Clicks wants more pharmacies

Johannesburg - JSE-listed home, beauty and health retail group New Clicks Holdings plans to open 15 additional pharmacies within Clicks stores before the end of its financial year in August.

"The vision is that we'll have a pharmacy at every Clicks store," New Clicks CEO David Kneale told Fin24.com on Thursday morning.

Government and the pharmaceutical retail industry have been at loggerheads since 2005 over medicine dispensing fees. The department of health in 2005 implemented regulations which limit how much pharmacies can charge customers for dispensing medicines, thereby forcing many pharmacies out of business.

In January 2009, the Pharmaceutical Society of SA agreed to drop legal action against government over the fees after a meeting with newly appointed health minister at the time, Barbara Hogan.

Kneale said New Clicks was waiting for the department of health to publish its latest draft dispensing fee: "We're hoping that will occur shortly, because the pharmacy profession is a vital gatekeeper to primary healthcare.

"We want a fee that is fair to the profession, a fee that does not inhibit competition and promotes accessible and affordable medicine."

While he says it would be good to have clarity on government regulation of the pharmaceutical retail industry, Kneale says its absence does not have an adverse effect on trading or the pharmacy roll-out.

Clicks keen to buy

Despite a slowdown in property developments over the next few years, Clicks will keep opening stores based on the pharmacy model.

"Our intetion is to take Clicks to a 400-store chain over the next couple of years because we are looking to grow our pharmacy chain."

Kneale said the group wanted space in existing rather than new developments, and that it was open to acquisitions.

Because pharmacies are "convenience-driven", Kneale said they will have to be in the right location with enough space. New Clicks is focusing on "opening and refurbishing Clicks stores, extending the national pharmacy network within Clicks and expanding UPD's pharmaceutical distribution capability".

UPD is the largest full-line pharmaceutical wholesaler in the country and supplies retail pharmacies, private hospitals, dispensing doctors and retail health stores.

New Clicks bought a 60% stake in the courier pharmacy business Direct Medicines as from December 1 2008. Said Kneale: "Now you have the choice of having your Clicks prescription fulfilled either directly to your home or you can come into one of our stores to pick it up."

Despite difficult trading conditions, revenue rose 7.5% to R6.3bn for the six months to end-February 2009 when compared with the same time in 2008.

Headline earnings increased by 10.6% to R232m. The return on equity improved to 38.1% from 32.6%.

Kneale said the "excellent performance" of pharmacies within Clicks stores contributed to their good results.

Clicks opened 23 new pharmacies in the six months, bringing the total number to 180.

The board of directors has approved an interim distribution of 24.5c per share, up by 30.3% from last year's half-year dividend. Further details about the dividend will be released on or before 25 June.

To listen to the podcast, visit Fin24.com Podcasts.

- Fin24.com