by Jim Woods | May 7, 2013 10:32 am
Access to the best-selling erectile dysfunction drug made by Dow component Pfizer Inc. (NYSE:PFE) will soon be available via cyberspace.
In a move that’s likely to alleviate much of the embarrassment many men feel when going to a pharmacy and getting their prescriptions filled, Pfizer has created an industry first by opting to sell its little blue performance-enhancing pill direct to the consumer at Viagra.com.
A doctor’s prescription still is required before you can buy Pfizer’s standout drug, which generated some $2 billion in worldwide revenue for the company in 2012. And while you can’t bypass a visit to a doctor, you’ll now at least be able to avoid a potentially uncomfortable visit to the local pharmacy.
This new, direct-access strategy has wider implications for the industry at large.
First off, drugmakers might be able to charge more money for direct access to personally sensitive drugs such as Viagra, birth-control pills, STD medications, hair-loss treatments, weight-loss drugs, or really anything that individuals feel generally uncomfortable with their local pharmacist knowing about.
In the case of Viagra, Pfizer says it will charge the very stiff price of $25 per pill; however, the company does plan on offering three free pills with the first order and 30% off the second order.
In addition to the monetary potential of charging more for drugs in exchange for privacy, Pfizer and other drugmakers will be able to combat the plethora of counterfeited drugs currently available through shady online distributors. Indeed, Viagra is particularly susceptible to this copycat threat, as the product is the most counterfeited drug available in the U.S., according to Pfizer.
A recent Associated Press story reported that many illegal online pharmacies are offering patients counterfeit versions of Viagra and other brand-name drugs, sometimes up to 95% off the retail price — and more importantly, without a prescription.
While this might seem enticing to some, according to Pfizer, a vast majority of the “Viagra” available through popular online pharmacies is fake. In a 2011 study, Pfizer bought so-called Viagra from 22 online pharmacies, then tested the pills for purity. Pfizer said 77% of the samples tested were counterfeit, while most had half or less of the promised level of the active ingredient.
Getting the drug direct from Pfizer will alleviate the counterfeit issue, and it also will alleviate the potential embarrassment associated with going to a local pharmacy.
Indeed, both of these issues could have ramifications for pharmacy firms such as CVS Caremark (NYSE:CVS), Walgreens (NYSE:WAG) and Rite Aid (NYSE:RAD), if they fail to jump on this trend.
Interestingly, Pfizer has chosen CVS Caremark to fill its Viagra.com orders. Why not just sell the drug without the middleman? Well, because by law, drugmakers aren’t allowed to sell directly to patients. Under the current legal framework, drugmakers sell to wholesalers, and the wholesalers then distribute the drugs to pharmacies, medical offices, hospitals and other places where drugs are administered.
For pharmacy companies, this means embracing the change and partnering up with drugmakers to fill direct prescriptions. So far, CVS Caremark has taken the lead here, but if the online direct-to-consumer model proves popular, look for other pharmacy firms to get into the cyber-delivery game.
If the Pfizer experiment is successful, other drugmakers could begin offering their wares online too. Likely candidates here are Eli Lilly (NYSE:LLY) and its competing erectile dysfunction drug Cialis, and GlaxoSmithKline (NYSE:GSK), which offers a variety of drug treatments for an array of sensitive ailments.
The bottom line here is that Pfizer’s new digital Viagra could lead to a breakout trend for drugmakers, and for pharmacy firms who embrace the change.
That’s a big development all investors should keep an eye on.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.
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