THE battle for market domination between pharmacy brands is intensifying as businesses adapt their models to meet new challenges which threaten to rock the sector.
Traditional independent community pharmacies are a dying breed, being replaced by big box discount chains, with franchise models becoming increasingly commonplace. Of the 4041 pharmacy businesses in Australia, IBISWorld estimates only 12 per cent are entirely independent.
Queensland is home to the headquarters of several industry juggernauts including Terry White Chemists, Good Price Pharmacy, Discount Drug Stores and Malouf Pharmacies and is also a key battleground in the fight for market share.
With so much competition between pharmacy chains the pressure to cut prices to compete with big box models and aggressive marketing campaigns have forced many businesses to consider diversifying their offering in an effort to carve out a niche.
IBISWorld researcher Anna Richardson said these factors, coupled with proposed changes to the Pharmacuetical Benefits Scheme (PBS) by the Federal Government, could impact on the industry’s future revenue stream and force pharmacies to adapt their business models to survive.
“The PBS is a government scheme that subsidises the cost of pharmaceuticals ... remuneration received by pharmacists for dispensing PBS pharmaceuticals is set via five-year agreements between the Pharmacy Guild of Australia and the Government,” Ms Richardson said.
“Any changes to the terms of agreement regarding remuneration rates or volumes dispensed under the PBS can affect industry revenue.
“Changes can also have bottom-line implications for pharmacies.”
Regulatory changes due to come into effect on October 1 under a new price disclosure arrangement are expected to cause the price of generic drugs to fall, dragging the industry’s revenue growth down to 0.7 per cent in 2016-2017. That would value the industry at $15.8 billion, only marginally higher than 2011-2012, according to IBISWorld.
Good Price Pharmacy chief executive Anthony Yap said with PBS revenue expected to stall, retail will become an even more crucial battle ground.
“The market has changed more in the past five years than it has in a long time,’ Mr Yap said. “Competition is intense, pharmacies are evolving their model to become more of a healthcare destination and must evolve to have less dependence on prescription medicine.”
http://www.couriermail.com.au/business/pharmacy-wars-the-prescription-for-success-in-a-saturated-market/news-story/dbd0c5b1bdf7513ebbb088ba72c12a2e
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