2008 is rapidly drawing to a close.
It has been a year that saw significant (and unwelcome) change in some aspects of community pharmacy and not much change where some change might have been good.
In some of this, community pharmacists demonstrated their appreciation of the important role they play in ensuring optimal health outcomes for all Australians and in others they undid some of this good work.
PBS Reforms was a huge hurdle for the pharmacy industry – manufacturers, suppliers, wholesalers and pharmacists.
These initiatives, devised by the Government, were rolled into the biggest single change since the PBS was first introduced almost 60 years ago.
The Government’s objective of taking cost out of the PBS was a profit margin tsunami that washed over us all on the 1st of August and then washed back out to sea, leaving us all to survey the wreckage of what was left of the generic drugs market in Australia.
But life goes on and we all picked up the pieces and rebuilt our business models to cope with the new world that confronted us.
The Pharmacy Guild had negotiated life rafts for community pharmacy by way of reimbursements but there was still a cost to be paid by every community pharmacy across the country.
The generic drug sponsors were more exposed as it was their profits that the Government intended to wash down.
The pharmacy wholesalers suffered collateral damage inadvertently, requiring the Government to throw these industry participants a token lifebuoy – advanced payments against the CSO. These at least helped the wholesalers stay afloat even if they were still drenched at the profit line.
Notwithstanding the vagaries of the PBS Reforms, it is to the great credit of the industry as a whole that this all happened without the average Australian even getting their feet wet. Community pharmacy and its partners collectively have a record of achieving great outcomes for the communities they serve.
2008 has also been the Year of the Banner Group.
The groups that formed over recent years have all consolidated their positions in the community pharmacy market, communicating their market presence through substantial and consistent advertising.
Traditional brands like Terry White, Amcal, Chemmart and Guardian, the wholesaler brands, have been joined in the market by My Chemist, Chemist Warehouse, Chemplus, Nova, Pulse and many more regional players such as Blooms and Malouf.
In an industry where pure corporatisation is not allowed, these aggregations of like-minded community pharmacists are the next best thing.
These ‘non-corporates’ have the potential to gain significant operating efficiencies and at the same time improve their buying margins so that their operating profitability can be improved. They can also promote their businesses more effectively through combining their (or their suppliers’) advertising monies.
This can generate increased sales and dispensary revenues.
There is always a short term, a medium term and a long term view in business.
My concern here is with the fact that most of these groups seem to be taking the short term – make hay while the sun shines or make profits whilst the grocers are kept out – view of the market and their position in it.
I came in to 2008 with that concern and it has only deepened over the year.
The long term view of community pharmacy is focussed on a desire to ensure the grocery channel (or others given that Costco is coming) cannot operate community pharmacies.
The strategy here is to promote community pharmacies as destinations for Australians to receive professional healthcare advice and information.
This is the line the Guild is promoting to Government on behalf of us all.
If the community pharmacy brands were all supporting this long term strategy they would be promoting the services they offer, the health-related programs they offer and providing evidence-based case studies for the benefit of their constituencies.
What I see – and I am making the market-wide generalisation here – is products at prices, discounted toilet paper and washing detergent with weight loss ‘programs’ put forward as the ubiquitous healthcare program of choice.
As I look at the constant promotion of these things, I can’t identify the distinctiveness that puts community pharmacies above that which Woolworths or Costco could offer.
The drive for profits is what seems to be driving community pharmacy brands in 2008, in the short term.
The weight loss programs, different ones offered by different brands, lack the long term longitudinal science-based proof of efficacy that many believe pharmacists should require before they endorse them.
The constant price promotion of the scheduled, pharmacy only medicines constantly undermines the notion of pharmacy as professional healthcare provider.
The selling of grocery lines such as washing powder, instant coffee and toilet paper further blurs the line between what a community pharmacy stands for and what a grocery store could be.
In the medium term, the Pharmacy Guild will negotiate another Community Pharmacy Agreement with the Government in 2009.
The Guild will continue to promote the professional healthcare services offered by community pharmacy as pivotal in the front line of Australia’s healthcare system.
How successful will they be?
How long can their description of community pharmacy be accepted by the Government as reality?
I guess that will depend on how effective the advertising campaigns of the community pharmacy brands is.
If it is very successful – not that long.