UPDATE 1-Drug wholesalers fail to block Pfizer deal in UK

(Adds further details on case, Pfizer reaction)

LONDON, March 2 (Reuters) - Drug wholesalers failed on Friday to block a controversial arrangement making Alliance Boots Plc AB.L the exclusive distributor of medicines from Pfizer Inc PFE.N, the world's biggest drugmaker.

The high court in London dismissed their application for an injunction to stop the deal coming effect on March 5.

Lawyers for the wholesalers had argued that implementation of the deal -- which gives UniChem, the wholesaling division of Alliance Boots, the right to supply 15,000 pharmacies, hospitals and dispensing doctors in Britain --- should be put on hold pending a full hearing of their challenge.

The British Association of Pharmaceutical Wholesalers (BAPW) said the arrangement would stifle competition and undermine the country’s flexible round-the-clock drug ordering and delivery service.

Although Pfizer was entitled to reach the deal it did with UniChem, it should continue to supply other distributors as well, the BAPW said.

Pfizer says it needs the new system to stamp out counterfeiting, following three cases of bogus versions of its top-selling cholesterol fighter Lipitor turning up in the British distribution chain since mid-2005.

Refusing to grant the wholesalers a temporary block on the new arrangement, Justice David Richards said: “My decision is that I refuse your application for an injunction.”

The judge said that he would give his reasons on Monday.

U.S.-based Pfizer, whose drugs account for more than 10 percent of those marketed in Britain, said it was delighted by the decision and the scheme would go live as planned on March 5.

“The company is confident that its new distribution arrangement is in full compliance with all applicable EU and UK laws, and that it will secure the supply chain,” a spokesman said.

Britain’s consumer watchdog, the Office of Fair Trading, has also been looking into the Pfizer deal but was not able to reach a decision on whether to open a formal inquiry before the scheme came into effect.

Critics believe Pfizer’s real aim is to fight parallel trade, the legal practice in Europe whereby medicines are imported for resale into places like Britain from countries in southern Europe, where prices are lower.

The success of its new arrangement with Alliance Boots is expected to be monitored closely by other big drugmakers, some of which are considering similar exclusive deals.

((Editing by David Cowell; email: ben.hirschler@reuters.com; Reuters Messaging: ben.hirschler.reuters.com@reuters.net; +44 20 7542 5082)) Keywords: PFIZER BRITAIN/