Layer 1

Cuts and ‘competitive pressures’ behind 72% Lloydspharmacy profit drop

McKesson said it expects to see “modest improvement” in the UK business in 2020
McKesson said it expects to see “modest improvement” in the UK business in 2020

Lloydspharmacy’s parent company has cited the funding cuts and “competitive pressures” in the UK as two reasons for a 72% drop in profits across its European business.

Adjusted operating profit for McKesson’s European pharmaceutical solutions division – which includes Lloydspharmacy – in the first three months of 2019 was $23 million (£17.7m), a 72% drop on the same period the previous year, it said in its latest financial report published this afternoon (May 8).

Revenue for this part of the business was up 2%, once currency rates were taken into account. While this increase had been “driven primarily by market growth”, it was “partially offset” by Lloydspharmacy’s decision to sell or close around 200 branches in England in 2018, as well as a “challenging market environment in the UK”.

C+D has previously identified 78 of the branches Lloydspharmacy closed in 2017-18, and another 104 that it sold.

Looking back over the past financial year, McKesson noted that adjusted operating profit for its European business was down 36% to $219m (£168m).

However, McKesson said it expects to see “modest improvement” in the UK business in 2020.

McKesson CEO Brian Tyler said the business had “successfully executed in a challenging environment and took action to address the headwinds in our European business”.

The latest results from McKesson come a month after Boots parent company Walgreens Boots Alliance said it was taking “immediate action” to address financial results “much weaker than expected”, which will include “decisive action” in the UK.

9 Comments
Question: 
What do you make of the latest financial results results?

R A, Community pharmacist

Let's be honest Community Pharmacy in the UK has never been a real business. Essentially the UK government paid contracted individual pharmacies to deliver a service no different to joe blogs hiring a plumber to fix his plumbing. Unfortunately, if you have only one employer aka NHS then you have no room to negotiate on your wages. 

Previously your employer was stuck because the market was fragmented and inefficient so had to set a average wage to prevent the collapse of the sector. But thanks to the multiples consolidation of the sector, this is no longer an issue.

Hence the price the NHS pays to the pharmacy is dropping and will continue to do so.  I have no sympathy given the fact that the multiples have ruined the livelihood of thousands of pharmacists!

barry richards, Dispenser Manager/ Dispensing Assistant

I feel before they punish the staff by closing stores and further redundancies, they really need to investigate deeply and see what has caused this deficet. If they look across the annual figures over the last few years; example since the funding cuts happened to obviously present figures, they will see what the issue is. 

My opinion is that they are ( McKesson Europe ) are trying to recoup what's been lost when the poor decision making of the previous heirachy ( with no disrespect to the staff there ) the Sainsbury purchase, meaning they spent so much money purching the contract not realising that the had no retail agreement to sell Lloyds products. Also going back to when funding cuts happened.. Management chose to cut back on budget hours which included the idea of when staff members did leave those hours where lost.. where as if the company rode the waves operating at same levels then they may not be in this position as with the increase in services and contracts with care companies would have balanced things out with a projection increasing to profitability.
 

By making all these closure's, cuts and other ideas of making profit they will end up losing the biggest source of their income and thats the customer as the service level they receive will be affected and they will go to another place.. they have no means to stay loyal if it affectes their wellbeing.

As i like to say Patient Care before Profits.. as better care and service you give the more the business and customer PROFITS....

Peter Smith, Student

Surely any retail business which wants to be profitable on a long-term basis should prioritise two things - staff happiness, and customer happiness. On that basis, it's amazing that any of the big multiples are making any profits at all, so expect further drops.

Lucky Ex-Boots Slave, Primary care pharmacist

Do big multiples ever care about staff happiness? Obviously no. They don't care about the patients/customers either. All they care about is the money

Beta Blocker, Primary care pharmacist

Staff + Customer satisfaction is what it's all about.... It's a shame because of greed they've forgotten that!

Peter Smith, Student

Now that I am a patient, I actively go quite a long way out of my way to use a local independent pharmacy. I don't want a greedy, grasping multiple getting a single penny because of my prescriptions.

Sue Per, Locum pharmacist

The management need to take a pay cut, and freeze it for a few years: The profits would then not only be restored, but will actually grow. There may be a slight dip, though if they paid their employee and Locum pharmacists a bit more to compensate then for the real time drop suffered over the past decade. And pigs might fly, i dare say!!!! 

Farmer Cyst, Community pharmacist

I don't know if it's a coincidence, but when I was a locum a few years ago Lloyds were absolutely abysmal to work for. The dispensary was usually cluttered and chaotic, with a whole week of unlabelled scripts not uncommon. Staff morale was so bad I wonder if I actually remember things correctly - then I remember incidents like 6 of 9 members of staff handing in their notice within a week at once particularly bad place, them losing ~30% store managers in the area within a year. 

 

The locum list just kept growing and growing as regular pharmacists left, then eventually you'd get the slightly begging phonecalls in the evenings to see if they could scrape together some cover for somewhere tomorrow. Luckily by then I had enough of a reputation that I could do what everyone else half decent did and stop bothering with Lloyds - filled my shifts with Day Lewis and independents. You have to for your professional sanity, if not because of the huge risk of making a mistake, then because that sort of atmosphere and attitude seeps into even the most resilient professional.

 

Might all be unrelated and I wont pretend to be a great business mind, but I simply don't see how they could continue to operate with such a thoroughly demoralised staff - I certainly couldn't keep working there even as a locum for more than a few months.

Ms B Wilson, Pharmaceutical Adviser

I agree, because I now work for Boots, any Xp I cash in I get done at the Lloyds Pharmacy near my surgery I have been with for twenty years. However I used to work for Lloyds nearly 15 years or so ago and you could see the sort of thing you have mentioned even then, but we were a busy pharmacy near a Drs surgery, but boy, and in comparison performed but staff turnover, well... Even by the time I decided to leave many many patients and customers were genuinely sad I was going, but I had to leave, even though there was nothing wrong with the staff they had managed to retain.
I went into the Lloyds near my surgery yesterday and there was a young girl like me in there, we will leave it there. I think she was a dispenser trainee , but her badge was obscured?
I paid and waited for my script asked a question about CBD oil and got an answer that in my mind was unprofessional... Anyway decided maybe time for me to have scripts which I do not have that often and random from somewhere else? WHY.
The atmosphere was not great!!
The pharmacist no rapport or that they were even bothered!!

So for me from what I know of pharmacy and I did hone some of my skills at Lloyds,
but then I am a competent person! Anyway... like most things its about the money rather than ethics and when you start going down that road, well look at the NHS and the education system, like someone mentioned less money paid at the top, stop putting staff through unneccsary stress, as in do as you would be done by..
And treating others like idiots, even before I got to pharmacy I had achieved, had good people other working experiences and skills!
But then I am nearly from back in the day, where morale fibre for some of us counted.
You were trained in a different way and standards seemed higher with rapport and empathy being thrown into the mix.

And if the rates of MH are anything to go by something is not right across society in general so are we not the people at whatever level in pharmacy best placed to support etc?
It is really scary. With regards Boots I just hope they do not change the original founders ethos just updated, so we do not become like any other high street pharmacy.

I still want to work for somewhere that still stands out from the crowd.

Job of the week

Pharmacy Manager - Bridlington
Bridlington
Competitive plus benefits (GPhC fees incl)