The resolution of the restructure of the Clicks private-label medicine business with the Department of Health is imminent, the company has suggested, with analysts predicting this could accelerate the issuance of outstanding pharmacy licences and boost growth of the already expanding group.
Last year, News24 reported that Clicks could be forced to sell its subsidiary Unicorn after a Constitutional Court judgment that effectively prohibited it from owning pharmacies and producing its own medicines.
At the time, the ruling was seen as a victory for independent pharmacies who had brought the case against Clicks seven years ago.
Up until now, Clicks has been selling a range of generic medicines manufactured by its subsidiary Unicorn in its pharmacies, but the Independent Community Pharmacy Association (ICPA), objected, calling this a conflict of interest.
At the centre of the ICPA’s case against Clicks – on behalf of more than 1 200 independently owned pharmacies – was that it incentivised pharmacists to promote the medicines produced by Unicorn to the exclusion of others.
However, the judgment did not restrict the Clicks pharmacies from continuing to sell the Unicorn products, with the Department of Health left to ultimately decide what sanction to issue.
There was speculation at the time that Clicks might have to sell Unicorn.
Positive spin-offs
Last Thursday, after the company released its interim results, CEO Bertina Engelbrecht told investors the group was encouraged by the constructive engagements with the department and its legal teams.
She said a proposed “scheme” Clicks had presented to resolve the matter had now been accepted, after a previous one had been rejected.
Engelbrecht added that the “constraint in opening up new pharmacies” had “sharpened focus on enhancing service”.
The result, she said, was that the group had managed to grow market share in retail pharmacy by 80 basis points to 24.3% and to extend the contribution of its 11m Club Card members to more than 85% of pharmacy sales.
“In the period, we increased the number of regional pharmacies to 718, the number of registered National Department of Health patient pickup points to 530, and the number of primary care clinics to 204.”
All Weather senior equity analyst Cobus Cilliers told News24 a “timely resolution” of the Unicorn matter could provide a healthy fillip to top-line growth as a number of potential pharmacy sites within Clicks stores were in limbo.
News24 article – Clicks pharmacy licence conundrum: Govt deal is imminent, says CEO (Open access)
See more from MedicalBrief archives:
Significance of the Clicks ruling for independent pharmacies
ConCourt rules against Clicks in long battle with independent pharmacies
Clicks to appeal ‘medicine factory’ ruling