If we were able to objectively stand back and look at the organisation that is Woolworths, we would probably be quite proud of the fact that this home-grown retailer is recognised globally as a best practice retailer, fiercely competitive and forever innovative.
The fact that they represent a sizeable chunk of Australia's GDP gives them economic and political influence that is only matched or bettered, by a handful of other Australian companies.
It's total retailing market share is unparalleled in any other western country.
In a duopoly with its primary rival Coles-Myer, both companies control 80 percent of the Australian retail market, leading some commentators to speculate that this will not be for the ultimate good of consumers.

Strategic skills in management and marketing have enabled Woolworths to operate multi-dimensionally as a "bricks and mortar" retailer, as an e-commerce retailer and to develop specialty retailing across a range of merchandise and services as standalone entities e.g. the Dick Smith electronic stores.
Paralleling the above, Woolworths skills in supply chain management are now regarded as legendary.

It is all of the above that Australian community pharmacy fears, for being structured as approximately 5000 independent cottage-industry enterprises, they are vulnerable to being "picked off" by an organisation such as Woolworths, with their accompanying expertise, and their accumulated previous experiences from forays against a diverse range of competitors.

And it has to be said that the Pharmacy Guild of Australia (PGA), as the lead organisation for the commercial and structural elements of community pharmacy, is way out of its league in any attempt to outsmart a focussed Woolworths strategy.

For years, various commentators (including myself) have been outspoken, in that the structure of pharmacy has needed urgent attention, particularly in the area of a redesign with a strategic purpose.
Instead, we have staggered along with a band-aided patchwork of a structure, and a lopsided strategic purpose, which has resulted in a lack of confidence as to future prospects.

The PGA has traditionally led its members down the path of garnering protection.
Through a jumbled framework of legislation, pharmacy has become legally protected but has created a soft "underbelly", being artificially isolated from real world competition.
Basically, pharmacists have only competed amongst themselves, resulting in a fairly bland and homogenised offering to the general public.
That is not to say that the model developed is all bad.
It is a model of planned health in association with government agencies, and basically can only work in a regulated manner.

But regulations quite often inhibit innovation and creativity of professionals, resulting in frustration, loss of motivation, degraded work and high levels of unnecessary work, as governments inflict procedures on pharmacists in the name of protecting taxpayer's money.

Protectionism dates back to the middle of the last century when Bootes the Chemist tried to gain a toehold in Australia.
The fear that was generated by the spectre of Bootes becoming the local dominant player has never ever subsided, and has formed part of the permanent culture of Australian pharmacy. Given that the majority of Australian pharmacists would be unaware of the events involving Bootes, they forever remain infected, with pharmacy leaders passing the infection on to successive generations.
This "fear factor" has been one of the reasons for the rise of the PGA as a coordinating body.
But like most political bodies, the membership are also fearful of losing control of their destiny through their elected political representatives, and always keep a critical watch.
This has meant that the PGA has ultimately had to defer to the wishes of each of their members, the majority of which are "cottage industry" in size and thinking. Consequently, those pharmacists wishing to break the mould and form up in a different way, are totally inhibited by the cottage industry thinkers.
As the leaders of the PGA come from the same pool, it follows that their leadership could never be described as dynamic.
It would be unrealistic to compare John Bronger of the PGA to Roger Corbett, the CEO of Woolworths, in terms of style, management skills and dynamism.
If you had the choice, who would you vote for as leader?

Because there are few commentators dissecting PGA leadership, and because the PGA have over the years, developed an organisational approach to respond to public relations issues, dissenting voices are hard to hear.
So when I saw a recent posting by an American pharmacist on AuspharmList regarding the issue of protectionism, I gave three cheers. Part of his listing reads as follows:

"And also, we independents have no fear of "Woolies", Walmart-Walgreen etc.
Bring them on.
It would be very refreshing to see some Aussie realism instead of so much Aussie pleas for "protection" from the big bad world of competition.
Now I know I am going to get flamed for this.
I have followed Australian pharmacy for several years now and must observe that I note a "head in the sand" attitude that disturbs me a little.
Independents in the US have survived mail order pharmacy, pharmacy benefit managers, low fees set by insurance companies, and of course the chains, and are alive and well.
There is not one on every corner anymore, but everyone has a job and the independents that have survived are doing very well."

My thanks to B.E Leissner, the US pharmacist who generated the above posting.
He certainly will not be "flamed" by this writer.

Now what I think Mr Leissner is illustrating is that given the freedom of choice as to the type of business structure you can operate out of, coupled with the additional freedom of following a marketing style of choice, the playing field becomes more level when compared to that of the Woolworths of this world.
You would not immediately recognise it, but the average IQ of a pharmacist has been estimated at around 125, which makes him or her, a reasonably intelligent person. The pool of intelligent pharmacists available outstrips those of Woolworths executives, so logically, a combined and disciplined group of pharmacists could technically be able to out-think and out-perform the talent found within the average Woolworths store.

It is only the PGA standing in the road of discipline and logic.

Why?

Because of their sustained and unreasonable opposition to not allow pharmacists to incorporate and develop the business structure of their choice.

If the PGA continues down the same old pathway, it reduces the lead time for its members to be able to come up to scratch within a competitive structure. The longer the PGA delays the more disadvantaged its members become.

Considering the range of potential competitors lining up, who would the PGA prefer to be competing against?

* Global Rx (including Bootes once more)
* Woolworths Rx (at least its Australian owned)
* Priceline Rx (a mini-global company owning pharmacies outright, with the same aspirations as Woolworths)
* Mayne/API/Sigma Rx (not franchised offers, but fully owned chains)
* Pharmacist Rx (where a pharmacist owned corporation builds up to a competitive critical mass)

The reality is that if the PGA continues to inhibit proper structure, we will get all the above over a period of time.
The only problem-the Pharmacist Rx company will have to start competing with one hand tied behind its back, because it will lack the financial resources and corporate expertise.

Now ponder on which of the above pharmacy types will seek membership of the PGA.
Answer?
As the PGA is currently structured-none of the above!

So the PGA could face a rapid demise as most of its members are taken over or merged into larger, more efficient operations, leaving the "cottage industry" mentality way behind.
Should not the PGA be looking at structuring itself to service different classes of members, and basically looking at how it would deliver services to each level?
And what about rationalising all the other pharmacy organisations that would be a "fit" with the PGA to eliminate the expensive duplication that has been occurring?

We can always appreciate change when it is happening to others, but somehow, when we are personally involved, it does not seem quite as appealing.
But see yourselves a Mr Leissner has objectively stated.
Here is a person outside of Australian pharmacy, but who is qualified to comment on what he observes because he is a pharmacist, and one living in an environment that we are about to enter.
To manage the change process by embracing it early enables a future where Australian pharmacists can still retain a maximum market share and control-but by competitive force, not by legislated protection.

Next article in Woolworths series---->