JL / The Pharmaceutical Journal
Our special report into the sustainability of the community pharmacy market reveals some clear trends.
Since we last looked at these data, there has been a slight contraction in the number of pharmacies in Britain — a net reduction of 52 between March 2016 and January 2019. Though this number may seem small, it conceals some damaging turbulence in the sector.
Smaller businesses are suffering: some having to cut staff and opening hours, and charge for services which were previously free
Large-scale restructuring programmes have been announced for two of the large multiples, which are selling off hundreds of pharmacies. Smaller businesses are suffering too: some having to cut staff and opening hours, and charge for services which were previously free. Others have had to release personal equity to keep their pharmacies open.
In England, successive waves of funding cuts have left contractors vying for a share of a £208m smaller pot of cash. On top of this, reductions to Category M reimbursement prices have been made to claw back excess margin earned by pharmacies totalling £200m in 2015/2016 and £100m in 2016/17.
Things are slightly better outside of England. Contract funding in Scotland increased by £2.6m in 2018/2019 and contractors do not face the same difficulties with the margin-sharing process. In Wales, funding has remained stable for the past three years.
But other headwinds facing community pharmacy are similar across Great Britain. Growth in prescription volumes has slowed and looks set to decline further as government guidance is implemented in England (and considered in Wales) to restrict the prescribing of common over-the-counter treatments.
The NHS is putting a renewed focus on polypharmacy, antimicrobial stewardship and social prescribing, all of which could have an impact on prescription numbers.
Medicines shortages, the Falsified Medicines Directive, Brexit, the consumer downturn, a weak pound, wage increases, a rise in business rates and the apprenticeship levy have also put additional pressure on community pharmacy.
Like many other sectors, online sales are cutting into the profits of brick-and-mortar businesses. Distance-selling pharmacies make up a tiny proportion of the market, but they are growing. Many pharmacies are investing in online technology to compete with new players, but they have a lot to do to catch up with their more agile competitors.
The situation may seem bleak, but it is not all doom and gloom. Negotiations between the Pharmaceutical Services Negotiating Committee (PSNC) and the government on a new English community pharmacy contract are due to start, with the PSNC aiming to secure a multi-year deal.
The small multiples, in particular, are bucking the trend by expanding their market share. Businesses with good links with local commissioners, and which are able to adapt to the changing times, can offset cuts in other areas. But, overall, the community pharmacy market is far more bear than bull, and that may continue for a while yet.
