Coles sells online medicines business as turnaround shows “early signs of improvement”

Posted by Isobel Drake on 16th April 2009

Coles yesterday announced it would sell its Pharmacy Direct business to RX Direct (a company owned by the Pharmacist Members of the Terry White Chemists Advisory Board) as they focus on the arduous task of transforming the Coles business after years of underinvestment.

Pharmacy Direct was bought by the former Coles Myer Group in March 2006, and sells a range of pharmaceutical products through a retail site in western Sydney, and through its mail order / online business.

Coles Managing Director, Ian McLeod, said the divestment represented the best business outcome for Coles and Pharmacy Direct team members.

“As the Coles turnaround begins to show some early signs of improvement, it’s important to recognise that this is still the beginning of our journey to return the business to sustainable growth,” he stated. “In order to maintain focus and energy on the priority areas of our strategy, we have identified that it would be better at this point in time to divest our interest in Pharmacy Direct as a non-core business.”

When Coles bought the business it was widely anticipated that they were preparing for a regulatory change that would allow supermarkets to sell pharmaceutical goods, but it now appears that such change would not come about until at least 2015, if at all.

The Pharmacy Guild of Australia was pleased with the sale, having fought a battle with Coles in the courts over their ownership of Pharmacy Direct. The Guild had been successful in the Supreme Court of NSW last year in obtaining an order for Coles to sell to a registered pharmacist, a pharmacists’ partnership or a pharmacists’ body corporate – a decision that was to have been challenged on appeal later this year.

“The successful outcome in the Supreme Court proceedings demonstrated the resolve of the Guild to prevent supermarket chains, such as Coles and Woolworths, seeking ownership or pecuniary interests in pharmacies in contravention of the law,” they advised in a statement yesterday.