Layer 1

Pharmacy2U made £16m loss in 2018-19, report reveals

The company said it “expects profitability to increase” in 2019-20
The company said it “expects profitability to increase” in 2019-20

Pharmacy2U reported a £16 million loss for the previous financial year, despite adding 330,000 new NHS patients, its most recent financial statements reveal.

The online pharmacy business dispatched more than 5.3 million NHS prescriptions from April 2018 to March 2019, a 80% increase on the previous financial year, according to documents filed with Companies House earlier this month.

The business – founded in 1999 and positioning itself as the largest online pharmacy in the UK – made “significant progress reduc[ing] operating costs” in 2018-19, it said, which “largely mitigated” the impact of the pharmacy funding cuts in England.

It attributed its £16m loss to “significantly higher investment in NHS acquisition marketing”, it said in the document.

The latest loss is greater than the business's £12.1m loss in 2017-18, but less than its £20m loss in 2016-17, according to its past financial reports.

Predicting profitability

Despite its losses, Pharmacy2U claimed in the documents that it “became profitable” in April 2019, and “expects profitability to increase throughout the remainder of the current financial year and beyond”.

“The group is well positioned to deliver further growth of the core NHS repeat prescription business,” it said in the document.

A £40m equity investment secured in March 2018 “will allow the group to gain a much higher share of the NHS repeat prescription market by accelerating the existing multi-channel marketing approach”.

Investing in automation

This investment will also be used to fund the development of a second automated dispensing hub – for which Pharmacy2U entered into a £7.5m contract last year.

This will “provide the required operational capacity, further reducing operating costs and improving profitability”, Pharmacy2U stated.

It also used the report to highlighted the “difficult economic market” and “competition from national internet pharmacies” as key business risks for the future.

Last year, the former CEO of Well Pharmacy exclusively told C+D that the multiple was prompted by online business Pharmacy2U’s “rapid growth” to “accelerate” its own digital plans.

25 Comments
Question: 
What is your take on Pharmacy2U's finances?

John Cleese, Production & Technical

How many community pharmacies have closed as a direct and demonstrable result of distance selling pharmacies?

Hanbal Chaudry, Community pharmacist

Bad model in the current times. The older generation is not internet savy yet. Maybe in another 25-50 years. What do I know? Only got an MBA from Oxford. 

Chicken Little , Pharmacy owner/ Proprietor

 

Did you MBA not teach you about building scale even at a loss, to sell the business in the future at a value based on a multiple of user numbers.

Perhaps your MBA is 25-50 years out of date

 

 

Farmer Cyst, Community pharmacist

Hey small world! I got BSE when I lived in Cambridge!

Edward H Rowan, Locum pharmacist

That's why pharmacies are always 30 years out of date. When we 50-somethings are retired and taking 15 different medicines each month in another 25 years, ETP will have been replaced by PTP (Psychically Transmitted Prescriptions) and these will be sent to patients by teleportation. Then we won't understand that, and the pharmacy staff will get frustrated with us.

SIMON MEDLEY, Community pharmacist

OK-so looking at pharmadata figures theyve averaged 532,227 items a month over the last 12 months, so thats 6,386,724 items.

Its cost them £2.05 to dispense each item !!!

James Currie, Community pharmacist

CA absolutely spot on! The BIG difference between P2U and the Amazons of the internet world is that P2U have no control over profit and margins. It is the DOH that rules the day, and as such they will always have their profit restricted/controlled by the DOH just like all the bricks and mortar Pharmacies!

O J, Community pharmacist

Great Britain is a sinking ship

David Kent, Community pharmacist

Best news so far this year 

Paul Guest, Manager

Despite its losses, Pharmacy2U claimed in the documents that it “became profitable” in April 2019, and “expects profitability to increase throughout the remainder of the current financial year and beyond”.

They said this in last year's accounts too, and qualify it by saying this excludes marketing costs. Of course if it wasn't for the aggressive and costly marketing campaigns they would have a small fraction of the prescriptions they do now, and no way of replacing the customers they lose.

 

 

C A, Community pharmacist

They are running a "silicon valley" style business at present, don't worry about profits and gain market share. Same thing Amazon and Netflix did. That's a simplification of course, as Amazon and Netflix can increase prices and change terms once they were established, good luck to P2U if they think the DOH will let them do that!

A B, Community pharmacist

I'm probably being very thick but I'm confused by the figures in the article.

16 million loss for last financial year, I assume means April 2018 -March 2019 as we are still in 2019-20.

But later on it says "The latest loss is greater than the business's £12.1m loss in 2018-19, but less than its £20m loss in 2017-18, according to its past financial reports".

So was 2018-19 a 16 million or 12.1 million loss? Again, I'm probably missing something obvious. Can someone shed any light?

James Waldron, Editorial

Apologies, that was a last minute edit. I have now amended the dates.

 

 

 

 

 

Michael Galyas, Locum pharmacist

Madness, why work for less than nothing ?

Leon The Apothecary, Student

Personally I suspect they are looking to get brought out by Amazon after they are done with the US.

Adam Hall, Community pharmacist

My concern is that they don't get enough business to be profitable, yet draw enough away from bricks and mortar pharmacies to make them unviable and so destabilise the whole system 

SIMON MEDLEY, Community pharmacist

while giving the govt the illusion that this operating model is the future

David Moore, Locum pharmacist

So in three years, it's lost £48m. How's it still going? Thought it was illegal to trade whilst a business was insolvent.

Chicken Little , Pharmacy owner/ Proprietor

Solvency is not linked to profit (as many of us know), therefore if P2U is properly funded by external backers they can trade legally. 
 

As pointed out previously by other users, P2U are clearly attempting to build scale, even at a loss, with a plan to exit the market by selling a consumer subscription type database. Love it or loathe it, they have a model which will work for their shareholders.

 

Chris Locum, Locum pharmacist

It is unless of course, you allow it because Amazon-style pharmacy is perceived as the future. However, if all the high street pharmacies close and online operations hover permanently on insolvency, the government will not be able to undo the consequences on the cheap.

A.S. Singh, Community pharmacist

Chris you are right

 

We do not have anyone in the government that understands pharmacy. As the world moves on they still believe that pharmacy should move with retail.

No one has asked GPs to move their business online. Pharmacy is also a personalised service and distance selling makes a loss. It will be too late by the time the government close down high street pharmacies and they would have wasted tens of millions trying to convince the public meds should come through your letterbox

P M, Community pharmacist

so no coperation tax to pay, and only one premises fee..

luvly jubly

Farmer Cyst, Community pharmacist

They'll be hammered by that GPhC premises fee increase next year

C A, Community pharmacist

Sure a £16 million loss is bad, but sure that extra £103 will bust them...

Joan Richardson, Locum pharmacist

LOL!

 

Job of the week

Pharmacist
Cayman Islands
Up to US $60,182 per annum (Tax-free salary) + benefits