Q&A: An insight into the finances of the Royal Pharmaceutical Society

What are the financial projections for the coming year?

Since 2010, we have transformed the Royal Pharmaceutical Society (RPS) from a regulator into an organisation that champions the needs of its members and customers, and is focused on the common goal of improving public health by supporting the career development of pharmacists and providing world class medicines information.

The investment to get us where we are today has meant that we have had to accept the organisation making a loss for a number of years. But we have seen the fruit of this, in that membership has grown over the past three years and our sales of digital drug information has increased, which helps us to subsidise our member offering.

Moving to our new London office in Wapping has enabled us to refresh the building we work in and lower the running costs, and we have invested the RPS assets from the sale of surplus property into a diversified growth fund that has grown by 9% since July 2015.

During 2016 we took a hard look at all our costs and, for 2017, we’ve managed to reduce a large number of non-pay items, such as post, legal, IT, expenses and professional services, which add up to £250,000 per annum. We have also found different ways to deliver our services around the promotion of events, communications, local engagement, The Pharmaceutical Journal and the administrative support in human resources and finance. 

As a result, in 2017, we have budgeted for a financial surplus of £5,000 before interest. Not a lot I know, but it means we will not be dipping into reserves and it is a big turnaround from the £1.5m budgeted loss for 2016. The budget includes a further capital investment of £1.2m. This represents a really strong message from the RPS Assembly that we want to keep improving what we do. The treasurer, David Thompson, keeps a keen eye on the financial performance with a weekly phone conference with me.

In 2015, the RPS ended the year with losses of £1.1m. What is the situation looking like for the end of 2016?

We set a budget for 2016 of a loss of £1.5m, but we have seen good commercial sales and controlled costs, so it will be better than that, but we are still preparing the year end accounts so cannot say just yet. 

The RPS has lobbied hard to develop new roles for pharmacists in GP surgeries, care homes, urgent and emergency care, and with other community providers and to raise the profile of the profession. There has been the launch of the Pre-Foundation programme and further development of the Foundation programme, Faculty, continuing professional development, and new guidance and standards. We also ran 37 events in 2016 that were attended by nearly 4,000 members.

We have built a new website for members that will be launched in 2017 and have been putting enormous work into our two largest-selling products, Medicines Complete and the BNF, that will enhance user experience and attract new customers in 2017, which is important because the member subscription does not cover all the services and products we offer. We have received positive feedback about the changes in The Pharmaceutical Journal and the relaunch in 2016 of the peer reviewed journal Clinical Pharmacist.

In our first full year at the new building we have achieved room lettings that are comparable with the best year we ever had at Lambeth and this all helps to keep running costs down. It was a busy year and 2017 will be the same.

In 2015, the cost of delivering member benefits exceeded RPS income. What adjustments have been made to ensure a profit is delivered in future?

We undertook a complete review of our activities in a programme we named ‘Fit for business’, where we evaluated the products and services we offer in terms of comparative cost and benefit as evaluated from our member surveys. We also undertook an analysis of the tasks staff undertake to see what to trim, stop doing or do differently. It has been a really useful exercise involving departments across the organisation which I hope will reassure members that we want to spend the money we receive wisely and minimise administrative costs so that there is more for front-line services.

In 2017, we are launching new ways of engaging with our members, so we are doing a lot of listening through research activity. We recognise that members are time poor and so want to communicate in ways that best suit them.

Will the RPS be investing money in member services in 2017?

Yes, we will be investing £1.2m, approximately half in new publication products and much of the rest in projects to make us more efficient and reduce future revenue costs. We have other ideas to trim costs further that we will develop in 2017 and plenty of ideas to enhance our services, including the new RPS website.

What will be the main financial challenges for the RPS in 2017?

Delivering a turnaround from a loss to a small surplus will be a challenge and we have many big projects to land in 2017. But I am confident in the energy and professionalism of everyone here to achieve the plans approved by the RPS Assembly. We are heavily dependent on the growth of Pharmaceutical Press sales, both at home and, increasingly, abroad, selling existing products into new markets and developing new content, which will require us to be incredibly focused.

Of course, we will be searching for a new chief executive in the first half of 2017, but Helen Gordon has ensured that the plans are clearly set for this year and beyond so this will not take us off course.

What effect is Brexit having or likely to have?

Overall, we are less affected than, say, a manufacturing or retail organisation. But Brexit creates massive uncertainty in the UK economy, which I fear will increase domestic inflation, which is not good for our members, whatever the pros and cons of the exit decision turn out to be.

We have our reserves invested in a diversified growth fund and we are reliant on our investor picking the right portfolio in turbulent times. Sales of our products made in sterling will be cheaper for our international customers and sales made in dollars are worth more presently. We do have some purchase commitments in euros and, sadly, they have gone up with the sterling devaluation, so we are managing our currency exposure.

What does the newly agreed BNF contract with NICE mean for the organisation?

The National Institute for Health and Care Excellence contract is terribly important for the RPS and for the NHS. We have the financial stability created from a multi-year contract, which has enabled us to invest in the new digital format and applications that are derived from that. The NHS has the confidence of knowing that their staff are using the best pharmaceutical reference information available.

How do you respond to suggestions from members that there needs to be more explanation around RPS finances – are there any plans to engage with the membership aside from at the AGM?

I am really happy to share information with members and confess I am disappointed that there are not more people following the AGM either on the night or via the website afterwards. I will publish some information on the new RPS website and would be delighted to receive feedback (simon.redman@rpharms.com).