Adding to my post above....looks like we have further details...

Adding to my post above....looks like we have further details come through just now in The Australian. Looks like it relates to generic medicines from Sandoz.

www.theaustralian.com.au/business/companies/sigma-launches-suit-to-enforce-supply-deal-as-share-price-tanks/news-story/c94fa9f6ba90388d0ea7bef7cbdfc226#

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Sigma launches suit to enforce supply deal as share price tanks

Sigma Healthcare has asked a court to force the MyChemist and Chemist Warehouse chains controlled by Jack Gance, Sam Gance and Mario Verrocchi to continue to buy generic medicines from the company.

News that the Gance group, the largest pharmacy chain in Australia, was intending to drop Sigma as a supplier of generic medications manufactured by Sandoz carved more than 30 per cent from the company’s share price yesterday after it told the market the move could cost it between $5 million and $10m a year in earnings.

In a statement of claim lodged with the Victorian Supreme Court yesterday, Sigma said its chief executive, Mark Hooper, learned the Gance group of pharmacies was planning to move to an unnamed supplier of generics manufactured by Sandoz at a meeting with Mr Verrocchi three weeks ago.

At the May 5 meeting, at the Gance group’s headquarters in Melbourne, Mr Verrocchi allegedly told Mr Hooper that if Sigma could not match the other supplier’s price the Gance organisation “considered themselves free” to buy from the other supplier.

Sigma alleges this would be in breach of a supply agreement struck between the two parties in February last year.

The Melbourne meeting allegedly followed an email Mr Verrocchi sent to Mr Hooper on February 24, informing him of a deal “which we cannot ignore because of the quantum”.

Damien Gance, who has often acted as the public face of the generally private My Chemist and Chemist Warehouse group, did not respond to calls and text messages.

A representative at the group’s Melbourne office, who would not give his name, declined to comment on the lawsuit.

In a statement to the Australian Securities Exchange, Sigma said it had decided to sue after the Gance group rejected offers of mediation and arbitration.

Sigma said that if the Gance parties acted “in accordance with their stated intention, the impact on Sigma’s EBIT (earnings before interest and tax) is expected to be approximately $5m-$10m per annum”.

“While Sigma remains confident of its position, this action, combined with a continuation of the subdued start to the financial year, may mean that current-year underlying EBIT could be up to 5 per cent below 2016-17,” the company said.

It warned legal costs would also eat into earnings.