Chemist Warehouse-Sigma Healthcare merger: Professor Stephen King says pharmacies face an ‘Uber’ moment

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Stephen King, who led a Health Department review into the sector, says antiquated ownership restrictions should be abolished before they do more damage.

The economist who led a Health Department review into the pharmacy sector almost a decade ago says the industry is ripe for an “Uber” moment and antiquated laws protecting ownership are preventing true market competition.

Professor King said technology would “eventually lead to that Uber moment in pharmacy. We’re going to face the same issues that we have with the taxi licence. People have bought taxi licences, paid a lot of money on the basis of government regulations. If the merger proceeded, the company would operate 864 outlets under the Chemist Warehouse, MyChemist, Amcal and Discount Drug Stores brands. It currently has more than 200 managing partners who are shareholders in the discount chain, using loopholes to allow them to skirt the restrictions on ownership and reach.

Professor King’s review of the sector, authored for the Health Department and published in 2017, recommended the government “remove barriers to community access and competition between pharmacies” and allow the ACCC to determine whether overlapping ownership of outlets resulted in lower competition. But Professor King said Chemist Warehouse was the key competitive force in the industry, and under more relaxed regulations, there would be no need “to worry” about a chain that already had more than 600 stores in its network.

 

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Chemist Warehouse’s $8.8b merger could stifle competition, shut stores: ACCCAustralia’s competition watchdog has raised concerns that Chemist Warehouse’s planned merger with Sigma Healthcare into an $8.8 billion titan will hurt rivals in the pharmacy sector.
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