Rich-listers Cathie Reid and Stuart Giles partner with Chemist Warehouse in hospital pharmacy push

Brisbane rich-listers Cathie Reid and Stuart Giles are spearheading a new hospital pharmacy venture via a new partnership with Chemist Warehouse.

Rich-listers Cathie Reid and Stuart Giles. Picture: Supplied

Brisbane rich-listers Cathie Reid and Stuart Giles are taking on the pharmacy empire they founded more than 30 years ago in a new venture with “category killer” Chemist Warehouse.

The Brisbane couple will launch a national network of hospital-based pharmacies with Chemist Warehouse to compete with the multi-billion dollar Icon Group, the healthcare operation founded by the couple but now owned by Swedish private equity firm EQT.

The couple are currently embroiled in a bitter court battle with Icon related to the supply of pharmaceuticals to hospitals.

Ms Reid said it was possible Icon could take legal action to stop the new fledgling business. “I suspect we will get something delivered (from Icon) but it won’t be flowers,” Ms Reid said.

She said the breakdown in the relationship with Icon was a contributing factor to the decision to start the new venture.

“Icon is now owned by a private equity firm from Sweden but they don’t have any connection to the pharmacy sector in Australia,” she said.

“Chemist Warehouse was founded by Australian pharmacists and is owned by Australian pharmacists.”

Ms Reid said the aim was to build a network of pharmacies in hospitals and leverage the largest network of retail chemists in the country.

She said Chemist Warehouse had a large number of after hours outlets that would augment hospital pharmacies as people moved from treatment or surgery in hospital back home.

Ms Reid and Mr Giles are being sued for $13m by the Icon Group, which was taken over by EQT in a $2.5bn deal last year, over alleged delays in payments for medicines to eight hospital pharmacies still operated by Reid and Giles.

A claim, lodged by Icon subsidiary Slade Health in the Victorian Supreme Court in March, alleges the breach of payment terms for the supply of the pharmaceuticals to the pharmacies that the couple had originally planned to sell to pharmacist and former business partner David Slade as part of the Icon deal.

Slade Health is a chemotherapy compounding business that is a fully owned subsidiary of Icon Group and founded by pharmacist David Slade, the proposed purchaser of the pharmacies.

In a defence lodged in the court in May, Ms Reid claims the legal action was directly linked to the failure of Slade to complete the $43.2m sale of the remaining pharmacies held by Reid and Giles.

On her personal blog on Tuesday, Ms Reid explained how the dispute with Icon had created a “pretty challenging working arrangement”, describing the situation as “untenable” and leading to the idea of establishing a new venture to disrupt the market.

“We needed to find a plan B,” she wrote.

“One that met our ownership obligations in a way that we were comfortable with, provided services at a fee structure commensurate with the cost of the services being delivered and the benefits received, and also gave us the scope to re-imagine what a new, innovative and enhanced hospital pharmacy service could look like.

“Hospital discharge and it’s accompanying information flow is still a source of great frustration across the board in Australian healthcare, and one which the billions spent to date on the various iterations of My Health Record have largely failed to significantly progress in any meaningful way.

“We certainly don’t think we’re going to be able to unlock that holy grail in the first instance, but the opportunity to develop a connection point between hospital pharmacies and Australia’s largest network of extended hour community pharmacies is unlikely to be a step backwards on the path to progress.”

According to The Australian’s latest Richest 250 list, Ms Reid and Mr Stuart have amassed a $535 million fortune from Icon and their Epic Pharmacy chain.

Financial terms of the couple’s joint venture with Chemist Warehouse were not disclosed but Chemist Warehouse is believed to have slightly more than 50 percent.

The partnership comes close to two decades after the couple sold the majority of their pharmacies in Victoria and Queensland to Chemist Warehouse, which operates 600 retail stores in Australia, New Zealand, China and Ireland.

Chemist Warehouse chairman and co-founder Jack Gance and the Verrocchi family of his business partner Mario Verrocchi have long rumoured to be working on an ASX float for the business in what has been mooted as a potential $5bn transaction.

Responding to questions about a potential listing, Mr Gance on Tuesday said: “We’re still working through the options and we haven’t made any decision yet.”

Icon Group did not respond to requests for comment.

Originally published as Rich-listers Cathie Reid and Stuart Giles partner with Chemist Warehouse in hospital pharmacy push