Australia’s biggest listed pharmacy brand, Sigma, is welcoming the prospect of a GP co-payment, saying it will be a shot in the arm for chemists.
Sigma chief executive Mark Hooper said cuts to the federal government’s $9 billion Pharmaceutical Benefits Scheme was hurting pharmacists and upending their business models.
Expanding into health services, the pharmacy operator said profit rose by more than a third in the six months through July. Photo: Virginia Star
But he said the Abbott government’s controversial plan to charge a $7 co-payment for GP visits could offset some of that pain as pharmacies start introducing more professional health services.
“If there is any hesitation from people wanting to go see a doctor, the next place they will go to is a pharmacy,” Mr Hooper said.
“By having a recognised set of brands delivering high-quality professional services, in that environment, plays perfectly into our strategy.”
Mr Hooper’s comments came after Sigma posted a 37.5 per cent rise in net profit to $22.39 million for the six months to July 31.
Sigma has been introducing structured professional services – such as initial screenings for a range of conditions, blood pressure checks and advice about managing chronic illnesses – across its Amcal and Guardian branded pharmacies in the past year.
“The old model of 70 per cent coming through dispensary and waiting for 1000 scripts to walk in through the door, that’s gone,” Mr Hooper said.
“The way you make your income has got to change with the way that the funding is coming through to support your business.”
He said the additional services could account for as much as 20 per cent of a pharmacist’s income, based on overseas models and even attract funding from the government and insurers.
“It will also allow pharmacies to levy a charge on patients for some services. A good example would be the recent trials that have run in pharmacies around flu shots.
“You can go get a flu shot from the doctor for free if you like, but the reality is there is a whole swag of people who are prepared to pay for the convenience of having it done in a pharmacy.”
Mr Hooper said Sigma expected acquisitions and its portfolio of private and exclusive-label products would also help boost sales and profits among its pharmacy network in the past six months.
The company bought two businesses this year, smaller rival Central Healthcare Services, and the Discount Drug Store pharmacy brand, taking Sigma’s total network of stores to 1200.
They were Sigma’s first acquisitions since a restructure in 2010, which saw the company hive off its struggling generic-drug-making business.
Mr Hooper said the purchases would not hinder its capital management plan, which has included buying back 7 per cent of the company’s shares in the past few years.
The company had $34.7 million in net cash and no debt, which Mr Hooper said gave Sigma the flexibility to complete further buybacks.
But he said it was not the company’s aim to be debt free, and would not rule out further takeovers.
“If I found a really good acquisition that made me a bucket load of money that required me to borrow $200 million, I’d do it,” he said.
Mr Cooper said the company also aimed to increase its presence in the $2 billion hospital pharmaceutical market, of which Sigma has a 5 per cent share through its purchase of Central Healthcare Services.
He said most of that growth would be organic rather than through further takeovers.
“I probably don’t want to talk about that in too much detail but we have a separate project team that we have established in that business to drive that strategy.”
Sigma did not pay an interim dividend because of a lack of franking credits. Mr Hooper said the company would resume its half-year shareholder payout in 2015.
The companies shares had plunged 3.6 per cent to 80 cents in afternoon trade on Thursday.