The effect of the pandemic, the impact of business rates and changes to pharmacy funding are among the factors that have led to the decision, the multiple said when it told C+D yesterday (August 5) that it is “proposing to close” some branches “that are no longer commercially viable for us to operate”.
Lloydspharmacy will aim to “retrain and redeploy as many of our talented colleagues as possible to other vacancies that exist,” a spokesperson for Lloydspharmacy’s parent company McKesson UK said. Further details about the closures are not currently available.
Profits “offset” by COVID-19
The news comes after the McKesson group earlier this week (August 3) announced that a 3% profit increase across its European business in the first quarter of the 2021 financial year was “partially offset” by the pandemic.
Adjusted operating profit for McKesson’s European pharmaceutical solutions division – which includes Lloydspharmacy and the wholesaler AAH –was $36 million (£27.4m) in the three months leading up to June 30.
This was a 3% increase on the same period the previous year, once currency rates had been taken into account, McKesson said in its latest financial report published on Monday (August 3).
This growth was “driven by lower operating expenses” but was “partially offset by lower volumes due to the pandemic”, McKesson executive vice president and chief financial officer Britt Vitalone said. The first three months of the 2020/21- financial year were “very difficult” and “the COVID-19 pandemic had a greater impact on our UK operations than the rest of our European operations”, he added.
“Our teams have adapted to a changing operating environment in the wake of COVID-19. We saw increased demand prior to the lockdown with material reductions after the [stay at] home orders were imposed,” Mr Vitalone said.
Revenue for the European business was $6.2 billion (£4.7bn), down 4% once currency rates were taken into account. This was also “driven by the negative impact of the pandemic on the pharmaceutical distribution and retail pharmacy businesses”, Mr Vitalone said.
Meanwhile, revenue across the whole McKesson group was $55.7 billion (£42.4bn), “flat year-over-year, as market growth and higher volumes from retail national account customers within the US pharmaceutical and speciality solutions segment were largely offset by the impact of lower prescription volumes and primary care patient visits across the enterprise”, McKesson said.
Presenting its fiscal 2020-21 outlook in May, McKesson predicted a 20-25% drop in adjusted operating profit across its European pharmaceutical solutions division, which it partly blamed on the “severe social restrictions” in the UK over COVID-19.