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.

Do you know a business that "pockets" all revenues as pure profit and has no business expenses?

The article in daily Telegraph on June 11th about pricing of PBS items by pharmacists contains many questionable if not inaccurate points.

One wonders whether this type of one sided representation keeps certain high profile high spending advertising clients of the Newspaper content or is an attempt to twist and confuse the negotiation process between the Pharmacy Guild and the Government in the coming months. However, getting into a verbal war of words about the inaccuracies in the article is futile and I am certain the Pharmacy Guild will correct the factual errors in the article in their response in due time.

Therefore, as a pharmacist I would like to ask the "Special Investigation Team and their Leader" at Daily Telegraph responsible for the article a different and more light hearted kind of question: Do they have to spend a portion of their salaries to pay taxes? Do they need to cover costs of living such as food, petrol, rent/mortgage, clothing, utility bills etc out of their salaries? Or do they "pocket" all their salaries?

Having asked those questions, any fair minded person should take into account the most basic fact in any business: sales revenues are not directly "pocketed" by the owners of the business and are not "profit"! The intentional use of phrases such as "pocket", "profit" and "rort" is at best regrettable and at worst mischievous.

Therefore, the article fails to mention that pharmacists do not in fact "pocket" or "profit" every cent of the prescriptions they dispense. Like any other business, they have to pay suppliers to buy the stock. (Let Daily Telegraph's so called "Investigative Team" decide at what wholesale prices since their investigators seem to have set the wholesale prices arbitrarily anyway!). Then there are staff wages, rent and outgoings, utility bills, advertising costs, various business loan repayments and leasing of fixtures and fittings etc, and last but not least any remaining money has to be taxed for income tax purposes.

So, let's be fair and remember that pharmacists always have and will continue to provide many free services to their customers on a daily basis. The high level of trust they have always enjoyed in the community is due to the accessibility of their professional advice to their customers and patients at no cost to the patients or taxpayers. Like any other business however, they need to have a business strategy to continue to service their customers, provide their free services, cover their business costs and make a living.