It’s official: CWH and EBOS sign

EBOS has announced to shareholders that it has signed a multi-billion-dollar agreement to supply the Chemist Warehouse Group

The agreement will see EBOS take over the exclusive wholesale distribution of pharmaceutical products to the more than 450 pharmacies which are part of the Chemist Warehouse Group.

The five-year agreement will be effective from 1 July 2019, and provides for a potential extension of three years.

According to EBOS, it expects that sales to the Chemist Warehouse Group will generate around $1 billion in revenue in the agreement’s first year alone.

EBOS CEO John Cullity said the contract is important to both parties.

“This contract is a very positive endorsement of the capability we have built in wholesale pharmaceutical distribution and reflects the large investment in facilities, technology and people we have made over the last five years,” he said.

“We look forward to a strong and productive relationship with CWG from 1 July next year.”

EBOS had announced that it had won the tender to supply Chemist Warehouse and My Chemist stores in July 2018, taking over from Sigma.

According to Sigma, discussions between it and the Chemist Warehouse Group had reached a stage where the proposed terms for a contract extension could not be agreed.

“We made it clear at the start of the negotiations that we would only enter into a new contract if it made commercial sense and provided an adequate return on invested capital,” Sigma Managing Director and CEO Mark Hooper said at the time.

In 2017, Sigma had launched legal proceedings against the discount giant, over some aspects of its supply arrangement whereby Chemist Warehouse had stated an intention to source some lines from an alternate CSO supplier.

However Sigma dropped the legal action in July 2017, and instead entered the ultimately unsuccessful negotiation period.

Now, Chemist Warehouse Group co-founder and director Damien Gance has said that EBOS was a “great fit” for the Chemist Warehouse Group network, due to its wholesaling expertise and service standards.

“CWG is a dynamic organisation experiencing rapid growth and relies on the expertise of its supply chain partners to service its retail network,” Mr Gance said.

“EBOS is the leading pharmaceutical wholesaler in Australia and New Zealand and we are pleased to be partnering with them to assist the growth and development of our network.”

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  1. pagophilus

    How will the wholesale prices offered to the CWH group and those available to me compare?

    • Jarrod McMaugh

      You’ll have to discuss that with the negotiators of your hospital’s supply contract to answer that adequately

  2. stuart walker

    There has to be something strange where one group (EBOS) state they forecast a$1 Billion revenue generation in the first year yet Sigma was stating the contract made it untenable in a commercial sense. Surely even with slight variances in the contract wouldn’t lead to such polar opposites? Where does the truth lay?

    • Jarrod McMaugh

      I would expect the correct term is “turnover” rather than revenue.

    • Alexander Tran

      The issue is that Revenue/Turnover does not necessarily mean profits. Right now, Symbion is investing in a large amount of automated infrastructure whose costs don’t go up when more volume is achieved.

      Plus i do not believe they have 90 day trading terms as they had with Sigma, imagine having to have an extra 240 million aside for that alone.

      • PharmOwner

        Yep, turnover of $1 billion certainly looks impressive on your financial reports. But when the profit on that turnover is sweet FA, it looks a whole lot less impressive.

  3. Andrew Kelly

    So EBOS will now distribute for Chemist Warehouse and have control of Terry White Chemmart? Nope, nothing to see here.

    • Andy Hawken

      Don’t be such a silly billy. Only pharmacists are allowed to own pharmacies.

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