King Pharmaceuticals is working with wholesalers to implement an inventory reduction program to help stabilize Altace stocking levels, CFO Jim Lattanzi said during a Feb. 19 conference call.

"We are actively engaged in negotiations with our wholesale customers to establish inventory management agreements that should facilitate improved management of inventory levels," he said.

Until such agreements are reached, sales for the ACE inhibitor, King's best-selling product, will continue to be adversely affected "as channel inventory levels continue to decline," Lattanzi acknowledged.

Altace (ramipril) inventories declined by one month during the fourth quarter, King reported, citing IMS America Pipeline Data. Altace sales for the quarter were flat at $108.1 mil., while sales for the year increased 17% to $527.1 mil.

King expects to reduce Altace inventory levels by at least another month in 2004, with the majority of that reduction coming in the first quarter.

Fourth quarter Altace sales were also adversely affected by an increase in the estimated amounts owed to the government for Medicaid rebate underpayments (see ¹ Also see "King Ups Medicaid Rebate Underpayment Estimate To $65 Mil.; CEO To Depart" - Pink Sheet, 23 February, 2004.). Of the $18 mil. in new adjustments for the years 1998 to 2002, underpaid Altace rebates totaled $11.2 mil.

King is one of several pharmaceutical companies to implement an inventory reduction program since wholesaler buying patterns were brought into the spotlight by Bristol-Myers Squibb's March 2003 restatement.

The wholesaler Cardinal is in negotiations with 47 manufacturers to establish "distribution service agreements"

King believes stocking levels have nearly normalized for other products. Noting that Levoxyl 2003 revenues should have been $165 mil., and net sales were actually $133 mil., Lattanzi said King has "closed the gap" on the levothyroxine product.

"We also think we're in pretty good shape on the muscle relaxant Skelaxin , since we believe we shipped product commensurate with demand in the third and fourth quarters," he said. Inventory for both drugs declined by two weeks during the fourth quarter.

King Altace Inventory Levels To Be Stabilized Through Wholesaler Agreements

More from Archive

More from Pink Sheet