Independent pharmacy owners have the opportunity to join up with a new type of support group. P3 finds out more about the launch of the Careway partnership programme and what the development of the European Pharmacy Network scheme means for Celesio UK

Celesio has a clear strategy for growth, with the organisation’s European Pharmacy Network (EPN) model at the core of that, aiming to give customers more of what they want – advice about pain management and skin care – and to increase revenue through streams that aren’t from governments. The initiative has been running for four years in several countries across Europe, now including the UK. Last month Celesio also announced the launch of their co- operation model for independents, Careway, offering the EPN model out more widely.

How successful has the EPN model been since it’s launch and what might partners gain from it? P3 asks Celesio UK’s sales and marketing director, Nigel Swift.

Growth phase

Change in the pharmacy side of the Celesio business is being spearheaded through the EPN concept, which, says the company, has been successfully implemented in several European countries. The stores have a particular focus on pain and skincare with pharmacy teams receiving enhanced training in these areas and ‘more comprehensive’ product ranges. The company has said that in 2013 alone, more than £1 million had been invested in training up pharmacy teams.

In it’s latest financial statement, Celesio AG, now with McKesson as it’s majority shareholder, says that the EPN concept is expected to be a major factor in driving growth in the company from 2015 onwards.

Brave moves

Celesio UK’s Nigel Swift has spent much of his recent career in various posts for the company across Europe. He has clear views on how he would like to see Celesio and LloydsPharmacy services for customers develop in the UK.

‘We are so far behind from where we are in Europe. There’s much more acceptance in our European countries that a patient would come into a pharmacy as a first point of call.’

Retail is a much larger part of pharmacy businesses in Europe, he says. ‘In Norway, for example, the split is 50:50. There is a massive opportunity on the retail side of the business, to help with margin.’ He would like to see the European model become more of the norm in the UK – with more revenue coming directly from consumers and less reliance on government funding. ‘The margin in pharmacies has been eroded and the market here in the UK is massively affected every time there is a clawback from the government. So every time this happens you’ve got to look for new solutions. I have lots of meetings with independents who can’t believe the retail split in Europe. The focus has to still be on prescription, but I still think that there are things we can do.’

He says while it’s easy to dismiss Europe as a different model, he is confident that changes can be made. EPN is a good tool for achieving this, he says.

A step change

The decision to change to the EPN model was a risk and a ‘step-change’, says Mr Swift, but was necessary because of the general decline in pharmacy retail and a slowing in the growth of prescription items.

LloydsPharmacy refitted 70 EPN pharmacies in the UK last year and plans to have another 300 by the end of 2014. There are three formats: health and medical pharmacy (health centre), health and community (commmunity) and health and skin extra (high street).

The model has evolved ‘quite a bit’ based on feedback from the pharmacies, says Mr Swift. ‘We went in with iPads, for example, but they were too small and no-one could read them.’ Larger screens were put in instead.

He describes customer engagement in EPN pharmacies as ‘phenomenal’. For example, in the first quarter of this year they have had double digit growth in the pain category.

‘The feedback from customers is that, when they walk into an EPN pharmacy now, there is a real presence and authority on pain.’ There are 10 million pain sufferers in the UK, and with a several week wait before a GP can refer, ‘you have six weeks dealing with your pain, and we believe we can intervene at that point to make it better,’ says Mr Swift. An improved range of products and expert advice and support from pharmacy teams, through medicines management, for example, offer customers improved support with pain management through the EPN approach.

‘In addition, one in three women believes they have a problem with their skin, and 80 per cent would trust the advice from their pharmacist. That’s been a huge success for us.’ Skin analysis machines in the pharmacies give staff the opportunity to advise and recommend based on the analysis, and there have been examples of GPs referring people for the tests.

‘We held a lot of customer groups, looking at what customers want. They don’t want toiletries in pharmacy - they can buy a toothpaste elsewhere (though they should be there as a distress purchase). The real interest came around a few key categories.

We’ve been brave to take the hit now, but the increase in sales has compensated for that as a total overall. If I look at our overall front of shop business – that’s every category – we are in double digit growth.

It’s about helping relieve the pressure on the GP through the pharmacy. We have to change the model,’ he says. That’s where I believe there is room for all of us: multiples and independents.’

First launch for the pharmacy partnership

The new Careway concept Marsden Pharmacy in Harrogate, Yorkshire, officially opened to local residents in July after a full refurbishment, and is the first in the UK to sign up for the Celesio UK Careway partnership programme.

The pharmacy now offers free, enhanced services for a range of conditions, including skin health, pain management and smoking cessation. Anti-malaria and Type 2 diabetes testing will be added in the near future.

Mr Swift said: ‘The introduction of the Careway partnership programme is the first stage in one of the biggest projects of the year for us, developing how we tailor and add value to our services for independent pharmacies and their customers. Our aim is for pharmacies that work with us to experience immediate benefits and long-term growth.’ Bhavin Morjaria, owner of Marsden Pharmacy, said he was delighted to pioneer the programme.

Careway launch

The EPN concept is now accessible to independents with the launch of the Careway concept last month, with different levels of collaboration or franchise. It’s described as: ‘Combining the best aspects of Celesio’s European Pharmacy Network concept with the local passion and knowledge of a trusted independent pharmacy team. Pharmacies that choose to take up a partnership will benefit from greater access to expertise, training services and products from the Celesio UK Support Centre and across the company’s portfolio, including LloydsPharmacy, AAH Pharmaceuticals and independent living product provider, Betterlife.’

‘I think that half of the pharmacists that I’ve met do really want to engage and do something about it. There’s still in-roads that we can make.’

Independents have the opportunity to enter into a co-operation or franchise partnership with Celesio UK, to benefit from the EPN model and other back-up.

Why the move? ‘For us it gives us buying synergies, because we are getting a bigger audience. Historically independents’ relationship with the wholesaler is around price, and every year it’s about needing a better price because they are losing margin somewere else. It gets to a point where there’s not that much money to be made anymore. We want to help to deliver increased sales in their pharmacies, through a longer and more secure relationship. There’s a benefit to both.’

Independents who sign up for the scheme will benefit from the increased buying power, receive examples of planograms, the best sellers and where the profit generation is coming from, as well as other benefits, including training.

Will Celesio’s offer be different from other support groups already in place? ‘I believe so, yes. If I was an independent I’d be waiting for the proof. This idea of co-operation and franchising has been around in the UK for a while and it’s never really taken off.’ He says that the focus will be on, ‘delivering what we said we’d deliver’ and ‘watching what happens to their margin in the pharmacy’.

They are looking at feedback from their early partners. ‘It’s still in the early stages and we are still learning from it. We have to listen to the independents.’

The company is trying out a range of new ideas in LloydsPharmacy stores, and is planning on sharing that information with independents as much as possible, he says. ‘We are like a petri dish, we are testing things, and then we can let them know the good things that are happening.’

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