Community pharmacy – between a traditional model and innovation
It is a common assumption that community pharmacy is not living an easy time. This is particularly true in North European countries and in North America. But how difficult is the situation? What is really happening?
The last data of NHS Digital can help us understanding what’s really happening.
According to data from NHS Digital More than 100 community pharmacies have closed over the past year in England. The data showed that 103 community pharmacies in England closed during the 2018/19 financial year, while only 38 opened during the same period. This represents a net closure of 65 pharmacies.
It has been calculated that there were 11,539 community pharmacies in England as of 31 March 2019: that means an increase of 9.8% over the last decade, NHS Digital said but it also means that the number of pharmacies has decreased by 0.7% since 2017/18.
The data shows that almost 4 in 10 (39%) community pharmacies in England are owned by independent contractors at 4,525, while 7,014 are owned by multiple contractors with six pharmacies or more.
Interestingly almost half of the pharmacy closures (48) last financial year took place in the North of England, with the Yorkshire and Humber region alone losing 15 pharmacies. In the same region only 12 pharmacies opened ast year, leading to a net loss of 36 pharmacies.
London was the only region to retain the same number of pharmacies, with 7 closing and 7 opening over the year whereas the Midlands and East saw a net loss of 20 community pharmacies, compared with 9 in the South.
Another interesting data to consider is number of consolidations: the data also shows that over the last financial year, there were 28 pharmacy consolidations. The Government made consolidations easier and pharmacies can quicker and easier merger. Moreover, the funding is still supporting more pharmacies than may be necessary. Also, Simon Dukes (PSNC) shared the belief that there are too many pharmacies near to each other so mergers could strengthen market interest in the sector. Accordingly to this all of the mergers involved an existing pharmacy premises, rather than a new building.
NHS data is clearly showing that the Pharmacy industry in UK is moving and changing. The existing model is probably difficult to be supported and it is even more difficult to be economically sustainable. Difficulties are not only affecting independent contractors: also, big multiples are announcing closures of low performing branches.
But is pharmacy closure the only answer to the declining profit in pharmacy business? Pharmacy closure is a fact and an easy choice but it is never a solution. Open minded independent contractors as some multiples are looking to alternative solutions and are looking to what can increase efficiency of their model. For sure “Hub and Spoke” is one of those. Investing in automation can allow to reduce costs and improve service to patients: if you give your staff better tool and more modern technologies, the same team can do more, can increase productivity and transforming red figures in black ones. The data from NHS Digital More is clearly showing that the traditional model of pharmacy is not capable to face the today challenges and that it can just decline. But technology does not stop and new solution are already available. Some pioneers are already going in this direction and they are already showing that it brings benefits and it can make the community pharmacy again a sustainable business.