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API (ASX:API) share price on watch after new govt funding

The API (ASX: API) share price will be on watch today after the company welcome increased government funding.

What is API?

API is the pharmacy company behind Priceline, ClearSkincare, Soul Pattinson Chemist and much more. The Melbourne-based company is more than 100 years old and operates more than 500 chemists and hundreds more are included in its member network.

New government funding

The government is increasing funding for Australia’s network of medicine wholesalers.

API is one of the four members of the National Pharmaceutical Services Association (NPSA) that will benefit from the commitment of additional funding over the next five years, commencing 1 July 2020.

The funding will underpin critical national infrastructure and ensure equality of access to vital medicines for all Australians.

The funding is an additional $92 million and it has introduced a floor price. The NPSA said the investment was necessary to help offset years of funding erosion and ongoing Pharmaceutical Benefits Scheme (PBS) reform and cost increases.

API CEO and managing director Richard Vincent said: “I congratulate everyone involved in the negotiations that led to this outcome. I would particularly like to thank Greg Hunt, the Federal Minister for Health, his advisors and my colleagues at our industry association, the NPSA.”

The API share price before the open was $1.11. This was almost the lowest it has been since 2015. I don’t think API is a fantastic business, but it looks cheap enough (with this extra funding) that it could make a decent return for a contrarian investor. However, I’m not personally going to buy it.

In early trading the API share price is up 2.7%.

Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned. 

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