Clicks Group appeals against high court order for company structure contravention of Pharmacy Act

THE SUPREME Court of Appeal (SCA) has granted the appeal by the Clicks Group against a decision of the Western Cape High Court which found the company’s corporate structure contravenes regulation 6 of the Pharmacy Act.

The decision by the high court was made on the basis that entities within the Clicks Group owned community (retail) pharmacies and at the same time have a beneficial interest in a manufacturing company.

This after the Independent Community Pharmacy Association (ICPA) lodged a complaint with the Department of Health against the Clicks Group where they had sought that the manufacturing pharmacy licence of Unicorn Pharmaceuticals be revoked. Unicorn Pharmaceuticals is a manufacturing pharmacy and a holder of 39 generic medicines under the regulatory regimes that apply to the sale of medicine.

The Clicks Group corporate structure is categorised as Clicks Group being the holding company which holds all the shares in New Clicks. New Clicks holds all the shares in Unicorn and in Clicks Investments (Pty) Ltd.

The ICPA had taken the matter to the Appeal Committee where they did an about-turn for the revocation of the licences but “in essence, the complaint was directed at the corporate structure of the Clicks Group of Companies on the basis that they had contravened the act and licensing regulations because entities within the Clicks Group owned community pharmacists while at the same time having an interest in a manufacturing pharmacy,” court documents read.

The Appeal Committee had found that the Clicks Group did not contravene licensing regulations, saying that “it may never be safely argued that because one company has 100% shareholding in another company, it can now be said that the company has beneficial interest in the other company” and the ICPA took the matter to the high court to have it reviewed and set aside.

In his judgment, SCA Judge Tati Makgoka, said: “The high court further pointed out, an entity having interests in both types of pharmacies would gain financially if the manufacturing pharmacy’s products are promoted by the pharmacists in the community pharmacies over other products. This could result in consumers not getting the best quality product at the best price.”

Head of Legal at Clicks Group Matthew Welz said: “We are pleased that the appeal has been upheld, and take this as affirmation of our long-held view that Clicks Retailers, which is the company that owns and operates Clicks pharmacies in South Africa, has at all times complied with the relevant laws. The position advanced by ICPA was based on an incorrect interpretation of the law.”