I am a little isolated so I am not sure re: general mood.Sigma...

I am a little isolated so I am not sure re: general mood.

Sigma has an issue locally in Brisbane with expensive equipment breakdown which could irritate some customers.

Sigmas online ordering invoice is far superior to API. But in the end it is as much personal relationships that drive choice of wholesalers.

No one from API in a sales capacity has spoken to me since switching so there is not much incentive in going back.

I suspect when API quoted that they maintained 50% of pharmacy alliance customers they would have counted those who have an API account in order to get Alphapharm stock rather than normal ethicals. As primary custumers I guess the figure is less than 10%.

The unknowns for API are that there was some rumour (and only such 10% credibility) that the Alphapharm supply contract may be up for negotiation soon, but I have no knowledge if there is any truth in that.

The biggest next challenge is 1st April when price price reductions on generics come in. The reductions will hurt the bottom line badly. API would appear to be most affected due to its distribution of Alphapharm. Ie reductions in cost price of Simvastatin, Omeprazole, Alendroate all large cost items with good volume and large reductions in price.

http://www.pharmatimes.com/mobile/11-12-22/australia_biggest-ever_pbs_price_cuts_coming_in_april.aspx?r=1

And

http://www.pbs.gov.au/info/industry/pricing/eapd/price-reductions

The impact is such that all wholesalers will have to go to the market place and set new trading terms with their customers. This is an opportunity and threat.

In my opinion Sigma is in a better trading position with a larger net margin due to better economies of scale. No real Analysis. I had bought sigma at 30c approx and sold at 62c , when it dropped to 54.5 a couple of days ago I have bought back in. If I had bought API then if would have picked up a tidy profit already.

As I have said here before the level of profit is unsustainable across the whole industry, and cutthroat, if the wholesalers can successfully restore their bottom lines then there should be good gains and I will be jumping into both. But at the moment there is nothing in the radar that is positive. I bought some Sigma as a gamble and to back my postings.

Buying could be a good long term play, but I don't have the guts to risk too much.

As to API s investment in Priceline, general retail is under pressure. API is competing against Woolworths and Coles and their pharmacy customers. Priceline Pharmacy is a franchised model where ownership rests with the pharmacist owners.