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Pharmacy2U uses £40m investment to ‘rapidly grow’ repeats service

Pharmacy2U: The investment follows period of “phenomenal growth”

Pharmacy2U has secured a “cash injection” of £40 million to “rapidly grow” its repeat prescription business.

The investment was secured from healthcare-focused private equity firm G Square, the online pharmacy business announced today (March 26). The Business Growth Fund – which has been involved in pumping £17m into the company over the past two years – said it had “also participated” in the latest financing.

How will Pharmacy2U use the £40m?

The company said it will use the latest funding to “further invest in our technology to ensure we maintain the same high level of service as we grow”.

“We believe digital transformation is essential to improving patient access to healthcare and easing the strain on the NHS, and believe that technology is now making a significant and much-needed mark on healthcare.”

The company has experienced a “phenomenal period of high growth”, it added.

“Positive disruption”

G Square founder and CEO Laurent Ganem said Pharmacy2U is “positively disrupting the healthcare industry in the UK”.

“We are much impressed with Pharmacy2U’s speed of growth, momentum in the sector, and remarkable customer experience,” Mr Ganem added.

£20m loss for 2016-17

Last week, C+D reported that Pharmacy2U had posted a £20m loss for the 2016-17 financial year. The company attributed £14.4m of this to the “exceptional” costs of its acquisition of competitor Chemist Direct, which it bought for £40m in July 2016.

Read what two accountants made of Pharmacy2U's most recent financial report here.

C+D explored the world of online pharmacies with an article every day last week. Read all the coverage here.

10 Comments
Question: 
What do you make of this investment?

P M, Community pharmacist

anybody know how many pharmacists work for p2u checking rxs?

JOHN MUNDAY, Locum pharmacist

What the investors are banking on (literally) is that Amazon will buy them to get a foothold in the UK. They don't want bricks and mortar but they want this. Give them 18 months. Mark my words.

Clive Hodgson, Community pharmacist

Very possibly. 

Amazon already have a well developed and efficient distribution system. This would be key to making this format financially viable.

Aryan Butt,

The emperor has no clothes. Am still to see anything mildly inovative that P2U have done. Any thing they are doing can be easily replicated. The only reason most of us dont do it is the distribution costs as shown in P2U's accounts are greater than the gross profit.

Oh and they were incorporated in 1999 so its not like they are new set up. Dont know many internet companies that have used the excuse of initial growth phase for that long. 

Lets face it you could buy bricks and mortar pharmacies for 20 million and have more items and profits to show for it tha P2U so far

 

Aryan Butt,

It would appear that Pharmacy2U are setting up LLPs with with doctors and doctor's surgeries

https://beta.companieshouse.gov.uk/officers/0fw1dxHm9yWS5du6nNYkMrtm2dw/appointments

On one LLP that I have looked into detail it is stated that primary purpose of the LLP is to share the profits between the members (members are P2U and various doctors)  

I would be interested to know what the doctors bring to the table.  Doctors directing prescriptions of course would be unethical.

 

 

 

 

 

Mayank Patel, Superintendent Pharmacist

That’s really interesting. Just checking prescription data  from those surgeries. 

A Hussain, Senior Management

That's a good point.  They'll have spent £40 million in accountancy fees!

Barry Pharmacist, Community pharmacist

They will have a queue of other potential investors if they needed even more cash. Like it or not they will be doing 300,000 items a month in a very short time and growth is 60% every 6 months. TV advertising obviously helps.

We might not like their concept or the company but we ignore them at our peril.

Even if they grew to dispense 1,000,000 items a month - something they could do in less than 2 years at their current growth rate they would be less than 2% of all Rxs and have a lot to aim for.

Some mega corp will buy them and this sort of investment is chicken-feed to them.

A Hussain, Senior Management

I know what you mean, but these guys are hardly trailblazers.  They have national reach and do about as many scripts as a small chain of 20-odd pharmacies (which when you look it that way isn't all that), without any of the other services they may do and receive revenue from.

These investment guys obviously know more than I do about risk, but the loan will be secured so they'll get their money back regardless so the risk isn't theirs.

S Morein, Pharmacy Area manager/ Operations Manager

Disrupters like P2U often burn through capital at a rapid rate during the initial growth phase. Then rise to become market leaders eg Amazon or Netflix or Tesla

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