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‘Rationalising’ contributes to 239% Lloyds parent's profit rise

McKesson: Pharmaceutical distribution volumes in Europe increased due to COVID-19

Lloydspharmacy’s parent company has attributed a 239% profit increase to its European business in part to “rationalising store footprint” and “streamlining back office functions”.

Adjusted operating profit for McKesson’s European pharmaceutical solutions division, which includes Lloydspharmacy and the wholesaler AAH, was $78 million (£63.8m) in the three months leading up to March 31, taking currency rates into account. This is a 239% increase on the same period last year, McKesson said in its latest financial report, published on Wednesday (May 20).

This growth was “driven in part by lower operating expenses as a result of actions previously taken to rationalise our store footprint and streamline back office functions and the lapping of a prior year inventory charge of approximately $20m (£16.4m)”, McKesson executive vice president and chief financial officer Britt Vitalone said.

Looking back over the past financial year, McKesson noted that adjusted operating profit for its European business was up 10% to $240m (£196.9m), once currency rates had been taken into account.

COVID-19 increased demand

Revenue across McKesson’s European business in the last quarter was  $7.2bn (£5.9bn) – up 9% once currency rates were taken into account – “driven by growth in the pharmaceutical distribution business, including incremental revenue as a result of COVID-19”, Mr Vitalone added.

Shortly after the World Health Organization declared COVID-19 a pandemic on March 11, “pharmaceutical distribution volumes in the US, Europe and Canada increased, as people stocked up on medications and personal protective equipment”, he said.

This contributed to an increase in revenue in the last three months of the financial year. McKesson estimates that the demand for pharmaceuticals triggered by COVID-19 resulted in “approximately” $2billion (£1.6bn) in “incremental revenue” across the business, Mr Vitalone said.

Thanking frontline pharmacy teams

McKesson CEO Brian Tyler thanked the McKesson employees who are working on the frontline during the pandemic.

“I want to particularly recognise our colleagues, who are on our front lines, like those in our distribution centres, in our pharmacies in Canada and Europe… going the extra mile for our customers and rallying around one another in these times,” he said.

15 Comments
Question: 
Has demand for pharmaceuticals increased in your pharmacy since COVID-19?

R A, Community pharmacist

Rationalising costs reeks of desparation and a unsustainable business.

How long can they go on like this? Especially when Amazon enters this sector which is the king of rationalising costs but wont have any legacy costs like Lloyds, Boots or Well Pharmacy from buying individual pharmacies at a premium, expensive overheads, TUPEs, pension liability?

 

Not-So-Lucky Ex-Locum, Superintendent Pharmacist

239% profit increase by stamping all over peoples jobs and lives but that doesn't matter because the shareholders will be happy. Hope they feel proud of themselves.

C A, Community pharmacist

“I want to particularly recognise our colleagues, who are on our front lines"

 

Any chance of that recognision being financial Mr Tyler? - you know like some other companies are doing

Linda Victoria, Community pharmacist

Yeah...thank you /clapping is good but can't pay bills ...

Chris Locum, Locum pharmacist

And rationalising on the subject of fees doesn't make for racketeering, unless you're the recipient.

Not-So-Lucky Ex-Locum, Superintendent Pharmacist

They are a multiple - according to the GPhC they are incapable of racketeering.

Caroline ACT, Accuracy checking technician

Massive profits yet cutting valuable hours again in Pharmacies. Why is this not mentioned?
So much for thanking frontline Staff putting themselves and their families at risk!!

Rebecca Field, Community pharmacist

Wondering If all those dedicated pharmacy managers will receive a bonus??? Hopefully they won't dangle the carrot again.....

Pharm Druggist, Community pharmacist

AAH will have made the majority of this profit at the expense of independants.

Tired Manager, Community pharmacist

Indeed it's entirely "rational" to hike up your wholesale prices, cream the profits and blame a pandemic

Seal Patel, Community pharmacist

Locum coordinator just emailed me at 3pm today saying £19/hr and with millage capped at £11 is most they can afford to pay as anything more is unfeasible. They will not pay extortionate rates but will offer them instead.

C A, Community pharmacist

It's almost as if the locum co-ordinators at multiples have taken the direction that locums shouldn't profiteer (from someone earning about £84/hr - Mr Rudkin) and are using it to beat locums over the head with low rates.

Benie I, Locum pharmacist

They would rather close than pay a reasonable rate. Rudkin will say nothing.

Benie I, Locum pharmacist

Is there a jargon free article? or could they just have said 'cuts, cuts and cuts'

Dave Downham, Manager

"...the lapping of a prior year inventory charge"? £16.4m is one hell of an expensive lap dance. No idea what else it could be.

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