Morningstars take on SIP and the potential deregulation of the...

Morningstars take on SIP and the potential deregulation of the sector and possible shake up of the MSB medical benefits schedule.

"Contrary to consensus, we view deregulation of retail pharmacy ownership structures as positive for pharmaceutical wholesalers given existing logistical capabilities and access to retail gross margins, despite the threat of entry by the large and well-funded supermarket chains. This would see gross margins move close to 37 per cent from around 7 per cent currently," he says.
A company like Sigma Pharmaceuticals (SIP) is positioned to benefit from these changes. The company has built its revenue away from the PBS.
Sigma managed to report a solid profit of $27.6 million for the first half of fiscal 2016 despite ongoing PBS reform.
Furthermore, the business is "essentially a franchising model," according to Kallos, as the expansion of its professional services offering to pharmacies and banner groups now totals almost 700 stores.