Costco CFO: Pharmacy prices to drop off due to generics

Predictions discussed during call with investors

ISSAQUAH, Wash. — Costco Wholesale EVP, CFO and director Richard Galanti told investors during the company’s third quarter 2011 earnings call last week that average prices in pharmacy probably would decline due to the introduction of generic versions of branded drugs.

“[The] only area where you are going to see some average price declines is probably in pharmacy where, and we've all read about it, there is some very well-known branded items that are going to become generic this coming year,” Galanti said.

Analysts have long predicted that the loss of patent protection for several branded drugs over the next few years, often known as the patent cliff, will lead to widespread commoditization of the pharmaceutical market.

The Issaquah, Wash.-based retailer reported third-quarter sales of $20.2 billion, compared with $17.4 billion in third quarter 2010, as well as profits of $324 million, compared with $306 million the year before.

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