CHS wins defence contract

SIGMA Healthcare says its new pharmaceutical supply contract with the Department of Defence (W breaking news Fri) is a “great step in implementing our business strategy to diversify our earnings away from PBS and move to a more holistic healthcare model”.

The five-year contract between Sigma offshoot Central Healthcare Services and the department also comes with the option for two extensions of two years.

Initially the agreement sets the base for CHS to provide pharmaceutical supplies to Commonwealth nominated distribution points across Australia, and there is an option for the Department to extend the scope of the agreement.

“We are excited to commence this long-term partnership with the Department of Defence,” said Jeff Sells, Sigma Healthcare general manager business development and strategy, who also oversees the CHS business.

He said over the last two years CHS had expanded its distribution network to have a national footprint, including the recent addition of a new centre in Western Australia which complements existing facilities in Victoria, NSW and Queensland.

“We now have a national footprint that will support DoD, community pharmacy, hospital pharmacy and our third party logistics customers,” he said.

There are significant setup costs involved in the deal, with Sigma saying the new agreement is not expected to make a “meaningful contribution” to its 2018 results.