesaler franchised banner group).

2. Influence regional buying groups to create a national alliance or start a series of mergers/takeovers to build market buying power.

3. Develop continuing negotiations with all manufacturers to gain best terms of trade.
Somehow, Pfizer (and others) must be eventually brought in to this arrangement.
In the interim, there may be an opportunity for a buying group to set up a diversion supply chain reaching back into Spain or Greece, to buy Pfizer prescription products.

4. Use national buying group market power to keep wholesaler “sell margins” in line with community pharmacy requirements.
While there is sympathy for the wholesaler cause, they really have to resolve their problems without inflicting pain on community pharmacies.
Unless community pharmacy develops a national marketing backbone that is controlled by the pharmacies, the community pharmacy position is very weak.
Remember that Sigma and API were originally owned cooperatively by community pharmacists.
When they went public their strength was revealed to the Australia stock market as they appeared in the top 200 list of Australian companies.
What has happened since?
Both ex-cooperatives have had their difficulties (one more than the other) and the original independent wholesaler (Fauldings) has changed hands a number of times but remains strong under the ownership of Zuellig.
However, its marketing policies will not necessarily be compatible with Australian community pharmacy because of its global nature.

5. Develop a national buying group website to reduce dependency on franchised wholesaler controlled groups.
Use the franchise fees saved to develop new professional services.

6. Develop a logistics operation to encompass buying group deliveries within a region but extend it to go the last mile i.e. for individual pharmacy deliveries into patient homes.
This type of logistic service will be important to extend professional services under a “Pharmacy in the Home” type banner.
Also ensure that regional logistics services can extend nationally by alliance or amalgamation, because it will be this type of service that could win Pfizer back into the buying group camp.

7. Embrace the global market through the national buying group alliance.
My initial pick would be to develop a relationship with Alliance Boots given their strength in China and Europe, and their relationship with Pfizer in the UK.

8. Despite the fact that manufacturers like Pfizer have the potential to inflict pain on Australian community pharmacy, there is a need for Australian community pharmacies to become more sensitive to manufacturer needs.
The reward for this type of approach does not necessarily have to reflect in cheaper prices, more in an underwriting of pharmacy professional services that will take our core business to an identifiable and recognised level.
I am thinking that infrastructure like the Division of General Practice may be organised through the buying group infrastructure and partly paid for from manufacturer promotional funds (as distinct from increased margins on product purchases).
Local input and ideas and harnessing local strengths have not had an infrastructure to work out of for many years.
Doctors have been able to attract many government grants and manufacturer subsidies through having locally organised infrastructure.
Another important element that needs to be organised locally is continuing pharmacy education. It’s too expensive when organised by universities, even the PSA, and too important not to have grass-roots support.
A buying group with a divisional framework for professional support and development could attract major funding from a range of sources and overcome the deep divisions created between the PGA and the PSA.

Comment in the panel below this article is encouraged because 2011 begins the globalisation of Australian pharmacy in earnest.

Return to home

Submitted by Suhail Mir Mohamed on Thu, 03/02/2011 - 21:49.

This is an excellent piece and one that I think every pharmacist must read. Well done

Submitted by Neil Johnston on Fri, 07/01/2011 - 20:57.

Thanks Peter.
I don't know how much awareness is out there at the moment, but our profession needs to get its act together from the "bottom up" given that there is no visible solution from the "top down".
If we can organise the right infrastructure from the bottom we can keep all those at the top in line, including government, pharma and pharmacy political bodies.
Thanks for noticing.

Neil

Submitted by Peter Allen on Fri, 07/01/2011 - 18:46.

Neil I hope this exceptionally thoughtful piece gets circulated all around pharamcy, as it deserves. I'll do my bit.

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