UK pharmacies-both retail and hospital-are currently facing shortages of medicines. This may be a result of recent trend for pharma companies to take hold of their own distribution chain rather than selling to wholesalers. However, it’s also being caused by products that are destined for UK patients being exported in parallel to Europe in search of higher profits.

Some hospital pharmacists are reportedly coming under pressure from their finance departments to cash in on the growing parallel export market from the UK. But the Department of Health has warned that it is unacceptable to take advantage of the pound’s current weakness against the euro by selling medicine supplies for profit. The government’s chief pharmaceutical officer, Keith Ridge, wrote a letter to all National Health Service Trusts (the bodies charged with delivering healthcare services at a local level) saying that this practice is irresponsible and threatens patient care. Products that are in particularly short supply at a hospital level include Novartis’ Myfortic (mycophenolic acid), used to prevent rejection in kidney transplantation.

This represents a reversal of the normal trend, as in recent years it has been increasingly common for drugs from southern Europe (where government-controlled pricing keeps drugs cheap) to end up in the UK supply chain. According to IMS Health, 11 percent of the 12,600 pharmacies in the UK are now engaging in this practice.

Retail pharmacists are also reporting difficulties in obtaining a number of important drugs, according to a stock survey carried out by industry publication Chemist & Druggist. More than a third of the pharmacists surveyed said they spent between two and five hours a week chasing out-of-stock drugs, while only 10 percent said that they spent less than an hour every week. Half of the respondents said that between five and 20 of products were currently out of stock at their wholesaler; a quarter said that 20–50 were unavailable; and 14 percent claimed the number was above 50. Three-quarters said that it typically takes at least three days to receive an emergency stock delivery when ordered direct from the manufacturer. 

At the top of the list of unavailable products are Roche’s Xenical (orlistat) and Lilly’s Zyprexa (olanzapine), with more than a third of pharmacists having difficulty obtaining these meds. Lilly implemented its new system of supplying through just two distributors a couple of weeks before the survey was carried out, making it the latest of a long list of companies that have now gone down this route. And many companies have initiated a scheme where they sell direct to pharmacies, paying distributors or wholesalers a fixed fee for delivery. 

But whatever the reason, patients are now facing long waits for important drugs, with pharmacists unable to source them from the wholesaler and having to go direct to the manufacturer. According to the Association of the British Pharmaceutical Industry (ABPI), the number of emergency deliveries has soared, with more than 77,000 made between January and May of this year by three major UK pharma companies alone. That compares to just over 6,000 in the same period of 2008-a staggering increase of more than 1,100 percent. 

ABPI claims that the problem is not with its members, as the oversupply numbers are13 percent for Zyprexa, 8 percent for Xenical, and 65 percent for Myfortic. “This paradox has nothing to do with the method of supply-shortages are hitting both the wholesaler model and the direct to pharmacy models,” says an ABPI spokesperson. “The root cause is that medicines are cheaper in the UK than elsewhere in Europe, a situation that is being made even worse by the weak pound, creating a financial incentive … for parallel exporting.”

Meanwhile, the Royal Pharmaceutical Society of Great Britain has reiterated to its members that exporting medicines like this could be construed as breaching their code of ethics. “Pharmacists exporting medicines or selling stock for exportation by others may be exacerbating existing supply problems, or creating new supply problems,” they said. “This is not in the best interests of patients or the public, and pharmacists should carefully consider their ethical responsibilities to their patients and the public.”

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News Analysis

With a weak pound being outpaced by the euro, many hospitals are sending drugs to the Continent for higher profits. What can NHS do to stop this practice?

UK Pharmacies Dealing with Drug Shortages

Roche, on Tuesday, addressed its plan to bridge the executive leadership hole that will be left at year’s end when its pharma CEO William Burns, diagnostics CEO Juergen Schwiezer, and research head Jonathan Knowles all step down or retire from their positions. 

Burns, the sole member of the trio not planning to retire, is making a bid for spot on Roche’s board of directors at next year’s annual meeting. The 23-year Roche veteran announced plans to vacate his position earlier this year. 

In a move quite different from Merck’s executive blending with Schering-Plough, Roche is extending an olive branch to its recently purchased bio-giant Genetech, and making its CEO Pascal Soriot head chief operating officer of Roche’s pharma division, with control over all global pharmaceutical operations. The decision to go with Soriot seems to emphasize Roche’s plans to fully transition Genentech into Roche’s corporate structure. 

“Following the conclusion of the Genentech integration, we will continue to bring innovative healthcare solutions to patients worldwide through a diversity of research approaches and efficient global development and commercialization,” stated Severin Schwan, CEO of the Roche Group. “This broadened and younger corporate executive committee will continue to drive Roche’s long term vision as the world’s leading biotech company.”

Rounding out the executive team will be Jean-Jacques Garaud, named head of pharma research and early development; Dan Zabrowski, appointed member of the enlarged executive committee; Daniel O'Day, appointed chief operating officer of the company's diagnostics division; and Ian Clark-a fellow Genentecher-named new CEO of Genentech.

With the pending retirement of three senior-level executives, Roche announced a new corporate executive team to bridge the personnel gap while the company looks for new leaders.

Roche Shifts Execs in Anticipation of Departures

Sepracor shareholders are voicing their concern over the company’s proposed $2.6 billion sale to Dainippon Sumitomo Pharma in a lawsuit filed yesterday in Delaware. 

Less than one week after announcing the deal between the Japanese firms, investors are calling the price negotiated-$23 per share in cash-inadequate and unfair. Sepracor, however, insists that the offer price represents a 48 percent premium over the stock’s six-month average price, and a 27.6 percent premium over the closing price of Sepracor’s common stock as of September 1.

Credit Suisse analyst Scott Hirsch stated in a letter to investors that while Sepracor’s sales are close to $400 million a year, its dwindling development pipeline (mostly respiratory and central nervous system treatments) doesn’t make the company appealing to a large number of buyers. 

“In our view, if a US firm wanted Sepracor, that likely would’ve happened already, as there have been plenty of lookers over the years,’’ Hirsch stated. “We think Dainippon Sumitomo is more interested in the sales platform and operating leverage than the revenue stream.’’

The two investors filing the suit claim that Sepracor didn’t leave much room for negotiating after the bid was made. They noted the inclusion of a $77.4 million termination fee and a “no solicitation” provision giving Dainaippon first chance to counter other offers. The complaint also states that Sepracor “did not undertake to canvas the market prior to entering into the proposed merger, and thus failed to inform themselves of the inherent fair value of the company.”

Sepracor could not be reached for comment by deadline.

Some shareholders think they were shafted in the multi-billion dollar deal between Sepracor and Dainippon Sumitomo Pharma. They're so miffed, in fact, that they've filed a lawsuit stating that the amount offered undervalues the company and its shares.

Pharmaceutical Executive-09-10-2009

UK Pharmacies Dealing with Drug Shortages

Roche Shifts Execs in Anticipation of Departures

Sepracor Faces Shareholder Lawsuit in Wake of $2.6B Deal