Ann: API response to Pfizer announcement , page-5

I think that there has to be a significant effect on profit.

I note that the companies concerned are still assessing the impact on earnings and will advise in due course.

I find it hard to believe that it was generating 10-15% of revenue for no or little profit. If that is the case, then the wholesalers should have been able to come out at the time of this announcement and make a statement to that effect, and left it at that. By making the announcement that they have, they are flagging to investors that there is a material effect.

Then there is the issue going forward, as to whether this announcement from Pfeizer has now set a precedent, and if so, how many other companies will follow in Pfeizer's footsteps. If their are some that do, the wholesaling business structure is in question.

API does not have the same problem that SIP does. SIP has allowed its major customers to dictate trading terms to it, rather than the other way round. If those customers decided to reneg on their account payments until a new arrangement in negotiated, the company is in dire straits.

I still think that it is conceivable that the whole basis of how pharmacies operate in Australia could be rearranged as a result of the position that SIP finds itself. Those major customers might opt to swap debt for equity, become the major holders and then bring pressure on the goveernment to partially deregulate the industry. They could then offload the pharmacy businesses to SIP and be issued more shares. If that were to occur API would be adversely affected IMO.

This decision by Pfeizer places the industry on the cusp of major restructure IMO.