Business Day

Clicks to appeal factory ruling

• Retailer loses four-year battle with independen­ts

- Katharine Child Retail Writer childk@businessli­ve.co.za

Clicks says it will appeal against the ruling by the high court in Cape Town that it owns a drug-making facility, which is illegal for a pharmacy owner. The beauty and pharmacy retailer has lost its four-year legal battle with the Independen­t Community Pharmacy Associatio­n, which represents independen­t pharmacies, over its ownership of Unicorn Pharmaceut­icals.

Clicks says it will appeal against the Western Cape High Court ruling that found it owns a drugmaking facility, which is illegal for a pharmacy owner.

The beauty and pharmacy retailer has lost its four-year legal battle with the Independen­t Community Pharmacy Associatio­n (ICPA), which represents independen­t pharmacies, over its ownership of Unicorn Pharmaceut­icals.

The law prohibits pharmacies from owning drug-manufactur­ing facilities. This is aimed at preventing pharmacist­s from dispensing only their own branded medicine to a consumer, instead of those from competitor­s.

On Wednesday the court ruled that Unicorn, which Clicks bought in 2011, is a drug manufactur­er and Clicks is breaking the pharmacy act and regulation­s. The court referred the matter back to the department of health to decide on a sanction.

However, Clicks said it would appeal against the decision. Clicks denies that Unicorn is a manufactur­ing facility, as it does not make medicines but imports them and repackages them as Clicks generics.

Initially, only pharmacist­s could own pharmacies, but this restrictio­n was lifted in 2003 to allow a much wider range of owners. Health workers who prescribe drugs and companies that own medicine manufactur­ing facilities are prevented from owning pharmacies to prevent conflicts of interest.

The ICPA argued that Clicks’s ownership of Unicorn allows the company to reduce logistics costs, which is uncompetit­ive and threatens the survival of smaller pharmacies.

It first approached the Competitio­n Commission in 2016 and then laid complaints at the department of health. It lost all of these actions but won in court on Wednesday.

The ICPA accused pharmacist­s at Clicks of illegally promoting Clicks branded drugs above others. This means when a consumer asks a Clicks pharmacist for a generic painkiller, they may be given the Clicks brand, when there are cheaper or better brands.

The ICPA says this could result receiving in“the the best consumer quality product not at the best available prices”.

ICPA CEO Jackie Maimin said the organisati­on had fought for years “in order to protect the best interest of the consumer against the financial interest of parties who are acting in contravent­ion of the pharmacy act”.

CEO of the Clicks Group Vikesh Ramsunder denies it is breaking the law. “We have consistent­ly rejected the repeated allegation­s made by the ICPA. All previous rulings held the Clicks corporate structure to be lawful.” It is saving customers money and denies it is promoting Clicks drugs above others. “Our pharmacies offer an extensive range of branded and generic products to ensure customer choice.”

Ramsunder said while Unicorn holds a manufactur­ing licence it does not allow the company to manufactur­e any medicines, only to import and export medicines. “As a healthcare business we are regulated by the department of health which grants pharmacy licences to Clicks, with full knowledge of our corporate structure.”

KwaZulu-Natal pharmacolo­gist Andy Gray said many generic medicine manufactur­ers only import and repackage drugs.

He added that if Clicks could lower prices by owning more of the supply chain they could win more contracts with medical aid schemes who incentivis­e their members to use certain pharmacies, often excluding smaller independen­t pharmacies, who are battling for longterm survival.

Clicks may have to sell Unicorn to comply with the law if its appeal is unsuccessf­ul, Gray said.

Clicks closed 3.50% lower at R236.54.

CLICKS MAY HAVE TO SELL UNICORN TO COMPLY WITH THE LAW IF ITS APPEAL IS UNSUCCESSF­UL, GRAY SAID

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