Thursday, July 19, 2007

Earnings Season

While Pharmalyst has been sampling some fine Aussie products like the ones shown, big pharma earnings season is in full swing. J&J & Novartis tempered their outlook while Abbott handily beat the street. Abbott seems to be riding the Humira wave and presumably their pipeline has other gushers or else they will be in a Pfizer like situation.

The big news appeared to be Pfizer's poor earnings. The extent of the decline of Lipitor's US sales surprised some. Time for Pfizer to move beyond Lipitor (they appear to be doing so if their new measure of earnings for non-patent expiry products per this post from Dr. Peter Rost is any indication). Dr. Rost also raises the issue of Lipitor channel stuffing by Pfizer.

Pharmalyst tries to listen in on all the analyst call webcasts and did listen in on the Pfizer call day before yesterday. Many of the analyst questions were precisely regarding this issue. Unlikely that Pfizer did any channel stuffing like BMS though sure looks like they may have indirectly & unintentionally forced wholesalers to buy more by their price increase schedules etc (some analysts were asking questions around this yesterday). In any case Pfizer clearly disclosed the impact of the channel inventory in both Q1 and Q2 earnings releases and their vice chairman David Shedlarz indicated during the call yesterday that lower inventories may be a hint of wholesaler's expectations of future Lipitor sales. Can't get any clearer than that and so they can hardly be accused of channel stuffing like BMS.


Peter Rost said...

"sure looks like they may have indirectly & unintentionally forced wholesalers to buy more by their price increase schedules"

This is how you do channel stuffing! Tell wholesalers price is going to go up, they stock up, and - voila!


Nothing unintentional or surprising there . . .

When sale of a $12 billion product is involved, people know exactly what they do . . . or they get fired.

Pharmalyst said...

Dr. Rost - Honored to get your comment on my humble little blog. Obviously you know much more about the industry than I do and he issue you raised in your post is certainly something that the analysts appeared to be concerned about.
What one of the executives said (don't remember exactly who) is that January is when the prices go up on a regularly and so wholesalers may have stocked up....but who knows what exactly happened. Certainly these sort of issues have not cropped up with Lipitor in the past...
However Pfizer did disclose +ve impact of channel inventory after their Q1 they are not doing it on the sly like BMS. Perhaps channel stuffing in CYA mode since they are now headed by a lawyer CEO?!