Big pharma shake-up: Chemist Warehouse pushes through with major merger
- Replies 7
Accessible healthcare is one of the most essential things, especially as people age.
As people rely on their local pharmacies for their medical needs, a recent update from one of Australia's leading medical care brands may change healthcare retail in the country.
The Australian Competition and Consumer Commission (ACCC) just gave Chemist Warehouse the green light for a significant merger in the pharmaceutical industry.
Its proposed union with pharmaceutical distribution company Sigma Healthcare has been approved.
This approval paved the way for an $8.8 billion behemoth in the healthcare sector.
This merger could be a development that should have real-world implications for Australians.
The ACCC's nod of approval came with the understanding that the merger should not 'substantially lessen competition nationally or locally'.
'There is and will continue to be effective competition at all levels of the pharmacy supply chain, capable of constraining a combined Sigma Chemist Warehouse,' ACCC chair Gina Cass-Gottlieb emphasised.
The commission's analysis suggested that other pharmacies and non-pharmacy retailers should remain as Chemist Warehouse's competition in the market.
Last June, the ACCC expressed its concerns that the merger could lead to reduced competition and higher prices for consumers.
Enquiries from pharmacists and other market participants echoed these concerns.
After reviewing both Chemist Warehouse's and Sigma Healthcare's internal documents, the ACCC believed that the merger would not impede competition, especially after Sigma agreed to a court-enforceable undertaking.
This undertaking included a series of obligations.
These undertakings include enforcing contractual restrictions, making it costly for pharmacies to switch suppliers, and protecting their franchisees' information for the next three years.
Additionally, Sigma should fulfil its obligations as a pharmaceutical wholesaler under the federal government's Community Service Obligation arrangements for the next five years.
Chemist Warehouse CEO Mario Verrocchi stated that the merger would continue to drive competition within the industry.
'By bringing together Sigma's advanced distribution and logistics capabilities with Chemist Warehouse's strengths in retail and marketing, we are creating an opportunity that will benefit both companies' shareholders and customers,' Mr Verrocchi shared.
Sigma Healthcare CEO Vikesh Ramsunder believed that the merger was a 'critical milestone'.
'We believe the proposed merger will create a stronger business and accelerate our long-term growth ambitions, for the benefit of our stakeholders,' Mr Ramsunder wrote in a statement.
Talks about the merger started earlier this year.
Several SDC members shared their thoughts about the merger.
'This will put pressure on my local chemist store if it goes ahead,' @Liz shared.
'I like the smaller chemists. They offer much better service, but I bet if this goes ahead, the smaller chemist will have to charge for delivering to the door.'
@Benny's Light believed that this would pave the way for pharmacies with little to no customer care.
'It will be like how Bunnings took over hardware and priced the local family-operated store out of business. We also know what groceries are like with the two big players of Coles and Woolworths,' he explained.
'If this happens, competition will go out the window, and we as consumers will be at the beg and call of the major player, pricing the smaller operators out of business and destroying any fair competition.'
With the merger on the line, it's time to keep a watchful eye on how it could affect the market and everyone's wallets.
What do you think about this update? We encourage you to share your thoughts and opinions in the comments section below.
As people rely on their local pharmacies for their medical needs, a recent update from one of Australia's leading medical care brands may change healthcare retail in the country.
The Australian Competition and Consumer Commission (ACCC) just gave Chemist Warehouse the green light for a significant merger in the pharmaceutical industry.
Its proposed union with pharmaceutical distribution company Sigma Healthcare has been approved.
This approval paved the way for an $8.8 billion behemoth in the healthcare sector.
This merger could be a development that should have real-world implications for Australians.
Chemist Warehouse has been in talks with Sigma Healthcare for the merger. Image Credit: Australian Journal of Pharmacy
The ACCC's nod of approval came with the understanding that the merger should not 'substantially lessen competition nationally or locally'.
'There is and will continue to be effective competition at all levels of the pharmacy supply chain, capable of constraining a combined Sigma Chemist Warehouse,' ACCC chair Gina Cass-Gottlieb emphasised.
The commission's analysis suggested that other pharmacies and non-pharmacy retailers should remain as Chemist Warehouse's competition in the market.
Last June, the ACCC expressed its concerns that the merger could lead to reduced competition and higher prices for consumers.
Enquiries from pharmacists and other market participants echoed these concerns.
After reviewing both Chemist Warehouse's and Sigma Healthcare's internal documents, the ACCC believed that the merger would not impede competition, especially after Sigma agreed to a court-enforceable undertaking.
This undertaking included a series of obligations.
These undertakings include enforcing contractual restrictions, making it costly for pharmacies to switch suppliers, and protecting their franchisees' information for the next three years.
Additionally, Sigma should fulfil its obligations as a pharmaceutical wholesaler under the federal government's Community Service Obligation arrangements for the next five years.
Chemist Warehouse CEO Mario Verrocchi stated that the merger would continue to drive competition within the industry.
'By bringing together Sigma's advanced distribution and logistics capabilities with Chemist Warehouse's strengths in retail and marketing, we are creating an opportunity that will benefit both companies' shareholders and customers,' Mr Verrocchi shared.
Sigma Healthcare CEO Vikesh Ramsunder believed that the merger was a 'critical milestone'.
'We believe the proposed merger will create a stronger business and accelerate our long-term growth ambitions, for the benefit of our stakeholders,' Mr Ramsunder wrote in a statement.
Talks about the merger started earlier this year.
Several SDC members shared their thoughts about the merger.
'This will put pressure on my local chemist store if it goes ahead,' @Liz shared.
'I like the smaller chemists. They offer much better service, but I bet if this goes ahead, the smaller chemist will have to charge for delivering to the door.'
@Benny's Light believed that this would pave the way for pharmacies with little to no customer care.
'It will be like how Bunnings took over hardware and priced the local family-operated store out of business. We also know what groceries are like with the two big players of Coles and Woolworths,' he explained.
'If this happens, competition will go out the window, and we as consumers will be at the beg and call of the major player, pricing the smaller operators out of business and destroying any fair competition.'
With the merger on the line, it's time to keep a watchful eye on how it could affect the market and everyone's wallets.
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