The worst thing wholesalers could do is pretend Amazon is not going to have an impact and ignore the threat, says Sigma chief
A few weeks ago, Amazon announced that it had acquired PillPack, an American company which offers pre-sorted dose packaging, home delivery and a customer service commitment for people who take multiple daily prescriptions.
PillPack has pharmacy licences in all 50 states of the US, which removes a significant barrier for Amazon in that country.
Following the announcement, CVS shares fell 9% in early trading, while Walgreens Boots Alliance dropped by more than 10%.
Amazon’s move in the US could possibly be a crystal ball into Australia’s destiny, suggest Fairfax writers.
Australian pharmaceutical wholesaler Sigma has suggested working with Amazon rather than against it.
“In a perfect world we’d be partnering with those sorts of people,” Sigma chief executive Mark Hooper told The Sydney Morning Herald recently.
“The worst thing I could do is pretend they [Amazon] are not going to have an impact and ignore [the threat],” Mr Hooper said.
Mr Hooper told SMH that if Amazon does move into pharmaceuticals, Sigma has the infrastructure to ensure prompt delivery to peoples’ homes.
“I’m trying to look for ways of working with new market entrants than trying to fight them,” he said, adding Sigma has reached out to Amazon “but there’s been no detailed discussions”.
“I need to make sure that I have a strategy that copes with them coming in as a possibility.”
Amazon is not the only threat facing Sigma right now.
Sigma shares plummeted 43% following the 2 July announcement that it failed to negotiate proposed terms for a contract extension with My Chemist Group.
Meanwhile EBOS Group shared that it had won the tender to act as the exclusive third party distributor to the more than 400 Chemist Warehouse and My Chemist stores across the country.
“The decision on the MC/CW contract creates an important pivot point for Sigma,” Mr Hooper said.
“It may be a step back in our short term financial results, but it improves the risk profile of our earnings and also releases significant capacity to better leverage our infrastructure and resources in areas that can provide long term sustainable growth.”
Sigma will continue to supply Chemist Warehouse and My Chemist pharmacies until 30 June 2019, under the terms of the existing supply arrangement.