Retail group Clicks says it is going to appeal a high court ruling that found it cannot own retail stores and a drug producing company at the same time.
In a long-running David vs. Goliath battle, independent community pharmacies had a victory in the Cape Town High Court on Wednesday when the court ruled that Clicks' corporate structure contravened certain regulations under the Pharmacy Act, prohibiting companies with beneficial interest in community pharmacies from directly or indirectly owning manufacturing pharmacies too.
Clicks Group, which owns Clicks Retail pharmacy chain also owns Unicorn Pharmaceuticals through one of its subsidiaries. But Unicorn Pharmaceuticals owns a drug manufacturing pharmacy.
The Independent Community Pharmacy Association (ICPA), which represents over 1 200 independent pharmacies, first lodged its complaint against Clicks for this reason with the Department of Health (DoH) in 2016.
However, the department rejected its complaint in 2017 and its appeal was shot down, which prompted the association to approach the Competition Commission, the South African Pharmacy Council (SAPC) and then the High Court.
The Court found on Wednesday that by having interests in both retail and manufacturing pharmacies, entities like the Clicks Group stood to financially gain as its manufacturing pharmacy's products could receive more in-store promotions.
"This could result in consumers not getting the best quality product at the best price. Products which are not strictly needed might be recommended and sold," read the judgment.
It also raised questions of conflict of interest, saying that the manufacturing subsidiary could favour retail pharmacies in the group above outside clients or independent pharmacies, the court found.
Clicks fights back
However, Clicks Group CEO, Vikesh Ramsunder said all previous rulings by the department of health, its appeals committee found Clicks' corporate structure to be lawful and therefore the group will appeal this contrary view.
"ICPA’s contention that the Clicks Group’s ownership of Unicorn Pharmaceuticals and the Clicks retail pharmacy chain is not allowed in terms of regulations governing pharmacies was rejected by the DoH in 2016 and by their appeal committee in 2018," wrote Ramsunder in response to Fin24.
He said Unicorn Pharmaceuticals' manufacturing licence does not allow the company to manufacture any medicines, but only to import and export medicines, which would negate the concerns raised by the Court.
Jackie Maimin, the CEO of ICPA, said the association persisted with this battle for years because it believes that this is in the best interest of the consumers and it will fight Clicks to the end.
"We expected them to appeal; however, we feel so strongly about this case and our wish that no pharmacy should have a conflict of interest when servicing patients, that we intend to fight this all the way to Constitutional Court if needs be," she said.
Maimin said the ICPA is still awaiting feedback on complaints lodged with the Competition Commission and the SAPC.