Healthy growth on radar
Wesfarmers’ new target
Wesfarmers boss Rob Scott is amassing the building blocks of a healthcare pillar within the Perth-based conglomerate that could one day complement the reach and earnings of its retail chain Bunnings.
Mr Scott said the recently created Wesfarmers Health arm should be viewed as a 10year plan with plenty of runway for growth, while admitting there needed to be improvements at its Priceline retail pharmacy business.
The updated strategy for Wesfarmers Health comes as Mr Scott led the conglomerate’s strategy day on Tuesday. He was flanked by the division’s managing director Emily Amos, who has her hands full bedding down last year’s $775m acquisition of wholesale and retail pharmacy business Australian Pharmaceutical Industries.
Mr Scott said Wesfarmers would bet big on a $40bn addressable health market, which he believes is within the conglomerate’s reach as API looks to bolt-on acquisitions across beauty and digital health.
This could see Wesfarmers Health emerge as a key earnings generator for the group one day.
“Anything is possible, when we made the investment in health we really thought about this as a 10-year type of runway and obviously we would like to see some improvements delivered over a shorter period of time,” he said.
“But obviously we see there are opportunities to make healthcare in Australia more accessible, more affordable and better leveraging the network of communities pharmacies we have together with digital platforms.
“So it is possible over time it will be a much more meaningful division, but time will tell.”
In his opening remarks and presentation, the Wesfarmers boss said that its newly formed Wesfarmers Health arm was supported by significant sector tailwinds.
This included increasing health spend from an ageing population and more healthconscious consumer, growing demand for beauty and wellbeing and accelerating digitisation of customer health purchases.
This would also be boosted by bolt-on acquisitions; Wesfarmers recently made a $169m takeover bid for Silk Laser Australia, which offers a range of cosmetic beauty treatments.
However, that bid was trumped by a Hong Kong company and as yet Wesfarmers has not made a counter bid.
Wesfarmers said the total addressable market for healthcare, health and beauty was as much as $19bn, medical clinics and laser treatments $3bn and digital health could have an addressable market of as much as $4bn.
In her presentation Ms Amos said Wesfarmers now owned a complementary portfolio of health, wellbeing and beauty businesses that included a national wholesale distributor supplying to more than 2500 pharmacies and had become a large player in the non-surgical medical aesthetics market.