API’s new trading terms
December 7, 2010
THE impact of Pfizer ceasing
sales of its prescription medication
through wholesalers (PD yesterday),
in combination with the recently
passed PBS refoms, will leave
Australian Pharmaceutical
Industries “with no choice but to
look at measures to recover lost
income”.
According to a statement by API
released late yesterday afternoon
the company estimates the negative
impact of Pfizer’s announcement
alone will see its revenues drop by
around 10-15% - the same
proportion as cited by Sigma in its
ASX announcement yesterday.
API also estimated that the
proposed PBS reforms will cost the
wholesale industry as a whole $220
million over five years, or $8,800
per pharmacy per annum between
2010 and 2015.
Yesterday, as a result of Pfizer’s
decision, API’s shares fell by 9.9%.
“The consequential impact of
both these changes on earnings
has yet to be fully determined
however API will put in place
measures to address the impact of
these changes by reducing
customer trading terms, and
reviewing its cost base,” the
company said in a statement.
At present API has said that it is
the process of working through the
“precise magnitude of the changes
required”, and will inform
customers of their new trading
terms “as soon as possible”.
API did however confirm that the
reductions in trading terms would
apply from 01 February next year.
MEANWHILE Pfizer’s
announcement also saw Sigma’s
shares drop by a whopping 17.3%.
The move is also expected to
reduce the discounts available
from wholesalers, according to a
story in today’s Financial Review
which quotes Ian Harper from
Access Economics saying that the
changes “will add further pressure
to a PBS supply chain under
financial stress.
“Changes of this magnitude
cannot be introduced without the
dynamics of the sector changing
considerably,” Harper said.
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