AUSTRALIAN Pharmaceutical Industries yesterday confirmed it was in "constructive dialogue" with rival Sigma Healthcare about progressing the recently unveiled merger proposal (PD 17 Dec).
Speaking at the API AGM, Chairman Mark Smith said the company's board anticipates signing a non-disclosure agreement shortly in order to allow a due diligence process to commence.
He reiterated previous estimates that the merged entity could deliver up to $60 million in annual savings from combined pharmacy distribution and corporate functions after three years.
MEANWHILE also at the API agm, CEO Richard Vincent focused on the performance of the company over the past year, with a small increase in underlying net profit after tax, despite the impact of exclusive direct distribution and PBS reforms which were estimated to hit gross profit by over $10 million.
He also highlighted API's "established, sustainable positions in both pharmaceutical wholesaling and in retailing".
The company's longstanding expertise in areas such as property development, franchising and marketing were also key to the success of the newly acquired Clearskincare business (PD 25 Jun 2018), Vincent said.
He confirmed that Clearskincare products would be ranged in Priceline Pharmacy, while ongoing growth within Priceline was also expected in 2019 with "demand for new franchise stores remaining constant".
In terms of Pharmacy Distribution, the year saw investment in new professional programs, merchandise and marketing under the Soul Pattinson and Pharmacist Advice brands, while an improved offer for independent pharmacies, strategic relationships and retail expertise "provides us with the opportunity to continue to hold or improve our market position".
Vincent acknowledged the new Community Service Obligation guidelines (PD 03 Dec 2018), welcoming changes preventing exclusive direct distributors also being part of the CSO but noting that the funding pool remained unchanged until Jun 2020.
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