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Lloydspharmacy blames income fall on drop in funding and prescriptions

Lloydspharmacy's parent company says category M clawback will “negatively influence” planning
Lloydspharmacy's parent company says category M clawback will “negatively influence” planning

Lloydspharmacy’s parent company has blamed the funding cuts in England and a drop in prescription volume for a fall in its income in the UK.

Mckesson Europe – formerly Celesio AG – announced that its overall earnings before interest and taxes for April 2017 to March 2018 were €126.6 million (£112m), a 58% drop compared with the same period the previous year, according to its annual financial report uploaded on Monday (July 2).

Lloydspharmacy's earnings were “burdened” by “higher than originally expected” government reimbursement cuts in England, Mckesson said, and “lower prescription item volumes…weighed on revenues”.

“We have experienced slower growth of prescription volumes flowing through our pharmacies primarily due to [the] NHS designating some prescription drugs as over-the-counter, thereby reducing fee income at our Lloydspharmacies,” McKesson explained.

“These negative effects were largely offset by our acquisitions and strong performance in our homecare and wholesale business in the UK,” it added.

Long-term planning

The funding cuts have a “significant influence” on the company’s “long-term planning for the pharmacy business in the UK”, it said.

It expects the category M clawback – which contributed to Lloydspharmacy’s 29% drop in overall earnings which it reported last year – to continue to “negatively influence” the group’s medium- and long-term income planning, it added.

The Department of Health and Social Care’s (DH) “directive with regard to prescriptions of numerous disease patterns” led to a “reduction in prescriptions” and is “expected to have a medium-to-long term impact” on UK pharmacy profits, it said.

Selling “unviable” branches helped profits

Referring to its October 2017 announcement that Lloydspharmacy would cease trading in 190 “commercially unviable” branches, McKesson said 171 Lloydspharmacies had been sold or closed between April 2017 and March 2018, which contributed to “disposal” profits of €9.6m (£8.5m) during the 2017-2018 financial period.

“We sold and closed pharmacies as a result of a strategic review and restructuring of our pharmacy portfolio in the UK, driven by government actions negatively impacting our UK pharmacy profitability,” McKesson explained.

The business was also hit by changes in the UK exchange rate, as “the overall negative exchange rate effects amounted to €4m (£3.5m), mainly related to the British pound”.

Last week, Boots attributed its own 2.8% drop in sales in pharmacies on fewer prescriptions and cuts to funding.

15 Comments
Question: 
How have your earnings changed over the past year?

AJ Smith, Locum pharmacist

I'm read some pharmacies have resorted to giving Botox and lip fillers to increase their bottom line. I thought pharmacy was a health profession

Disillusioned Sussex chic, Dispenser Manager/ Dispensing Assistant

Oh! Lloyds, get back to basics. Look after your staff in store and they will look after you. Look after your customers and they will come back, allow your managers to have more say in what they sell and they will sell it. One size does not fit all, never has and never will. A village pharmacy will not sell the same as a town one. the top brass should go into pharmacies, especially into village ones and without area/regional managers to look for themselves, talk to ALL the staff, THEN have your board meetings to make an informed decision. You want profit? let the shop staff have a say how it's done!!

Peter Sainsburys, Community pharmacist

You must be dreaming. Have you met any of the senior Lloyds management?

Alexander The Great, Community pharmacist

My pharmacy has seen at least a 50% drop in profits this year, dispensing 11000 items. Im shocked Boots has only reported 2.8%.... they are definitely covering up their figures somehow. Its not just Lloyds that are taking a bashing... its EVERY pharmacy.

Leon The Apothecary, Student

I wonder how much of an impact charging for deliveries had on their business?

Leon The Apothecary, Student

So prescription volume is naturally going to be lower if you have fewer doors for them to come through. That's common sense.

Disillusioned Sussex chic, Dispenser Manager/ Dispensing Assistant

My Neighbour who is in her late 80's was charged an enornormous amount for the year for her deliveries from Lloyds. the Lady is almost blind, cannot walk, lives on her own and has a large prescription each month and she has to PAY? Well Lloyds bosses, One day you will be old and infirm, let's hope you can afford the delivery charges by then eh?.

Peter Sainsburys, Community pharmacist

Eventually, nobody wanting to work for them will have a larger effect on their business.

Beta Blocker, Primary care pharmacist

People working for them are already looking for a way out...

Pharm Tech, Pharmacy technician

That will mean more job cuts and closures then no doubt. I’m surprised that buying up all the Sainsburys pharmacies hasn’t been included in the article as a potential reason for Lloyds profit loss. 

Jonny Johal, Pharmacy Area manager/ Operations Manager

This statement needs to be qualified; "a drop in prescription volume" may be due to the way they operate - there must be a reason why their customers are now going elsewhere. As for "a fall in its income", are they quoting the Lloydspharmacy retail shops selectively, or are these figures inclusive of their wholesaling activities?

Lucky Ex-Locum, Superintendent Pharmacist

I posted a prescription increase of about 15% for the last financial year. Just sayin......

A B, Community pharmacist

Fall in income relates just to the retail side as I read it, the wholesale side looks like it has compensated for the loss. A bit like the boots results the other week, wholesaling profit never seems to dip.

Nalin Shah, Community pharmacist

Keep calm and cary on.We are victims of funding cuts combined with  regulatory burdens.Free deliveries to undercut other pharmacies, poaching by internet operations has made the patient king and footfall to decline dramatically.Who will survive the race to the bottom?

 

 

 

 

Peter Sainsburys, Community pharmacist

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