Dispute over Chemist Warehouse plans to purchase certain products from alternate wholesaler.
Sigma Healthcare has just announced the launch of legal action against the My Chemist/Chemist Warehouse Group (MC/CW) in a major escalation of a supplier dispute.
In a trading update to the Australian Stock Exchange this morning, Sigma says the decision to take legal action has come after offers of mediation and binding arbitration were rejected by MC/CW.
The planned action is over MC/CW’s intention to acquire products from an alternative Community Service Obligation (CSO) Wholesaler.
“Sigma maintains that under the existing agreement MC/CW is not entitled to acquire products from another CSO Wholesaler,” Sigma said. “Remedies to be sought by Sigma include declarations and injunctions for specific performance of the agreement.”
Sigma said the impact of MC/CW’s intention was expected to be about $5m to $10m per annum.
“While Sigma remains confident of its position, this action, combined with a continuation of the subdued start to the financial year, may mean that current year underlying EBIT could be up to 5% below FY2016/17 (subject to the outcome of the proposed proceedings),” Sigma said, adding that ongoing legal costs would also impact earnings.
More in tomorrow’s Pharmacy Daily.