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.
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