Woolworths has long toyed with the idea of dipping its toe in the pharmacy sector and last year made a bid for Priceline operator Australian Pharmaceutical Industries (API),but ended upwithdrawing its $850 million offer in January. It told API that after due diligence,the supermarket chain “has not been able to validate the financial returns it requires in line with the Group’s capital allocation framework”.
Retail giant Wesfarmers ended up acquiring API for $764 million in March.
But Woolies has remained interested in the healthcare space and has an independently operated platform called HealthyLife,which sells supplements,wellness products and beauty goods. The platform,launched 18 months ago,has reached 200,000 customers.
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Australia’s pharmacy sector is a tightly regulated industry,and regulations about the owning and operating of chemists have long kept general retailers like supermarkets at arm’s length.
These rules are robustly defended by the powerful Pharmacy Guild of Australia,which was quick to respond to the deal on Friday,saying it was assessing whether Woolworths’ plans are in line with regulations for the sector across the country.
“We have contacted the pharmacy authorities in all jurisdictions across Australia to ensure this partnership meets all the State and Territory-based registration requirements that all pharmacies must comply with,” a guild spokesperson said.