C+D exclusively revealed that Lloydspharmacy has sold all of its high street and community pharmacies yesterday (November 23), ending months of speculation about the multiple, which was the second-largest in the country as recently as March this year.

The announcement has sent waves through the sector, which is struggling with persistent underfunding.

But the Department of Health and Social Care (DH) was untroubled, saying that the sector was “backed by £2.6 billion a year”. 

 

“Wake-up call”

 

The Company Chemists’ Association (CCA), of which Lloydspharmacy was a member, said that it is “obviously very concerning that the owner of such a large organisation has chosen to exit the community pharmacy market”.

CCA chief executive Malcolm Harrison said that the news “must serve as a wake-up call to the government and NHS”.

Read more: UPDATED: Pharmacy2U buys LloydsDirect for undisclosed sum

The multiple’s sale of all its community pharmacy branches comes amid a real-terms funding cut of 30% since 2015, a net loss of more than 1,000 pharmacies with 299 this year alone and NHS workload rising “inexorably”, he added.

And he stressed that new money announced as part of the Pharmacy First reforms “will not address the underlying fragility in the market, nor will it be able to make up for almost a decade of underfunding”.

“Access to medicines and other critical primary care services will continue to deteriorate as more and more pharmacies close,” he said.

 

“Strong headwinds” for new owners

 

Simon Tebbutt, the National Pharmacy Association’s (NPA) director of membership, told C+D that the Lloydspharmacy branch sales were “historically significant” for the sector.

He said that “many” NPA members had purchased Lloydspharmacy branches and cautioned that new owners faced “strong headwinds as they look to establish themselves and progress” given the “tough conditions” facing the community pharmacy sector.

Read more: Lloydspharmacy branch numbers dropped almost 50% in nine months

But he added that “patients, communities, the NHS and government have always relied on a strong independent sector, even more so since the market movements involving Lloydspharmacy and Boots”.

 

CPE now “lacks proportionality”

 

Dr Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies (AIMp), said that it was “very telling” to see that a multiple “of that size must exit the sector”, with a £1.2bn funding shortfall meaning pharmacies struggle to “keep their heads above the water”.

She questioned whether the make-up of industry negotiator Community Pharmacy England (CPE) should change following the Lloydspharmacy sales.

Dr Hannbeck said that the composition of CPE "lacks proportionality" now that the number of pharmacies belonging to members of the CCA have been “considerably reduced” but that all CCA members, including Pharmacy2U, have “seats” on the CPE committee.

Read more: UPDATED: Lloydspharmacy ‘selectively selling’ branches to independent buyers

A CCA spokesperson stressed that the organisation “does not determine the number of seats that it can nominate to at CPE”, which is an “internal matter for the CPE committee to decide upon.

And the negotiator told C+D that it was committed to “regularly review” its committee’s composition in line with its election cycle every four years by “looking at pharmacy ownership data”, which is “best practice”.

Read more: All Sainsbury’s Lloydspharmacy branches to close by tomorrow, chain confirms

It said the committee had “decided that it was not appropriate to make any changes now” for various reasons, including that the committee was “only constituted in April” and that “to continuously amend [its] composition would be detrimental to continuity and stability”

"Changes in pharmacy ownership are likely to be an ongoing feature of the sector for some time – and it would be inappropriate to change committee constitution in response to every change in market share,” it added.

CPE stressed that it “has been a principle of the committee for some time and was affirmed by pharmacy owners” that the committee’s composition “should remain 50% multiple and 50% independent”.

 

“Brutal reality”

 

In a statement issued yesterday, CPE chief executive Janet Morrison said that Lloydspharmacy’s exit from the community pharmacy market reflects “the brutal reality in community pharmacies as financial and operational pressures continue to take their toll”.

“This should be ringing alarm bells for the government and the NHS: their near decade-long policy to squeeze community pharmacies financially is now pushing all community pharmacy businesses to the brink,” she added.

Read more: Ex-Sainsbury’s Lloydspharmacy workers head to court over redundancy benefits

She too stressed that the £645m recovery plan funding announced last week “is welcome and will bring some relief to some businesses” but “is not a panacea for all the issues our sector faces”.

CPE will continue to “press” the government and the NHS for the “increased and sustained support and investment” that are “desperately needed”, Ms Morrison added.

 

“Avoided redundancies”

 

Meanwhile, the Pharmacists’ Defence Association (PDA) said that it was “continuing to support pharmacists to understand and exercise their rights at work” after the Lloydspharmacy announcement. 

PDA negotiators have “confirmed that HR support will remain available to help resolve queries” from former Lloydspharmacy employees and the union will also assist members with such issues, it added.

And it said that PDA recognition will continue for the “more than 100 pharmacists who remain employed by Lloydspharmacy Healthcare Services”, which is a separate business under Lloydspharmacy’s parent company that is not directly impacted by the announcement.

Read more: Do corporate disposals offer an opportunity for independents?

It stressed that the programme had “avoided redundancies” – with the “notable exception” of Lloydspharmacy’s withdrawal from Sainsbury’s – and that the PDA had “worked with the company throughout the programme to avoid job losses”.

“This final announcement has been long anticipated as divestments have reduced the size of the network continuously for many months, however it may still feel shocking to many people who have worked for Lloydspharmacy and others who have seen it as a key part of the community pharmacy sector,” PDA director Paul Day said.

Read more: 'Pharmacy wastelands’: Over 200 net closures in 2023 so far, DH admits

A DH spokesperson told C+D that community pharmacies “play a vital role in our healthcare system, backed by £2.6bn a year”.

They highlighted the recent announcement of £645m in “additional funding” to support the upcoming Pharmacy First service.

C+D’s exclusive story yesterday revealed that “over 6,500” former Lloydspharmacy employees secured employment with the new owners of branches, with 99% of its branches to remain open.