Publication Date 01/04/2014         Volume. 6 No. 3   
Information to Pharmacists

Editorial

From the desk of the editor

Business is tight!
Cash flow has evaporated!
The PGA calls for unity while simultaneously dismembering the business of consultant pharmacists.
The federal government continues to strip massive funds from the PBS to the extent that it is gasping for air.
Oh, and I forgot, the Revive Clinic thinks that pharmacists cannot vaccinate patients in community pharmacies ( It is actually a warehouse pharmacy group trying to destabilise the market here to push fellow-pharmacists off balance by supporting the Revive group).
Even wage-earning pharmacists have discovered that they have not had a rise in their pay over the past five years

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The Pharmacy Guild, because of what it is, will have difficulty promoting the next generation of community pharmacies.

Neil Retallick

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Neil Retallick is a former General Manager, Merchandising, for National Pharmacies, the successful community pharmacy model owned by the Friendly Societies. Neil holds a Graduate Diploma of Marketing from Monash University, is a CPM and a graduate of the AICD.He began his career with Myer Stores Ltd and worked for FMCG companies including TIA (Sheridan) and Pacific Dunlop. Prior to these roles Neil worked for Cadbury Schweppes Drinks Division - Grocery, and Trimex Pty Ltd in Victoria in State management roles.
He is currently Chief Executive Officer at the  Combined Dispensaries in Sydney and is a Member of the Advisory Board at Ehrenberg-Bass Institute for Marketing Science

Those of you who are regular readers will know that, by and large, I think the Pharmacy Guild of Australia does a pretty good job of promoting the two horns of the interests of its members and the healthcare of the average Australian.
But, as Bob Dylan continues to remind us, “...the times, they are a’changing...” In fact, it is hard to remember a time when community pharmacy was confronted by more dynamic intra-industry and extra-industry forces.

The Pharmacy Guild represents the interests of the owners of the roughly 5,000 independent community pharmacies across Australia. It works unashamedly to benefit those members, often invoking the ‘what’s good for the goose is good for the gander’ posture when negotiating with the Government and other key stakeholders. And I think it is fair to say that, again by and large, this approach has assisted in the Government’s push to improve the health outcomes of the average Australian.

The problem confronting the Pharmacy Guild is that the next generation of community pharmacy is most likely going to embrace a corporate ownership model. This next generation is the one being touted by the grocery chains in their discussions with the Government. It is also the one proven as successful every day right now by the continuing success of the friendly society pharmacy model. These organisations are typically unlisted public companies owned by the members and operated on their behalf by an employed management team. The very existence of these organisations, and their success, disavows to some extent the Guild’s claims that corporates cannot deliver quality professional pharmacy services. The proviso here is that the friendly society pharmacy groups must return all profits made to the members. By contrast, the grocers’ profits can be used to buy pubs with pokies or liquor stores.

The grocers’ claims for improved productivity and cheaper costs of drug delivery to Australians are hard to refute. Bigger typically does mean better, at least in terms of logistics efficiency.

It seems to me that a logical middle ground issuing from these alternate views is to allow registered pharmacists to incorporate their businesses. This middle ground ensures the delivery of professional healthcare from community pharmacies and also allows the creation of corporate chains of pharmacies that could garner the economies of scale that would reduce operating costs.

Many years ago, the Managing Director of one of Australia’s most successful manufacturing businesses told me to “never enter a marketplace dominated by independent operators”. He referred to the “cottage industry mentality” where decision-making is not driven by rational commercial principles but swayed by emotion and a deep commitment to the status quo”. It was not possible to optimise outcomes in this kind of market, he said. The community pharmacy industry is a cottage industry. It was in the 1940’s when the current regulatory environment was constructed and is still because of it.

The problem for the Pharmacy Guild is that it cannot contribute objectively to the debate about the next generation of community pharmacy. It is beholden to its members to uphold their current vested interests, to fight for the status quo. As time goes by, this position will become weaker.

The grocers will develop the community pharmacy offer sans pharmacist but will operate other professional healthcare businesses such as optometry very successfully. New players such as Costco will expand their network across Australia and point to a proven track record of operating pharmacies successfully elsewhere.

The Guild must argue against corporatisation of community pharmacy even though there are many members of the Guild who would be delighted to embrace this new future. The problem for the Guild is the old Pareto Principle. This principle predicts that only 20% of members probably want the opportunity to transform community pharmacy. The other 80% want the status quo maintained at least until they are either retired or big enough to be the hunter and not the hunted should corporatisation become possible. In this scenario, the Guild is publicly hamstrung notwithstanding any personal views its office-holders might hold privately.

The ultimate outcome here may be that pharmacists will only get the opportunity to corporatise at the same time that the grocers are able to enter the industry. This will not provide the best opportunity for community pharmacists or for the average Australian. The question is, how can the Guild navigate the increasingly rocky shoals of the status quo and at the same time set a course for a new generation of community pharmacists that will be adverse for most members? I for one hope they can and do. If the future is to be disadvantageous for community pharmacy then I vote for that which is least calamitous for pharmacists and best for all Australians.

While none of us knows where the future lies, there is at least one thing that we can all do to better ensure our business is the hunter and not the hunted – attend Pharmacy 2012, the pharmacy management conference being held at Clive Palmer’s new Palmer Resort Coolum from the 29 to 31 August. It is a business-focussed conference providing insights that can help us all improve our business operations. Workshops, presentations, networking with like-minded people and suppliers – it is a program honed by more than 10 years of previous events.

www.pharmacyconference.com.au

 

 

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