‘Direct to Pharmacy’ David Watson Trade Director Pfizer Ltd

Headlines We’ll boycott Pfizer brands, warn contractors C&D 7 October 2006 We’ll boycott Pfizer brands, warn contractors C&D 7 October 2006 This is a bad move for Pharmacists Steve Dunn, C&D 7 October 2006 This is a bad move for Pharmacists Steve Dunn, C&D 7 October 2006 Public scrutiny will exonerate Pfizer The Times October 2006 Public scrutiny will exonerate Pfizer The Times October 2006 Pfizer upsetting the apple cart Pharma Times November 2006 Pfizer upsetting the apple cart Pharma Times November 2006

Supply chain control Supply chain control Changing portfolio Changing portfolio Power of wholesalers Power of wholesalers Integrity of supply Integrity of supply Patient safety Patient safety Pharmacy customer Pharmacy customer Why the change?

 All UK wholesalers with national coverage were invited to participate in negotiations – RFP  After intensive discussions and a comprehensive due diligence programme, Unichem were appointed as an LSP on an initially exclusive basis  After initial AAH agreement to heads of terms, AAH withdrew in January 2006, notified to Pfizer by Celesio Headquarters Appointment process

 Pharmacists can buy Pfizer products directly from Pfizer, ownership and visibility of Pfizer products remains with Pfizer until sale to the pharmacist  Pfizer has appointed UniChem as a Logistics Service Provider (LSP) to carry out a full range of services on behalf of Pfizer, for which Pfizer will pay UniChem a fee per pack  Pfizer does not sell Pfizer products to Unichem or to any other wholesaler, Unichem does not act as a wholesaler in relation to UK sourced Pfizer products  Pricing and discounting on Pfizer products the responsibility of Pfizer How does DTP work

you’re forcing me to buy from UniChem… You can’t cover the whole of the UK You can’t dictate your own discount scheme UniChem don’t have the capacity UniChem will preferably supply Boots Challenges What if UniChem go on strike

My mailbox

Key metrics:  97% of all ‘dispensing points’ in the UK have ordered products from Pfizer  6.9 million units have been delivered  99.7% ‘on time, in full’ delivery accuracy First 3 months

Pfizer has the ability to through DTP to develop a new pharmacy commercial value proposition and service approach  UK Pharmacy has an emerging role in the management of patient treatment through the new Pharmacy contract  Changes in Pfizer portfolio in the next few years mean pharmacy purchasing choice becomes a more important factor in the growth of many Pfizer products  Pfizer are developing a number of customer facing strategies to support our wide portfolio, and provide additional services to pharmacy Commercial Opportunity

OFT short term study  Market study – not a review specifically on Pfizer  Many different (and conflicting) interests and opinions have been heard  Market practices on discounting arrangements in the UK are not transparent  Evolution of the pharmaceutical distribution market difficult to predict

What happens next  Other Pharma Co’s may make similar changes (AZ, Lilly, Sanofi Aventis)  Some may focus on Hospital distribution rather than the entire community pharmacy customer base  Wholesaler business impact depends on market change over time – not simply Pfizer move  Wholesalers willingness to embrace change and compete effectively against new entrants in sector?  Pharma Industry increasingly focusing on the role of the Pharmacist in provision of healthcare