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Lloydspharmacy: Our competitors know bricks-and-mortar is challenging

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Toby Anderson: We are being forced to remove vital services from communities
Toby Anderson: We are being forced to remove vital services from communities

Lloydspharmacy's competitors acknowledge that keeping "bricks-and-mortar" pharmacies open is "more and more challenging", its parent company's CEO has told C+D.

Community pharmacy is being “attacked” from all angles – with Brexit uncertainty, the Falsified Medicines Directive and “the vagaries of category M”, McKesson UK chief executive Toby Anderson told C+D yesterday (March 13).

Lloydspharmacy was “prompted to tackle market changes head on”, by closing “around 70” branches, he added. C+D has identified 78 Lloydspharmacies deemed “commercially unviable” that have closed, and another 104 have been sold, since October 2017.

“Our competitors have now acknowledged that keeping their bricks and mortar sites open is becoming more and more challenging,” Mr Anderson told C+D in an exclusive comment piece.

“We are being forced to remove vital services from communities at a time when our NHS is under more and more pressure.”

Last month, Rowlands put 70 branches up for sale to focus on a “slightly smaller pharmacy network”.

Read why Mr Anderson believes business rate changes are needed to ensure healthcare remains “accessible”.

14 Comments
Question: 
How is your pharmacy coping with the funding cuts?

Sue Per, Locum pharmacist

We are being forced to remove vital services from communities at a time when our NHS is under more and more pressure.

What vital services are unique to Lloyds??, Sell up to a more eager and hungry potential proprietors, at realistic goodwills, or at reverse premimums, and the vital services and more will remain offered to the communities that Lloyds cease to offer. Lloyds is replaceable!! 

Lloydspharmacy was “prompted to tackle market changes head on”, by closing “around 70” branches, he added. C+D has identified 78 Lloydspharmacies deemed “commercially unviable” that have closed, and another 104 have been sold, since October 2017.

Fact:Managed to sell of 66% with good premiums, to those who were happy with lower profits or margins. If you reduce the exorbitant management costs extracted from these units, they would certainly have been profitable.Easy solution, executives need to take a pay cut, and work as fast and efficiently as their pharmacists!!.

Further, the "closures" was merely a consolidation exercise, post acquisition, which usually happens. The first signs of tough trading conditions in a sector would be evidenced, with mass closures. not a mere sub 1%, that we have witnessed!!

Female Tech, Pharmacy technician

Early days to say those pharmacies sold will still be trading in the future. Anyone can say they'd be happy with next to no profit, but actually living it is a different kettle of fish

Sue Per, Locum pharmacist

The evidence is in the open in most cases at the companies house.It is for you to draw your conclusions and opine accordingly. From a network of some 12,000 pharmacies, only 70 have closed, which in my opinion, pales into insignificance compared to almost two pubs closing each week, and have done so for a number of years.!!No other parties in the sector have closed, and most of the businesses are being sold with prmiums. This is ir-refutable evidence that they are profitable, but not for the multiple operator, as it wishes to extract high management charges!!

Further, net profits can be engineered to suit.  Increase management charges, and net profits decline.

Charge high rents to phrmacies, with kick backs from the Landlords, and the net profit declines!!

For instore pharmacies, apportion a high high level of fixed costs and profits decline.Also in this case with a transfer profit of "GSL" medicines sales to the account of the main store, the net profit of the pharmacy sector declines,despite the pharmacists intervention in some of its sales!!

 

 

s8chy P, Pharmacy owner/ Proprietor

Sue Per,
You're talking about something you don't know about. As a pharmacy owner of one branch dispensing 6000 items monthly, I calculated I make something like a locum rate. I work at least 62 hours per week between pharmacy role and superintendent role. Some weeks it rockets past 70hours if there are annual submissions or staff issues for example. Every month it takes a half day to organise the prescriptions etc to send off. Locums have it easy.

geoffrey gardener, Community pharmacist

Time to pull the plug, you are obviously not enjoying it, overworked and underpaid. I am sure there will be scores of people prepared to take on your onerous task, some of them might even be prepared to make a modest contribution to your holiday fund .

Sue Per, Locum pharmacist

Whatever i have stated is evidence led, and i would not believe you without sight of your P&L accounts.Visit Christies website and look at the profits of comparable pharmacies, and they are good enough to command eye watering premiums.But if you say that you earn less than an hourly rate paid to locum pharmacists, i suggest you contact christies straightaway, and they will find you a buyer with completion well before the end of Spring, just in time for you to fit in few cruises for the rest of the year.Dont deliberate!!

 

Independent Dave, Community pharmacist

Absolutely correct S8chy. Many independent contractors are making not much more then our families that began from owning corner shops once you take all the hours into consideration. God knows who’s scorned them, but Sue per has no idea whatsoever and is trying to spread nothing but blind hate and cause fractions! The industry is on the brink of death, and it seems she/he won’t be happy until it is

Benie I, Locum pharmacist

Interesting you say independent contractors had forebears that started with corner shops ?!

C A, Community pharmacist

Dontca know that all pharmacists are just glorified shopkeepers?

R A, Community pharmacist

That's because community pharmacy has no real business model. It was based on a simple arrangement of NHS paying you to provide a service. In the past, the need for a pharmacy outstripped supply this provided a great opportunity for individuals to open up new pharmacies in the 80s and 90s and the NHS paying generously. However, a lot of people mistook this success for their own business prowess rather than being very lucky.

But now the tide has sunk rock bottom low these great businesses are coming undone like a house of cards! If community pharmacy had a great business model this would have been a mere blip in the ocean. If you want an example of a great business look at BP in 2010 the oil crisis led to a huge fine of $28 billion they coughed up. However, they are still generating a healthy profit of $ 9.58 billion. 

Similarly, if pharmacy had a robust business model then it would have been able to weather this storm. This gives me satisfaction because these companies robbed the livelihood of myself and many other pharmacists. As pharmacy was a once a respectable trade with good income.  

Andy Burrells, Community pharmacist

The only flaw with your commentary is pharmacy is reliant on the PSNC to negotiate on it's behalf.

You know where I'm going with this....

R A, Community pharmacist

PSNC is a non-functioning body the real reason why pharmacy faces this situation is due to consolidation and change in the business model of pharmacy.

In the past, the sector was so highly fragmented the NHS was prepared to pay per pharmacy as individual pharmacy has higher overheads but thanks to the rise of multiples cost of operating individual pharmacy went down due to the scale of economy. 

Due to consolidation and the sector being run by 3 large players and few medium players the government is in a position to pay less because these companies won't stop operating due to poor funding. If the market was fragmented the government would struggle because it would lead to a collapse of the whole sector so they would have been forced to pay up. Currently the low fees are causing multiples to close only certain stores and migrate those customers to existing stores and dumping them on overwhelmed staff. Everyone wins except the staff.

The other thing to take into consideration is that due to change in pharmacy practice the role of bricks and mortar pharmacy is becoming less important to the NHS. Changes include no extemporaneous compounding and use of the internet to read on minor ailments. One has to realise that pharmacy is losing its monopoly in providing healthcare advice and just dispensing prescription can be done from Amazon style warehouse.

This makes the bricks and mortar model redundant. PSNC should be disbanded because it adds no value but its a mistake to think that the current demise is due to PSNC. Rather its the profession itself! Had an agreement stayed in place by the profession such as one or two pharmacies per pharmacist, all medication including GSL being available in a pharmacy only and not in supermarket/petrol station and keeping extemporaneous compounding in community pharmacy then this would have created significant barriers for the government to ignore pharmacy. Instead, the sector has sold its family silver and has nothing to barter with. Therefore an easy target.

Look at how GP protect its turf they were resistant to pharmacy doing flu jabs and now pharmacists switching the patient to an alternative medication. They know its a slippery slope. Once they start making these concessions it can lead to further attrition of power and its demise. 

 

Chris Locum, Locum pharmacist

Correct. Pharmacists have been the medicines expert on the high street. However, the rise of Dr Google, vertical integration of corporate pharmacy, de-skilling through change and loss of ownership have sealed our fate. A weak negotiating position merely heightens the poor remuneration that will remove the smaller operator. Multiple volume operations will still make a profit. It is staff that bear the brunt of these pressures while a single-handed contractor tries to predict cash flow, wondering if they will see reimbursement of over-priced drugs.

Benie I, Locum pharmacist

In a nutshell I think you're trying to say do not study pharmacy and certainly stay away from the comunity sector. 

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