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Faction fighting among representative bodies over their membership sizes will only lead to more chaos, says Outsider

Say, can you see? See what? A pharmacy? An independent pharmacy? Well then, you are blessed my child! For the independent pharmacy is a rare and fine thing...

Summer brings with it sunshine, sun burn and sunstroke – all the accoutrements of the season. The joy of cricket, the pain of le Tour de France, the strawberries and cream of Wimbledon. America’s Independence Day and France’s Bastille Day.

There is another battle for independence quietly brewing through the back corridors of community pharmacy where the organisation formerly known as the Association of Independent Multiples (pharmacy) or AIMp, but now calling itself the Independent Pharmacies Association (IPA) is in a turf war with the Company Chemists’ Association (CCA).

It’s less a turf war and more an existential crisis, cos-playing as a form of ideological power play, and, as always, it’s all Lloydspharmacy’s fault. Or Big Blue, or neither.

Since the inception of the Pharmaceutical Services Negotiating Committee as an independent body 45 years ago, there has been an often false balance of power between independent pharmacy contractors and the large multiples.

The CCA, the oldest of the organisations holding 40 per cent of the seats, independent contractors voting for 40 per cent of the seats and the IPA and NPA sharing the balance between them. 

In the 80s and 90s this false equivalence benefited the independents, because the truth was that the CCA market share, in both volumes of NHS dispensing and pharmacy contracts was more like 55 per cent and growing.

Independents were the junior partner among a sector that was seeing increasing consolidation.

The 2007 financial crash brought an end to cheap credit. Companies beholden to shareholders put themselves on a path of relentless cost cutting, streamlining, mergers and acquisitions. In 2000, there were six or seven full-line generic medicine suppliers in the UK.

These were supplemented by dozens of smaller short-line sellers. All competing, sending sales representatives out in Audi A4s to wine and dine pharmacy owners to switch to buying their 37p pack of thyroxine instead of someone else’s 37p pack because they would throw in a case of wine and 60 per cent discount.

It was a field of dreams. There was buying margin everywhere, the discount clawback in the contract could never hope to keep up, so when buying margin was finally recognised in the contract in 2005 at £500 million, it was already a losing game. Chasing margin for even a moderate size pharmacy could pay well.

And now there are two, perhaps three, full-line generics manufacturers. And those competitive short-liners, well they’re few and far between. Margin is rarer than rocking horse shit and yet we’re trying to ride along with the same contract mechanics.

This loss of cheap credit and the consequential market consolidation all contributed to the demise of Lloydspharmacy. Once the second largest chain and the second largest wholesaler, it was unable to make the books balance.

For it is the loss of those 1,800 Lloydspharmacy branches that leads to this current battle for independence (sorry, independents).

That entente cordial between the CCA and the independents, so finely balanced by the NPA and AIMp (sorry IPA), is now being torn asunder as both the CCA and IPA chase new members to bolster their political standing in an inevitable reckoning of how the new Community Pharmacy England committee is structured.

That 60 per cent market share the CCA could boast about in 2000, it’s gone.  With no Sainsbury’s and no Lloydspharmacy, the CCA is significantly diminished. Sixty per cent becomes 35 per cent by number of contracts and perhaps 40-45 per cent by volume.

Accepting Pharmacy2U as a member certainly boosts the latter. And with welcoming Pharmacy2U it also welcomed Lincolnshire Cooperative, a not insignificant regional multiple and previously a core AIMp member. And now the IPA feels squeezed – with the CCA, previously the home of the multinational accepting Pharmacy2U who will they go after next?

Which all begs the question, what is a multiple? What is an independent?  

Every contractual settlement since 1980 has been based on cost assessments of operating an independent pharmacy, with the buying power available to it. It intrinsically matters that independent pharmacy owners are well represented as it benefits everyone. 

Multiple pharmacy owners need independents for that very reason, but they may well lobby for policies that benefit their operations at scale, including vertical integration and cost reducing measures.

What no one needs, whether owning one pharmacy or one hundred, is faction fighting among local and national representatives about whose mandate is bigger and better.

Community pharmacy is in a genuine state of flux and trepidation. 

This is no time for The Judean People’s Front, The People’s Front of Judea or the The Populist People’s Front of Judea. Which begs the question, where is the NPA?

The NPA, let’s not forget, who pulled the plug on Pharmacy Voice.

Sometimes you don’t know what you had until you lose it. Happy Independent’s Day.

Outsider is a community pharmacy commentator