Australian Drugstore Mulls Entering Israeli Market

A new player such as Chemist Warehouse could shake up Israel’s drugstore sector, known for its limited competition and high prices

Australian discount drugstore chain Chemist Warehouse.

Australian discount drugstore chain Chemist Warehouse is considering entering the Israeli market in partnership with local discount supermarket magnate Rami Levy, TheMarker has learned.

Israel’s drugstore sector is known for its limited competition and its high prices. A new player such as Chemist Warehouse could shake up the industry.

Chemist Warehouse is Australia’s largest drugstore and pharmacy chain, with some 300 outlets in Australia and New Zealand and AUS $4 billion in annual turnover.

Levy bought a controlling share in a small Israeli discount pharmacy chain, Gur Pharm, in 2018, but that chain is currently struggling in its attempts to bring Israel’s HMOs onboard with its pharmacies.

Economy Minister Eli Cohen made the connection between Levy, Gur Pharm and Chemist Warehouse as part of his two-year project to lower Israel’s cost of living. The Economy Ministry reached out to several major foreign drugstore chains to recommend that they enter Israel’s market, given the poor state of competition here.

Chemist Warehouse was the only company to express interest, and the ministry sent it proposals from potential partners with business experience in Israel, including from Rami Levy.

Chemist Warehouse and Levy are currently in talks to create a major pharmacy chain that would compete with Super-Pharm, which controls Israel’s market. A smaller rival, Be, is owned by the Shufersal grocery chain, which bought out the collapsing New Pharm chain.

The goal would be for Chemist Warehouse to use its massive foreign buying power and its connections with suppliers to buy its merchandise for less than the Israeli pharmacy chains currently pay to Israel’s exclusive importers.

A random survey of products available both in Israel and on Chemist Warehouse’s website found Israelis pay anywhere from 14% to 253% more for the same products.

Gur Pharm stated in response that the process was in a very early stage and it was too early to say what would happen.