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Alliance Boots has pulled out of a key European trade association after a row with its competitors over sweeping changes to the Continent’s wholesale medicines market, The Times has learnt.
A leaked letter from Ornella Barra, the company’s wholesale affairs director and the long-term partner of Stefano Pessina, its largest shareholder, shows that the company withdrew unilaterally from the European Association of Pharmaceutical Wholesalers on June 11.
“Our decision to withdraw is the result of irreconcilable differences of vision, outlook and approach to pharmaceutical wholesaling between GIRP and the group I represent,” Ms Barra wrote in a letter to the Brussels-based group’s president and members of its executive committee.
The decision followed a series of disagreements with the organisation, which represents 600 of Europe’s largest drug wholesalers, after Alliance Boots’s exclusive distribution deal with Pfizer, the American pharmaceutical giant, last year.
“Regrettably, we have to note that there has been no attempt by the association in the last several months to change its strategy or corporate governance [as we have suggested and requested] to enable it to adapt to the evolution of the market,” Ms Barra wrote.
The association opposes the new drug distribution arrangements, which have cut out rival wholesalers by making Alliance Boots the exclusive supplier of all Pfizer medicines – about 15 per cent of the market – to every chemist and dispensing doctor in the UK.
Pfizer, which is seeking to reduce costs in the face of the expiry of patents on some of its bestselling drugs, has said that it is considering rolling out similar exclusive distribution deals across Europe. Other big drug companies, including Astra-Zeneca, are planning similar moves to give them tighter control of the supply chain and help to clamp down on pharmaceutical counterfeiting and parallel trade in medicines.
The Pfizer/Alliance Boots distribution model, known as “Direct to Pharmacy”, is being investigated by the Office of Fair Trading as part of a study of Britain’s drug wholesaling market announced in April. Rival wholesalers have accused it of being anticompetitive and of posing a danger to public health.
Ms Barra, attacking the wholesalers’ association for its “incoherence” on the issue, wrote: “In an environment of major change in the pharmaceutical supply chain, GIRP has remained tied to the old methods and ways of operating, with which Alliance-Unichem no longer identifies.”
Alliance Boots’s decision to withdraw from the association represents one of the first independent steps that the company has taken under the new ownership of Mr Pessina and Kohlberg Kravis Roberts, the American private equity firm. They led a successful £11.1 billion joint takeover of the group last month.
Alliance Boots has also been Europe’s largest pharmaceutical wholesaler. The company earned £9 billion of its £17 billion revenues from its wholesaling activities last year.
A spokesman for Alliance Boots confirmed its decision to withdraw from the group, but declined further comment.
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