Some pharmacies in 'quite severe financial straits'

How does Numark's Jeremy Meader see the current funding crisis in community pharmacy, and what can be done about it?

Community pharmacies in England are suffering a perfect storm of factors that is causing businesses to have cash flow problems – and the situation is serious, says managing director at Numark, Jeremy Meader, speaking to P3’s Carolyn Scott.

“At the moment the environment is particularly hostile for pharmacies financially – it has been very tough. We are seeing some pharmacies in quite severe financial straits, and it’s not only business owners affected: it’s their families and the local communities they serve,” he says.

“We are aware of some pharmacies having problems - particularly people who have bought pharmacies more recently, maybe at a high price, and are now finding the going a bit more difficult.

“Certainly, Scotland is the best place to own a pharmacy at the moment, because you have a government that seems to believe in pharmacy and seems to be willing to share quite openly. Conversely in England, the government seems to be on a very different track currently. Fundamentally, the [English] government’s position is contradictory, and to some extent self-defeating.”

In particular, this winter has highlighted the issues involved, he suggests.

“Every time you put on the news there’s a story about problems over winter and GP practices under pressure, yet at the same time we have a government that seems to be wishing to close a significant number of community pharmacies. To me, that just doesn’t stack up.”

An “explosion” in lifestyle-related health conditions and the decommissioning of many of the services that pharmacies have been running to help address some of those “is detrimental to patients” and “not good for the NHS,” he stresses. “Community pharmacies have 14,000 access points across the UK, and yet government doesn’t seem to be maximising that opportunity.”

What can be done?

Minimising losses by adopting new ways of buying medicines is something that independent pharmacies can consider to stabilise themselves through difficult times, comments Mr Meader.

“One of the things that we can do is to help make sure that people are buying as effectively as possible. We’ve certainly seen people moving away from traditional methods of buying over the phone and, particularly, adopting electronic buying solutions. For us, enabling members to save not only time, but also to maximise their profitability in the current environment is absolutely critical.”

Having tight control of business finances is crucial for pharmacies, he suggests.

“Pharmacies have to clearly assess their finances very carefully – though I appreciate that’s very difficult to do at the moment. Historically, pharmacies have probably looked at their P&L at the end of the year when the accountant has done their books. But going forward I think there’s a requirement to see those figures on a monthly basis.

“That’s one thing that Numark will be supporting our members on: getting more regular financial information, so they can be aware of exactly what their financial position is, and then manage their business accordingly.”

There are some other developments that some pharmacies have been trialling.

“I think there are some good opportunities: for example, some members have opened very successful travel clinics. Equally, although recognising that this is a very small part of the business, in the past few years the focus has all been on the dispensary and the front of shop has not had quite as much attention as it needs. It’s an important part, as much about the image of the pharmacy as anything.

“There is work that we can do there with members to help make sure that they are maximising the OTC opportunity, and particularly for products that are exclusive to pharmacy.

“We’ve seen the range of products that pharmacy stocks change quite dramatically over the past few years; some products have moved towards the grocers and discounters, but there’s still a good opportunity there with the core healthcare products for pharmacy. P lines are pretty much pharmacy’s point of difference and where pharmacy can add value through an advice-based sale – and I think that’s predominately what people are looking for when they go into pharmacy.”

Fighting pharmacy's corner

Numark intends to fight the corner for its 3,629, and growing, independent community pharmacy members. As new managing director, working with chairman John D’Arcy, he is committed to reviewing the business to see what new support members may need and to lobby on their behalf.

“The environment is clearly very challenging, but from our perspective there has never really been a better time for an independent to be part of Numark and to maximise the benefits of belonging. We’ve got the strongest ever offer that we’ve had both in terms of commercials and services, so I’m hoping that we can continue to grow that membership.”

“Our priority is to make sure that our overall membership offering is meeting the needs of our members, so we’ll be doing a lot of engagement with our members over the course of the year to ensure that in a tough time that we are absolutely sure what their issues are, and that the Numark offering is meeting their requirements.

Supply stress

Independents are also coping with product shortages, particularly with generics, which have been causing some major difficulties. It may still take a few more months still for these problems to ease, suggests Mr Meader.

“We’ve seen a combination of factors that have led to those difficulties. In 2016 we saw some price deflation leading some manufacturers to withdraw certain products; then we had exchange rates impacted by Brexit and then more recently we’ve had some regulatory action, which has impacted a couple of major suppliers in the market.

“All of this has led to quite a severe situation, and I do feel for our members, who are struggling to get hold of product – it’s particularly difficult. I think the market will adjust and the supply issues will ease, but it’ll take a few months for that to happen.

When will this be, does he think? “I think it would be very brave to predict that. But in terms of supply, the market will probably start to come back to balance over the next six months – manufacturers may start to look at areas of opportunity that they’d moved away from, maybe will reassess those. So, I think we will see an adjustment, but I don’t think that it will happen overnight.”

Situations in which pharmacies have been losing out because of fluctuations in product prices according to demand have to be addressed, he suggests.

“I think what we have to do there is to lobby particularly hard – we had a lot of concern for pharmacists who are paying above the drug tariff price, and that’s certainly an area of contention and it has seemed a real battle to get concessionary prices on a number of products. That’s an area where we will continue to lobby on behalf of our members: that there should be a faster response on that. It seems unfair that as a contractor you are not sure until the end of the month that you are going to be reimbursed for a product you bought to meet the requirement of a patient.”

A strong commitment from PSNC and DHSE is needed to resolve this, he feels.

“I think they are getting there, but pharmacy would like to see that happening far faster - for there to be a better mechanic in place for an agreement that if pricing reaches a certain level there shouldn’t be the uncertainty, but maybe there should be a framework in place that gives more certainty about getting remuneration for products which they are legitimately supplying to patients.”

Pharmacy resilience

“Certainly from a Numark perspective, we will be lobbying very hard that we think there is an opportunity that the government is currently missing, and maybe looking at Scotland and some of the positives there,” comments Mr Meader.

“A nationwide minor ailments scheme for England would seem an obvious thing for the government to do. It’s had some considerable benefits in Scotland, but for whatever reason the government in England doesn’t seem willing to listen to that case at the moment.

There’s an important battle to wage for all the pharmacy organisations, including Numark, he suggests.

“Pharmacies are very resilient, entrepreneurial and passionate about what they do, and have a real ability to adapt and change. I think the battle for the sector at the moment really is to convince government that pharmacy has got a real opportunity of saving secondary care costs.”

“But, that’s not easy,” he admits.

“ At the moment the environment is particularly hostile for pharmacies financially – it has been very tough ”

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