Sigma Healthcare set to deliver COVID-19 vaccines across Australia

The owner of the Amcal, Guardian and other chemist brands, says it has the cold-chain storage network needed to deliver COVID-19 vaccines across the country.

Sigma Pharmaceuticals CEO Mark Hooper at their HQ in Melbourne. Picture: David Geraghty, The Australian.

Sigma Healthcare, Australia’s biggest pharmaceutical wholesaler, is in talks with the federal government about using its distribution network to deliver COVID-19 vaccines across the country.

It comes as CSL signed a $1.7bn production and supply deal with the Morrison government to manufacture the two types of COVID-19 vaccines at its Melbourne factory — with the first tranche of 80 million doses expected from January next year if clinical trials are successful.

One of the vaccines is the candidate that Oxford University and AstraZeneca are developing, which is a live virus vaccine and requires extremely low temperatures — down to -80 degrees celsius — to transport.

Sigma Healthcare chief executive Mark Hooper said the company supplied pharmacies across Australia each day and had the cold chain distribution network to ensure the vaccine remained effective after transport.

“We are engaging with the government at the moment because practically when a solution comes you are going to need a whole supply chain solution, so all of the distribution network will need to be actively involved and we see ourselves as playing a key part of that,” Mr Hooper said.

“We have already established ourselves of being able to do daily delivery and handling of cold-chain drugs.

“In terms of practically how that’s going to work, you’ll have to wait and see what form the vaccine is in. Some of them require quite low temperatures storage, others the traditional 2-8 degrees storage.”

Logistics giant DHL has highlighted the challenges of distributing COVID-19 vaccines around the globe, estimating global coverage will require 15,000 flights and about 15 million deliveries, all under stringent temperature controls, with last-mile delivery the biggest challenge.

It is also dependent on securing a viable vaccine. While Oxford University and AstraZeneca’s candidate is currently the world’s most advanced, its phase three trial was halted this week to “review the safety data of a single event of an unexplained illness” from a participant who was injected with the vaccine.

“At AstraZeneca we put science, safety and the interests of society at the heart of our work,” chief executive Pascal Soriot said.

“This temporary pause is living proof that we follow those principles while a single event at one of our trial sites is assessed by a committee of independent experts. We will be guided by this committee as to when the trials could restart.”

Under the agreement with the commonwealth, CSL will also manufacture 50 million doses of a separate vaccine candidate it has been developing with the University of Queensland since January.

Sigma’s talks with the commonwealth come as its half-year revenue dived 12.5 per cent to $1.64bn, while underlying net profit fell 5.1 per cent to $10.6m.

The period, six months to July 31, included the partial resumption of its Chemist Warehouse contract, which it lost in 2018 and with it almost a third of its revenue. Sigma has since regained the fast-moving consumer goods component of the Chemist Warehouse contract but not the part covered by the Pharmaceutical Benefits Scheme.

The result also included a doubtful debt provision of $4.5m.

“Results from Sigma’s pharmacy business have unfortunately been negatively impacted by reduced merchandise and marketing income, due to lower promotional activity during COVID-19 restrictions, and the increased provision for doubtful debts given the uncertainty of the current economic environment,” Mr Hooper said.

“This has however been offset by underlying growth in other parts of the business and cost reduction initiatives.”

The group’s statutory net profit jumped 87 per cent to $4.7m. On a like-for-like basis, revenue grew 9.5 per cent across Sigma’s Pharmacy brands

Mr Hooper said it was difficult to forecast exact earning guidance for the second half given the COVID-19 pandemic, but early indications are positive.

“While the vagaries of the COVID-19 pandemic make it difficult to give clear earnings guidance for financial year 2021, early indications are the momentum will continue in the second half. We are very excited by future opportunities for growth.”

The company has also strengthened its balance sheet through the sale of its distribution centres in Sydney and Brisbane for $172m under a leaseback arrangement. The transaction has reduced the company’s debt to $33.6m as of August 31.

Sigma will not pay an interim dividend, citing a lack of franking credits. It plans to pay shareholders a dividend within the next 12 months, subject to review.