Sigma Healthcare's kissing Guardian Pharmacies goodbye... because it's investing more in the pharmacy biz this time.
👉 Background: Sigma Healthcare is Australia’s biggest pharmaceutical wholesaler. That means they sell both prescription drugs and over-the-counter medicines to pharmacies and hospitals.
👉 What happened: Sigma also has a whole group of its own pharmacies, like Guardian Pharmacy, Amcal and Discount Drug Stores. Over the last 12 months, Sigma saw its revenue jump 6% (thanks RAT tests), but it made a loss of $1.5 million.
👉 What else: Now, its new CEO has announced that it will invest more in the pharmacy biz and less in the wholesale one. That involves waving goodbye to Guardian Pharmacies and hello to more beauty products.
💡 The business model of pharmacies has been flipped on its head over the last 10 years. Traditionally, pharmacies would generate 80% of their revenue from prescriptions - but these products have really low margins.
💡Whereas over-the-counter products (like jelly beans, perfumes or makeup) have much higher margins but were only 20% of revenue. Chemist Warehouse were the leads in flipping this model - it generates a majority of its revenue from over-the-counter goods.
💡So clearly, the Sigma Healthcare CEO recognises that in order to bring back a profit, it needs to invest more heavily in the high margin products… like beauty.
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