Pills/Medicines/Drugs

Australia's consumer watchdog has greenlighted a landmark merger between discount pharmacy retailer Chemist Warehouse and Sigma Healthcare, paving the way for the creation of an AU$8.8 billion pharmaceutical giant.

The new venture is expected to add new dimensions to Australia's healthcare landscape. The consolidation, finalized in December, will combine approximately 1,000 retail stores and 16 distribution centers across Australia and New Zealand. The pharmaceutical behemoth, born out of the merger, will be effectively managing the whole process from medication development to retail sales, ABC reported.

"There is and will continue to be effective competition at all levels of the pharmacy supply chain, capable of constraining a combined Sigma Chemist Warehouse," Australian Competition and Consumer Commission (ACCC) chair Gina Cass-Gottlieb said.

The company was expected to soon claim the top spot in Australia's pharmacy landscape, surpassing EBOS -- the owner of TerryWhite Chemmart -- making it one of the country's biggest retailers, leveraging Sigma Healthcare's extensive pharmaceutical wholesaling and distribution network, ABC reported.

Sigma Healthcare's stock price surged 39% on Thursday following the ACC announcement. Although the ACCC was previously concerned about decreased market rivalry, the concerns were allayed upon acquiring a court-enforceable undertaking from Sigma, Bloomberg reported.

"The evidence gathered, augmented by the undertaking given by Sigma, led us to conclude that a substantial lessening of competition is unlikely," Cass-Gottlieb said. "The ACCC's analysis found that the proposed merger is unlikely to substantially lessen competition nationally or locally because other pharmacies and non-pharmacy retailers will continue to compete to the same extent they compete now."

"Critical to our conclusion that a substantial lessening of competition is unlikely is the competitive constraint provided by competing wholesalers including API, EBOS, and CH2,"

According to Mario Verrocchi, CEO of Chemist Warehouse, the decision reinstated the company's dedication to making Australia's pharmacy industry a more inventive and competitive market.