EBOS Group has won the tender to act as the exclusive third-party distributor of pharmaceutical products to more than 400 Chemist Warehouse and My Chemist stores in Australia.
Both parties expect to enter into a five-year supply agreement, with the potential for an extension for a further three years, to take effect from July 1, 2019, when the supply arrangement with the current supplier Sigma ends.
EBOS estimates that sales to the Chemist Warehouse Group stores will generate about $1 billion in revenue in the first year of the agreement. Having acquired Symbion in 2013, EBOS has grown to become a leading marketeer and distributor of pharmaceutical products, with yearly sales revenue of about NZ$7.5 billion (A$6.84 billion) and a market capitalisation of NZ$2.7 billion (A$2.46 billion).
EBOS Group CEO John Cullity says that to be chosen to partner with Chemist Warehouse Group was a further endorsement of the group’s significant growth in the past five years.
“To be selected as a trusted partner by Chemist Warehouse Group reinforces our capital-investment strategy and reflects the efficiencies we have made over a number of years to our operations,” he said.
“It’s a great endorsement of EBOS’ wholesale pharmacy business and reflects the high level of expertise and service standards that we offer the industry more broadly. Continuing to grow our healthcare business remains a high priority for the group and partnering with Chemist Warehouse Group will be a natural progression of that. We’re confident that EBOS will generate an acceptable return on capital from this new business.”
EBOS Group Chairman Mark Waller says the business has invested diligently to ensure it’s well placed to service an agreement of this nature.
“Over the past seven years, the group has undertaken a significant capital-expenditure program to establish a number of new highly automated distribution centres in Sydney and Melbourne with our new Brisbane facility to open later this year,” Mr Waller said. “These major investments have significantly improved both our productivity and efficiency levels and lowered our operating costs.
“Today’s announcement is a strong validation of that investment and we’re very well equipped to meet growing demand across the entire industry, including from our existing customers, and continue to uphold the high standards we set.”