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.”