Pharmacy broker claims Uniphar breaching agreement in attempted takeover
A pharmacy brokerage business has claimed in the High Court that pharma giant Uniphar is breaching an agreement in an attempted take over bid and abuse its dominant position in the market.
Dublin based Thera Pharmaceuticals Ltd is seeking orders preventing Uniphar from blocking its trading account and from disabling or otherwise altering an existing system for sending real time stock updates to it.
Thera, part of the Navi Group, provides infrastructure to the purchasing power of a large group of retail pharmacies for ordering supplies from wholesalers like Uniphar which, with United Drug, account for 87 per cent of sales in the State.
Thera says the consolidated group buying can negotiate discounts from suppliers like Uniphar. This means it can deliver to retail pharmacies significant savings and ordering efficiency compared to what could be achieved individually.
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On Thursday, Thera was granted permission to serve notice of proceedings on Uniphar plc and Uniphar Wholesale Ltd.
It seeks orders against Uniphar Wholesale including that it restore its trading account, not alter the real time stock update system, from reducing credit terms currently available to certain pharmacies and prohibiting the ceasing of supply to certain pharmacies.
The application was made on a one side only represented (ex parte) basis by Michael Cush SC, for Thera. Mr Justice Brian Cregan said it could come back to court next week.
In an affidavit, Thera founder and director John Carroll said in 2015 the company concluded a brokerage agreement with Uniphar Wholesale which has been extended to 2028.
He said that in the last 12 months alone, around €475 million worth of sales have been concluded within the agreement, representing he says 35 per cent of Uniphar Wholesale's entire sales.
Both Uniphar Wholesale and United Drug have their own buyers' group electronic ordering platforms which are in competition with Thera, he said. He believes Uniphar is also investing some €160 million in a new 'best in class' warehouse to compete more aggressively.
Mr Carroll said there has been a successful relationship between the parties going back more than nine years and Thera has grown the number of pharmacies buying from Uniphar from 240 to 600 in that time.
In 2021, he said a heads of agreement was concluded whereby it was agreed to sell shares in the Navi group parent company, NaviCorp Ltd, to Uniphar plc.
But this was blocked by the Competition and Consumer Protection Commission on grounds it would substantially lessen competition in the markets.
He said following the appointment of Ian Madden earlier this year as Uniphar Wholesale's managing director of supply and retail, a series of unilateral changes were made to the brokerage agreement. Mr Madden reports directly to Uniphar plc chief executive Ger Rabbette and acts on his instruction, he said.
'There has been a marked deterioration in the business relationship', he said.
In April, Mr Madden wrote to Thera saying Navi 'had been identified as a high risk partner from an IT perspective and required a full IT security audit'. Mr Carroll said this was difficult to understand given the company has been consistently best in class on standards.
The unilateral changes to the agreement immediately benefit Uniphar Wholesale's profit margins and is a clear abuse of its dominant market position, he said.
Uniphar was also attempting to manufacture, in breach of the agreement, a massive €3.49 million liability designed to destabilise Thera, he said.
He said Uniphar was also attempting to force certain pharmacies to route all their purchases through it or face being cut off at the end of the month.
He said Uniphar's Mr Madden refused to go to mediation and this was of deep concern, he said.
He believes the defendants have made 'a strategic decision' to launch a multifaceted attack on the brokerage agreement and the business relationship to try to take over Thera's business and seeks to abuse its dominant position.
As a result Thera was seeking orders from the court restraining Uniphar Wholesale from continuing what Mr Carroll called 'its current campaign'.
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