Chapter 9: New Beginnings: 1996-2012
The appointment, in 1996, of new Managing Director, George Savvides, marked a break from the past. In contrast to his immediate predecessors, Savvides came from outside Sigma.
A contemporary corporate image was launched in February 1997. The stylised ‘S’ logo was seen as representing the joining together of past strengths and competencies with new business acquisitions and endeavours to provide a new and revolutionary healthcare business for Australia.’ With its aubergine and gold tones, the logo was to reflect a definite departure from the past and a reflection of the changing aura of Sigma.
This period in the company’s development was also marked by pressures relating to deregulation and competition. In moving to protect its interests Sigma argued that while it supported the removal of ‘costly barriers to open competition’, the deregulation of the pharmacy sector by the removal of pharmacists ownership of pharmacies was not in the best interests of the community. As a measure of their belief that pharmacy ownership should remain in the hands of pharmacists, Sigma committed substantial funds and human resources to the campaign to preserve this unique primary healthcare delivery system.
1997 saw the retirement of long-serving board member, Bruce Moore.Moorehad been chairman 1982-1986 and deputy chairman 1986-1991 and had completed twenty-five years of service to the company. Joining the board that year was its first female member Linda Nicholls who brought to Sigma an impressive range of experience in banking and finance and thus contributed to the broadening of the board’s expertise.
From a financial viewpoint, a key highlight of the year had been a very successful equity raising, thus enabling the company to decrease debt from $88 million to $36 million and increase its capacity ‘to fund acquisition opportunities for the future.’ The year also brought a new stated focus on business renewal which saw some major changes to the composition of Savvides’ management team. In addition, Sigma had acquired Queensland Drugs Limited in 1996. This takeover of one of Australia’s oldest state-based pharmaceutical wholesalers was highly successful, transforming Sigma into a company with national distribution coverage.
From a tiny base of just a few products, manufacturing technologies now encompassed tablet making, encapsulation, sterile and non-sterile liquids, ointments and creams, injectables, sterile and non-sterile penicillin products and medicated lozenges. Moreover, Sigma was well established as a market leader in contract manufacture, servicing a number of large multinational and domestic businesses.
Expansion continued at a rapid pace during the next two years with the acquisition of Amcal andNew Zealandbusinesses Russell Pharmaceuticals inAuckland, Pharmaceutical Promotions Services, Amcal (NZ), Pharmacy Wholesalers (Wellington) and Pharmacycare Chemists. Sigma’s dramatic four year re-invention of its pharmaceutical wholesaling business into an emerging trans-Tasman leader provided an interesting contrast to its 1995 Australian southern region profile.
Of even greater contrast was the company’s rapid rise to the position of retail pharmacy leader with the largest network of national pharmacy groups through Guardian and Amcal. As explained by Savvides, ‘this highly strategic business portfolio and brand stable is tangible evidence of Sigma’s exciting community healthcare vision coming into view.’ He went on to outline a bold new vision for the company which envisaged Sigma as ‘the region’s leading healthcare services company’.
In 1998 John Hirst retired after fourteen years of dedicated service to the board, eight of which had been as chairman. Hirst was succeeded by Dr John Stocker who brought a wealth of experience in pharmaceutical research and manufacturing.
In his first year as chairman, Stocker presided over a momentous event in the company’s eighty-seven history – its full listing on the Australian Securities Exchange in November 1999. Sigma’s new public status was achieved with the full support of the traditional shareholders and provided the capital needed to acquire Smith Kline Beecham’s manufacturing facility at Dandenong and to position itself for further growth.
One of the major growth areas for Sigma’s retail network was the introduction of the category management approach to the delivery of healthcare solutions to pharmacy customers. Initially developed with the Guardian group in 1998, its implementation focussed on individual training sessions with pharmacists and staff that covered seventeen specific healthcare categories including: wound care, asthma, diabetes, cough and cold, allergies, sports and arthritic medicine and smoking cessation.
Similarly, the new Australian Pharmacy Assistant of the Year Award program continued to grow in status with recent recipients including individuals with qualifications in nutrition, homeopathy and health sciences. Based on a range of quality and service driven criteria, the award had contributed to raising awareness of rising standards and professionalism amongst pharmacy assistants.
At the end of the twentieth century, Sigma was in the process of ‘changing the performance culture of the organisation’ – a conceptual strategy incorporating ‘a high performance employment ethos’ and a focus on increasing shareholder value. This entailed initiatives to reward individuals for growth in shareholder value, competitive remuneration and an achievement oriented senior executive incentive program in support of goals aimed at achieving best practice productivity at all levels of the business. At the same time, the introduction of a very successful employee share purchase plan also enabled staff to participate more directly in the company’s growth and prosperity.
During 2000, Elmo De Alwis became acting chief executive officer, replacing Savvides who had left the company after four years. The following year, De Alwis announced a set of objectives and strategies aimed at enhancing shareholder value and improving customer service.’ Included were the divestment of the New Zealand operations and the achievement of efficiency gains and profit growth throughout the organisation. After tax profits grew to $21.9 million; the company paid a fully franked dividend of ten cents for the full year.
The growth trends of the early years of the new century were well established by the middle of the decade. In 2003 the Herron Group was acquired and in 2005 Sigma merged with Arrow Pharmaceuticals, thus creating the largest integrated enterprise of its kind inAustralia. This bold achievement was seen as the successful ‘merger of two synergistic businesses with minimal overlap’, which would deliver new opportunities and contribute significantly to the achievement of Sigma’s growth aspirations.
In 2005 Sigma also launched Amcal Max, a dynamic, modern, retail pharmacy brand enhancement of Amcal which leveraged Amcal’s heritage and access to a core range of competitively priced products. Then, in 2009, Sigma launched Pharmacy Advance, a unique support programme for Sigma pharmacies providing business, marketing, education and category management modules to further build and enhance their businesses.
The next few years were, however, amongst the most challenging the company had faced in its long history. 2010 brought reports of a loss of $389 million and the announcement that ‘no final dividend would be paid this financial year.’
However, the appointment, in August 2010, of Mark Hooper to the position of chief executive officer and managing director heralded a new phase of stability and consolidation. With the full support of the Board, Hooper moved quickly to implement immediate change to save the company. Following the sale of its manufacturing division to Aspen in 2011, the company moved to modern premises in Rowville, from which it now operates a state of the art distribution centre and administrative headquarters.
In celebrating its centenary, Sigma has much to be proud of. From very small beginnings and just one product, annual sales have grown to nearly $3 billion. Over 800 hundred staff are employed nationally and thirteen distribution centres operate across all states and the Northern Territory. The Healthcare division comprises one of Australia’s leading national full-line pharmacy wholesalers and includes two of the most recognised brands in community pharmacy – Amcal (including Amcal Max) and Guardian. An ongoing relationship with Aspen reflects the position of the Healthcare and Pharmaceutical divisions prior to the sale. Under the industry’s Community Service Obligation, the company ensures all Australians enjoy timely access to their medications.
Established with just one product, Sigma’s growth and development over the ensuing hundred years stands as a testament to what can be achieved from small beginnings. The vision of Ernest Leete and Thomas Church has been more than realised through a century of service, not only to pharmacists and pharmacies, but to millions of individuals and families throughout the nation. Sigma has survived and evolved successfully meeting all of the challenges placed before it, a testament to its ethos, culture and continuing determination to proudly serve pharmacists, as it had done from its beginnings.