Why are we ‘Booting’ out community pharmacy capacity?

This month, The Pharmaceutical Journal’s health policy columnist analyses the practical and financial implications of widespread community pharmacy closures.

The recent news that Boots is going to close 300 UK pharmacies over the next year was striking.

On 27 June 2023, BBC News reported that Boots’ parent company Walgreens Boots Alliance (WBA) said “they will shut down stores in close proximity to each other as part of plans to ‘consolidate’ the business”.

The BBC was briefed that there will be no redundancies and staff will be offered work at nearby stores. However, the Pharmacists’ Defence Association (PDA), which represents Boots employees, warned that redundancies are still “a possibility”.

This closure of 300 pharmacies will leave Boots with 1,900 branches across the UK, having already closed 200 “loss-making” pharmacies between 2019 and 2022.

Both rounds of closures were initiated by US pharmacy retail mega-corporate WBA, having previously been bought by private equity firm KKR.

A 2012 analysis from The Guardian noted that KKR paid £1.25bn for what was known at the time as ‘Alliance Boots’ in 2007 (funded with almost £9bn of debt). Later, in 2012, KKR sold a 45% stake in it to Walgreens for US$6.7bn initially, plus US$9.5bn later (plus the £7bn of private equity debt still in Alliance Boots).

When KKR acquired Alliance Boots in 2007, it was Europe’s biggest ever private equity deal: the acquirers were regarded as having saddled Boots with immense debt (this tactic won’t be unfamiliar to people observing the UK’s privatised water companies).

The changing sector

While the sale may have had a lasting impact on Boots’ footprint, as of October 2022, England already had the lowest number of community pharmacies in seven years. As The Pharmaceutical Journal reported in February 2023, before the Boots announcement, pharmacy multiples and supermarkets had put 252 branches at risk of closure in 2023. 

The closures have largely been chalked up to insufficient government funding, resulting in “changing market conditions” — conditions that the government knew were risky when it froze funding for pharmacies from 2019. 

If diverting the rising and unmet need from primary care is supposed to be ‘a thing’, then this seems like a curious way of preparing for it

This is curious, in a country with an ageing, fattening and sickening population and a Pharmacy First policy due to be in place by the end of 2023. If diverting the rising and unmet need from primary care is supposed to be ‘a thing’, then this seems like a curious way of preparing for it.

But what are the financial expectations for the UK pharmacy sector now? Statista suggests that in the UK, “revenue is expected to show an annual growth rate… of 4.82%, resulting in a market volume of US$54.6bn by 2027”

That seems surprising given the prediction from the National Pharmacy Association that several thousand pharmacies are likely to close over the next few years without additional government funding. But obviously Boots’ business owners — and others — will be thinking about online retail opportunities and cost efficiencies, as well as opportunities for physical high street pharmacies.

Redundancy capacity

Does the community pharmacy market really have this much redundancy or surplus capacity built in? In some places, it may have: in the London suburb where I live, until 2022, there used to be two small Boots pharmacists within a three-minute walk of each other, with a third a ten-minute walk away next to a local supermarket. Now, I walk quite fast — which, given the demographics of healthcare demand, the majority of people who need pharmacies do not — but that has never seemed like a sustainable distribution. Yes, it’s an anecdote: it’s still a real situation.

Elsewhere, it won’t be as clear cut. I live in the affluent south west region of Greater London. The vast majority of my neighbours who pay for their NHS prescriptions can probably afford them, even in a cost of living crisis. 

Poorer areas — which, as we have known for many decades, have the higher healthcare need — are seeing pharmacies that are in high demand close at a faster rate than other parts of the country, worsening health inequalities.

Obviously, this affects pharmacists: job and training opportunities will clearly be lost, and this matters — particularly as the government now plans to increase the number of pharmacy trainees. Equally, if the aim is to improve population health and increase availability of pharmacists to alleviate demand on primary care, then the government’s decision to leave pharmacy provision mostly up to market conditions is an odd choice. 

We seem to be lacking some joined-up thinking — or some market-making.

Andy Cowper is the editor of Health Policy Insight

Last updated
The Pharmaceutical Journal, PJ, July 2023, Vol 311, No 7975;311(7975)::DOI:10.1211/PJ.2023.1.192556

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