The right medicine: Chemist Warehouse backs Marcus Blackmore in boardroom row

Chemist Warehouse, vitamin company’s biggest customer, agrees with founder Marcus Blackmore that the company has lost its entrepreneurial spirit.

Chemist Warehouse is Blackmores’ biggest customers

Chemist Warehouse has thrown its support behind a push from Blackmores’ major shareholder Marcus Blackmore to elect former Pharmacy Guild president George Tambassis to the vitamin maker’s board.

Chemist Warehouse, Blackmores’ biggest customer, agrees with Mr Blackmore that the vitamin company has “lost its way” and Mr Tambassis’s pharmacy and retail acumen would assist Blackmores in its transformation.

“Out of all the suppliers we deal with, if there’s one company that needs a reality check on their board it’s that one,” Chemist Warehouse chief operating officer Mario Tascone said.

“They need a retailer. They’ve lost their way. You can’t manage a retail product as good as Blackmores from a campus in Warriewood.

“You need a real retailer driving that business who knows what customers want, knows what today’s customers need and particularly knows what’s going on in pharmacy, which is where the bulk of the revenue and sales are coming from.”

Chemist Warehouse is better known for its disagreements with the Pharmacy Guild – given it has used a loophole in the rules to expand its empire – than its agreements, making its endorsement of Mr Tambassis as a potential Blackmores director significant.

“We’re opposed on a few issues with the Guild, and they’re big ones but, by the by, there are a lot of things we are in agreement with the Guild. It’s just that they don’t get publicised.”

Blackmores has refused to weigh in to the stoush, including Mr Tascone’s comments, with a spokesman saying: “It’s a matter for Blackmores shareholders.”

Mr Blackmore, who owns almost one-fifth of the company, is threatening to vote against the election of Blackmores chairman Anne Templeman-Jones after she rebuffed his recommendation of nominating Mr Tambassis for the board. Mr Blackmore said the company focused on governance at the expense of innovation and entrepreneurship.

Mr Tascone believes the company began to stray eight years ago when it got caught up in the China boom, which generated “easy money”.

“China was going left, right and centre. The vitamin business went from a $1bn industry to a $1.8bn industry in about two years. Blackmores and Swisse were the beneficiaries of that. They did really well getting their stuff over there,” Mr Tascone said.

“The only problem was, which I kept reminding them of, was don’t forget what made you famous, which was the local market. And during all that time that they focused on China, they stopped innovating doing what they did here in Australia.”

Mr Tambassis – who is also a director of Priceline owner, Australian Pharmaceutical Industries – has submitted his own nomination for election to the board. But Ms Templeman-Jones is urging shareholders to vote against him.

Ms Templeman-Jones, who is also a CBA director, said the company had engaged an “external professional board search firm”, understood to be Egon Zehnder, to find five new director candidates.

“The board recognises that robust and effective corporate governance and risk management are key to our ability to deliver on our purpose and strategy. To support management in delivery of strategic goals and ensure the board has appropriate diversity of skills, knowledge and experience, the board has undertaken a robust renewal process to appoint five new directors,” Ms Templeman-Jones wrote in the company’s annual meeting notice.

Blackmores has been completing a transformation program, with a goal of increasing its revenue base by 2025.

This includes launching in India, Indonesia and elsewhere across South-East Asia, as well bolstering its fast-growing pets division.

While its shares have slid from a record high of almost $218 in December 2015, its shares have rallied 52 per cent to $93.07 in the past year under chief executive Alastair Symington’s leadership.

The company’s annual meeting is scheduled for October 27.