Shares in Sigma Pharmaceuticals plummeted today after the company said it stood to lose up to 15 per cent of its revenue from wholesaling because of a change in strategy by a key supplier.
Sigma announced earlier in the day that US-based Pfizer had decided to supply prescription drugs directly to pharmacies rather than through Sigma.
The change will take effect from January 31, 2011.Sigma said the change would mean its wholesaling revenue would drop by 10-15 per cent from that time.
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Sigma shares were 9 cents lower, by 18.4 per cent, at 40 cents.
Sigma said the move by Pfizer would force it to ”further reduce its customer trading terms”, the company said.
Sigma said in a market update that Pfizer had told it of the change, which involved ”expanding its current Pfizer Direct model”.
”All prescription products (PBS and non PBS) will be delivered by Pfizer direct to pharmacies” from that time, Sigma said in the statement.”This program will by-pass the national full line wholesaling system.”
Sigma said it would continue to distribute Pfizer’s OTC & Consumer Products.
”As a result of Pfizer’s decision, Sigma expects its annual wholesaling revenues to decrease by approximately 10-15 per cent from February 2011.
”However, the full impact on future earnings is being assessed.”Given the significance of this change, combined with the impact of the recent PBS reform legislation, this will accelerate the need for Sigma to further reduce its customer trading terms,” Sigma said.
Pfizer also announced it would not be seeking to participate in the Community Service Obligation funding pool, Sigma said.
AAP
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