Sigma Healthcare’s proposed purchase of Chemist Warehouse represents a major structural change for the pharmacy sector, according to the Australian Competition & Consumer Commission.
Outlining initial concerns, the ACCC has called on pharmacies to have their say on the proposed acquisition.
ACCC Commissioner Stephen Ridgeway said the ACCC had identified a range of preliminary competition concerns, including at the retail level.
“This is a major structural change for the pharmacy sector, involving the largest pharmacy chain by revenue merging with a key wholesaler to thousands of independent pharmacies that in turn compete against Chemist Warehouse,” Mr Ridgeway said.
He said Sigma was one of the largest wholesalers of prescription medicines, over the counter and front of store products.
“Sigma also provides brand and support services to community pharmacies operating as franchisees under Sigma banners such as Amcal +, Discount Drug Stores, PharmaSave and Guardian.”
Commissioner Ridgeway said Chemist Warehouse was a franchisor of pharmacies and retail stores under the brands Chemist Warehouse, MyChemist, Ultra Beauty, My Beauty Spot, and Optometrist Warehouse.
“The transaction would create a merged company that is uniquely vertically integrated across multiple levels of the pharmacy supply chain. This new business model for the pharmacy sector could raise barriers to rivals expanding or entering, which may lessen competition,” Mr Ridgeway said.
He said the ACCC had heard many concerns about the impact Chemist Warehouse has had on the pharmacy sector.
“However, the ACCC is focussed only on the impacts of the acquisition on competition, rather than the pros or cons of different business models. The key issue is whether or not the proposed acquisition weakens competition in the supply of pharmaceutical products.”
Mr Ridgeway said the ACCC was also concerned the proposed acquisition may harm pharmacies currently supplied by Sigma, leading to a substantial lessening of competition in pharmacy retailing.
Submissions to the ACCC are being accepted until June 27 and can be submitted by emailing SigmaCWG@accc.gov.au
