Pharmacists are split over the outlook for the UK’s pharmacy sector over the next 12 months, with half believing that trading levels for their businesses in 2011 will remain constant or will improve, according to a new survey by Christie + Co, the specialist property agent and advisor.
The new survey posed a number of key questions to approximately 3,500 pharmacists that related to current trading and forecasts as well as on key issues which were felt would impact the pharmacy sector over the next few years.
In looking ahead to the coming year, half of the respondents were less confident of trading prospects, highlighting a number of key issues facing the sector, including the Government’s proposed changes to NHS funding and the implementation of the category M claw back.
The new study, in which pharmacists were banded depending on levels of annual script income generated by their respective businesses, also found that those pharmacies based in high street (61%) and village (71.5%) locations were more confident about the trading outlooks, than those based in a suburban community (43%) or in an integrated site (25%).
Business size also played a key role in the confidence levels for 2011, with those outlets that dispensed up to 2,500 items (73%) and between 7,500 to 10,000 items (75%) more optimistic about the coming year, compared those with between 2,500 and 5,000 items (41%), and over 10,000 items (12.5%).
Tony Evans, Head of Christie + Co’s Pharmacy team, said: “As with the UK economy in general, the key message from this survey, is one of uncertainty about the outlook for the coming year, although it is encouraging to note the percentage of operators who believe trading will improve or at worse remain at 2010 levels this year.”
In terms of the key direct or indirect issues that pharmacists felt would have an impact on their business over the next three years, the majority said the continuing development of enhanced services giving pharmacies the opportunity to develop their services over and above script driven income and traditional OTC businesses would be the most positive step.
The most common concerns were product availability and supply; control of entry legislation; the abolition of PCTs; and potential transfer of funding to GP consortia. Another negative factor that pharmacists believe could impact their businesses was Direct To Pharmacy (DTP) supply schemes, which will potentially reduce discounts previously generated.
One of main issues causing concern is the potential impact of the coalition Governments proposed changes to NHS funding to include the abolition of Primary Care Trusts.
Evans said: “The overwhelming opinion is that this will impact heavily on pharmacy businesses with particular concern expressed over a potential conflict of interests if GP consortia were to hold the purse strings. Inevitably this may raise questions as to how services and funding can be allocated effectively where GPs offer competing services. At the very least the majority opinion calls for the appointment of practicing pharmacists to sit on the commissioning boards to ensure equal representation.”
A respondent commented that, “pharmacists are rarely considered in the equation of health services in spite of what they can offer”.
However, it was the implementation of the category M claw back that remained the biggest concern, with 55% of respondents indicating it would lead to a further reduction and erosion of gross margins in the future. One pharmacist commented, “the claw back will have a dramatic effect on my business… and for the first time in 26 years I will be unable to invest in staffing or award wage rises”.
Evans concluded: “Whilst it is clear that the industry faces some significant challenges over the years to come appetite within the sector continues unabated. Applicant registrations are increasing for existing operators and first time buyers keen to acquire across the country.
“Despite these challenges we are experiencing increasing demand for pharmacy businesses for sale with all pharmacies we are listing commanding healthy interest. If anything the market is inhibited by the lack of stock being openly marketed. Indeed, close to 45% of respondents suggested that they would like to develop or enhance their existing business, or acquire an additional site over the next year. Our own experience would suggest that the pharmacy sector will continue to have a bright and healthy future as long as operators continue to adapt and evolve their businesses.”
Acting on behalf of the private owners, Christie + Co recently sold the leasehold interest of Anthony’s Pharmacy in Manor Park, East London, to national operator Alliance Boots, for an undisclosed sum.
For further information please contact Christie + Co’s pharmacy team on 0207 227 0700.