Sigma inks Chemist Warehouse supply contract for PBS, FMCG goods

Image credit: Sigma Healthcare's Facebook

Pharmaceutical company Sigma Healthcare Limited has signed a binding term sheet with Chemist Warehouse for the supply of Pharmaceutical Benefits Scheme (PBS) medicines as well as Fast-Moving-Consumer-Goods (FMCG) products for a five-year period beginning on 1 July 2024.

According to the provisions of the new supply deal, Sigma will guarantee an additional supply of PBS medications to Chemist Warehouse while the current FMCG contract will be renewed. 

In the first full year of the arrangement, Sigma projects that income from all product sales to Chemist Warehouse will be at least $3 billion, as revealed in an ASX announcement. 

Sigma CEO Vikesh Ramsunder commented on the contract by Chemist Warehouse, saying the deal is “wonderful news” for the company and its shareholders.

“The contract allows us to leverage our highly automated distribution centres and latent spare capacity after multiple years of investment,” he said. 

The parameters of the supply contract, once fully implemented, are expected to support Sigma’s medium-term EBIT margin estimate of 1.5 per cent to 2.5 per cent. 

Moreover, Sigma’s existing FY24 EBIT forecast of $26 million to $31 million is unaffected by the current deal, which runs until June 2024.

“Sigma has worked tirelessly the past 12 months to build a stronger company and to significantly improve our operational performance for the benefit of all customers,” Ramsunder said.

The Sigma CEO further noted, “Securing this Chemist Warehouse contract means we will now have real scale and momentum moving into the future.”

Sigma and Chemist Warehouse are collaborating to finish the long-form agreements that will fully detail these arrangements by 30 June 2023.

Sigma Healthcare Limited is an Australian, ASX-listed company with a focus on the pharmacy industry.

The company has pharmacy operations in retail, wholesale and distribution. F

From its head office in Clayton, Victoria, Sigma manages over 1,200 branded and independent pharmacies.