Pharmacy banners struggle


amcal, pharmacy, chemist, prescriptionSigma Pharmaceuticals has called on the incoming Abbott government not to make further cuts to the Pharmaceutical Benefits Scheme (PBS).

The owner of the Amcal, Amcal Max, and Guardian pharmacy banners says the medium term outlook for growth in the PBS , under which the Federal government subsidises drugs, is relatively flat to negative.

Sigma’s net profit in the six months to July 31 dropped by 38 per from the same period in 2012 to $16.3 million, despite a 3.1 per cent increase in sales revenue.

Sigma had already flagged its earnings would be lower as a result of the cost of investments in its multi-channel sales strategy, and long standing customer, the Harrisons Group, going into receivership.

The settlement of a law suit commenced in 2008 by pharmaceutical company Vifor also impacted earnings.

Sigma MD, Mark Hooper, said the outlook for the pharmaceutical sector is pretty tough, given government cuts to the PBS over recent years and significant rises in wages and the cost of electricity.

“The key message that we would give to the incoming government is to provide an environment of greater certainty for a sector that I think has already contributed more than its fair share to the budgetary position,” Hooper said.

Aggressive reforms to the PBS had already locked in further cuts to subsidies, and there should not be any more changes, he said.

“You’ve got to create the certainty where wholesalers can invest in infrastructure to reduce costs, and pharmacists can invest in new businesses to deliver service, knowing the environment against which they are making that investment,” Hooper said.

The government should also ensure all drugs subsidised via the public purse on the PBS are able to be distributed by drug wholesalers who are part of the Community Service Obligation (CSO).

In 2010, US-based drug maker Pfizer changed its supply arrangements to an exclusive model where wholesalers were bypassed.

The move substantially cut Sigma’s revenue, and since then Sigma has been lobbying for regulatory change to stop more drug makers following Pfizer’s supply arrangements.

Hooper said he was concerned that private research had indicated that 30 per cent of suppliers would consider a direct distribution model.

“That says to me that the issue is not dead,” he said.

Sigma shares were up 1.25 cents at 64.75 cents at 1310 AEST.


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