Pharmaceuticals distributor Sigma says it must find new ways to generate revenue as cuts to the Pharmaceutical Benefits Scheme continue.
Pharmaceuticals wholesaler and distributor Sigma Pharmaceuticals will increase its focus on services that can be offered by pharmacists as it continues to battle changes to the Pharmaceutical Benefits Scheme (PBS).
Sigma, which operates the Amcal, Amcal Max and Guardian pharmacy brands, will also upgrade its key distribution centres over the next three years.
The company said continuing federal government reforms to the PBS meant it had to find new ways to generate revenue.
The PBS reforms have lowered the prices paid for generic medicines, lowering the distribution margin earned by Sigma and other distributors.
“A flat PBS necessitates a sharper focus on non-dispensary sales,” Sigma said.
Managing director Mark Hooper said Sigma was investing in areas such as pharmacists’ professional services, such as initial screening of customers for various conditions, or advice on how to manage an existing condition.
The company would also focus on new healthcare products that can be sold at the front of pharmacy stores.
“If you look at the models overseas, pharmacies have migrated from a heavy reliance on dispensary income to have much greater focus on services and front-of-shop income,” he said.
“That’s the model that we see as being the one that will be successful moving forward.”
Sigma made a net profit of $53.5 million in the year ending January 31, almost triple what it made in the previous year.
Without one-off items in both years, underlying profit was $51.05 million, down slightly from $52.3 million a year earlier.
Sales revenue was up 1.1 per cent to $2.97 billion, reflecting increased volumes and market share gains, and despite PBS reforms over the last 12 months.
Sigma estimated that without the PBS price reductions, sales revenue would have grown by 4.1 per cent.
Ongoing PBS reforms would continue to put pressure on the pharmaceuticals industry, but emphasis on reducing discounts for customers, and more efficient warehousing and logistics, would position the company for growth in gross profit, Sigma said.
Over the next three years, Sigma plans to upgrade its 13 distribution centres across Australia, after years of underinvestment in that area, Mr Hooper said.
It will spend between $40 million and $50 million on upgrading major distribution centres in Sydney and Brisbane.
Sigma shares gained one cent to 64 cents.