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Now it's pharmacy's turn to adapt

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Now it's pharmacy's turn to adapt

Contractors who used to feel a detached sense of pity for shuttered high street businesses now find the time has come to evolve or shut up shop themselves, writes Richard Addy

Back in March, the editor of this publication addressed the financial challenges of dispensing NHS prescriptions. He warned about the profitless troubles of Pharmacy2U, and hoped that Pharmacy First would save the sector from further doldrums. 

As a pharmacy owner in Northern Ireland, I found this rather concerning as we haven’t got the full Pharmacy First offering that is available elsewhere. These issues led me to re-evaluate my own business model and explore the issue more deeply.

The financial difficulties facing the pharmacy sector are well known. However, with businesses now closing at an average rate of 18 per week, it’s clear that the situation is more critical than ever. 

For decades, independent pharmacies could rely on NHS prescription dispensing as their main source of income. However, the funding model has not kept pace with inflation, minimum wage rises or the increasing demands placed on pharmacy services. Pharmacy owners used to look at other shuttered businesses on the high street with sincere, but disconnected sympathy, mistakenly thinking we were too crucial to be expendable. Now the feeling has turned into creeping dread.

In 2022 my own business was impacted. Two of our shops were situated on the same street. The pharmacies had successfully operated independently for decades, but with one of our pharmacists retiring and overheads growing, we could no longer afford to keep them both open. It was a painful decision, but we ultimately decided to hand back our contract for one of them and consolidate our operations. 

The consolidation allowed us to manage costs more effectively, but it also meant more pressure on our team, as we now had to serve the customer base of two stores from a single location. While the decision has helped us weather the storm so far, it has become clear that surviving solely on NHS prescriptions will not be sustainable in the long term.

For years, like many others, our strategy was centred on pushing up prescription item numbers. The more items we dispensed, the more we earned. At least, that was the thinking. Success was measured based on volume, believing that increasing the number of prescriptions would drive up profits.

However, it has become evident that the dispensing-centred approach is no longer viable. Pharmacy2U isn’t making it work. Lloyds couldn’t either, and when the big corporations are going out of business, you know that something ain’t quite right! We are finding ourselves working harder and dispensing more but seeing fewer financial returns. 

Looking for guidance, I reached out to Saam Ali from Pharmacy Mentor, a respected voice in the pharmacy industry. I was in search of advice, but also a motivational pep talk, to help find a new way forward. Saam’s perspective was refreshingly optimistic; he’s a glass half full kind of guy.

“I always say, for pharmacies dispensing more than 10,000 items per month, automation should be a priority.” Saam told me. “You need to automate as much as possible, from patient ordering to dispensing and collection. Automation frees up your staff to focus on delivering more services.”

Beyond automation, he underscored the necessity of diversifying. “With the availability of Patient Group Directions (PGDs) and Independent Prescribers, there has never been a better time to expand into services beyond NHS prescriptions.” Private services, he explained, allow pharmacies to reduce their reliance on NHS prescriptions while offering higher profit margins. “The opportunity is huge,” he emphasised. “We can clearly see the demand for services like travel clinics, ear wax removal, and weight management. It’s about capitalising on that.”

Inspired by this advice, I have begun to explore some additional private services for my business. By introducing a variety of new PGDs, I aim to boost revenue streams while delivering greater value to the local community. 

NHS prescriptions will remain a core part of the business, but the dispensing process must be streamlined and optimised due to the financial constraints. The flexibility we once had is no longer available. Gone are the days when you’d think nothing of sending an assistant to run down to the surgery if someone’s prescription hadn’t turned up on time. Our focus must shift to commissioned and private services, as these are crucial for securing the pharmacy’s long-term sustainability.

The future of community pharmacy is uncertain, but one thing is clear: if we don’t adapt, we won’t survive. By embracing automation, new technologies, and diversifying our services we can safeguard the future of our businesses while continuing to serve our communities. It’s never easy to change, but I’m committed to doing so, as I firmly believe that this is the right way forward. I still have hope that there could be a bright future for independent pharmacies.

Richard Addy is managing director of Nipharm Pharmacies in Belfast

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