In Australia, consumers are getting used to larger "Drug Store" style pharmacies & are demanding bigger range & convenience!

As some of you know, I recently travelled to Madrid for the Champions League final in May. Whilst spending time in this beautiful city, I noticed most pharmacies (see above photo) are still heavily regulated.

Like most metropolitan pharmacies in Australia till the mid 90s, they were mostly small, dark & drab & only ranged medicinal items.

This observation brought back sentimental memories to me as I remembered my days at school & as a young pharmacist when most pharmacies were smal. But as a pharmacist in Sydney, I also realised how much our shopping preferances as consumers in Australia have changed in the past 15 or so years.

As a pharmacist, I found the pharmacies in Spain a rather depressing environment to work at! On the other hand, as a consumer I saw the range offered in the pharmacies very limited & "boring" (consumer hat remember?), the variety non existent, self selection range very small & the size of most stores simply clausophobic!

Then I realised that the various larger chain store pharmacy brands in Australia from Priceline to terry White to various discount models do provide an exciting "shopping experience" for many consumers in Australia! Of course, we have mostly changed tour business practices to these models as a direct result of fierce competition from food & discount retailers, as have pharmacies in e.g. Canada, USA & parts of UK.

But it is important to acknowledge that we have also done so as a result of trying to meet our customers needs & wants. our customers enjoy shopping at e.g. Priceline Pharmacies due to the good range, competative prices & great shopping experience, as well as availability of advice & medicines.

In Spain, pharmacies may provide advice & medicinal needs, but nothing else. Therefore, none of the 10 or so pharmacies I visited had more than one customer in them.

Dark shadows over the future viability of Community Pharmacy in Australia

The floodgates opened a few years ago with the introduction of the manditory 12.5% price reductions & the subsequent PBS reforms implemented by the somewhat attention deficit suffering (and as it's turned out very ambitious) Health Minister in the Howard Government.

Then the industry suffered from the discounting of fast moving PBS safety net items initiated by major discount pharmacy chains & its subsequent follow up by others (including chains my stores belong to), then the recent announcement of the 2 year indexation freezing of dispensing fees & elimination of the PBS on line incentive in the 5th agreement....and now the deletion of larger pack sizes of codeine combination analgesics!......next it will be the reconsideration of the absurd proposal to make all sinus/nasal/cough products for under 6 year olds Rx only & for 6-12 year olds Pharmacist Only. (May I dare to suggest the fools around the world who are suggesting this must have be a bunch of nerdy scientists who have had minimal contact with sick small children & their sleep deprived parents?

Regrettably, for most pharmacies, all of the above are/were items or factors that make/made a significant contribution to both gross sales & more importantly gross margins. Whilst gross margins in pharmacy in recent years have steadily declined, income sources such as the ones mentioned above have kept GPs at a manageable level. This has in turn allowed business owners to survive all other challenges, and continue to provide the variety of "free of charge" community, clinical & counselling advice pharmacies provide.

The future looks even far less certain when the usual rental pressures, banks' charging of up to 2% above mortgage rates to provide finance to small business and the substantial increase in wage costs once the new Fair Works Legislation is fully implemented are added to the above considerations.

Sadly, we have reached a point that there are so many internal & industry related threats to our businesses that we don't even have time to worry about our major supermarket rivals & their adverse effect on our businesses.

Woolworths & Wesfarmers are aware of the tough market condition pharmacy is finding itself in, and would be more than happy to stay out of the industry & see what shapes up by 2015.

Even the most creative & smart business operators in Pharmacy are beginning to find it increasingly difficult to generate a substantial increase in turnover unless it is accompanied by a major sacrifice in GP.

Where do all of the above leave Pharmacy? In a very uncomfortable and uncertain space.