Article Index
Computachem
E-Newsletter
Editor:
Neil Johnston
Regular Contributor:
Rollo Manning
|
Home
March 2000 |
1. Around and About |
| 2. Guest Article:Comments on NCP Review | |
| 3. Some E-Commerce Statistics | |
| 4. Supermarket Shudder | |
| 5. Complementary Therapy: Items of Interest | |
| 6. Internet Preparation |
AROUND AND ABOUT:
Welcome to the second edition of the Computachem E-Newsletter
and thank you to those pharmacists who passed on comment and support.
One comment concerned the final draft of the COAG review, that had modified
one very important aspect regarding non-pharmacist minority shareholders.
The following is an actual extract from the final recommendations:
"Due to the risk of conflict of interest of shareholders, and the difficulties in determining the extent to which minority shareholdings may compromise pharmacist control of a pharmacy, operating companies with minority shareholdings held by non-pharmacists are not considered to be appropriate ownership structures for pharmacy businesses."
It is a relief to know that pharmacy now has an opportunity to develop some creative corporate structures strong enough to withstand the changes that are poised to sweep through all forms of business over the next five to seven years. This month we are featuring a guest article from Rollo Manning. Rollo is a pharmacist with wide experience, ranging from community pharmacy and industry, to the pharmacy political. He is currently the senior government policy officer, for pharmacy, in the Northern Territory, and is well qualified to comment on events from his unique perspective. We are pleased to publish his material. The invitation to be a guest contributor is also extended to all persons who would like to utilise this unique forum to express a point of view. Readers may remember that the decision to dispense NHS prescriptions in public hospitals was announced in this newsletter last month. So far, there has been no comment in the media that I have noticed, to stimulate debate on this major shift in government policy. Details are also sparse within the hospital system itself, but there is speculation that the HIC has offered hospitals a mark-up on the cost of pharmaceuticals (but no dispensing fee). Given that hospitals purchase under contract approximately 20% cheaper than community pharmacies, this would still bring the cost per prescription under a pharmacist's cost price. The HIC would certainly be able to cap its expenditure at the expense of community pharmacy, if it is able to transfer market share into the hospital system. If any reader has any information on this topic I would be very pleased to receive it. Please note that all newsletters are being archived on the Computachem web site, which can be accessed at http://www.computachem.com.au
COMMENT ON NCP
REVIEWS AND WHAT CAN BE LEARNED...by Rollo Manning:
Retail pharmacy will remain an uncompetitive, insulated industry, susceptible
to Government intervention if it does not move with the times into the
21st century. National Competition Policy (NCP) is not new. It is not
a tool for governments to reign in the small operator in favour of the
big three retail giants. It is not a tool to deprive rural and remote
communities of essential services. It is a philosophy to encourage the
public and private sectors to work together towards a more efficient,
cost effective and accessible approach to the delivery of goods and
services to the community, wherever they may be. The final report of
the COAG review of pharmacy regulation makes it clear how changes to
regulation can improve services to communities "in the bush". It explains
how current ownership regulations and PBS location rules work against
the benefit of people living in small country towns. It goes to some
length to explain how the present ownership regulations work against
having a competitive environment for consumers to be able to decide
for themselves the profile of the pharmacy which they would prefer to
patronise. It also accuses the industry to be behind the times when
it comes to innovation and experimentation with alternative models of
practice. This report (in the year 2000) is unlikely to bring about
any immediate change as the political climate is not right, and this
fact is well known to pharmacy leaders. The Federal Government is obsessed
with bringing in the GST with the least disruption. State/Territory
Governments, while maybe interested in the process of change through
National Competition Policy incentives, are also aware the changes needed
to have a competitive retail pharmacy marketplace do not happen suddenly.
They must be carefully planned in conjunction with measured changes
in the PBS. With pharmacies relying on the PBS for 65 per cent of turnover,
rapid change could mean the closing down of access, and this is not
being responsible. Given these factors it could easily be argued why
worry? The answer is simple. While the report may not have any immediate
impact, the arguments contained will not go away even with the passage
of time. In fact they may become stronger in the near future if no action
or attention is given to the reasons why certain assertions were made
towards the retail pharmacy industry. The allegation that NCP will give
an easier access to larger retailers to dominate a marketplace, is neglecting
what the situation would be without NCP processes. Given the need for
NCP reviews to be transparent, and encourage submissions from the private
sector and community groups. It could be that the path for change would
be more sympathetic to local needs in a social and employment context.
Globalisation of industry was well in progress before NCP, as was the
growth of information technology. At least through a well-defined process
NCP has the opportunity to assist with planned change rather than one
which is purely economically driven. Pharmacy in the retail sector could
do well to ask itself some questions as to the lessons which can be
learnt from the NCP review of pharmacy regulation. This if done in a
transparent manner, and open to public scrutiny and support, would position
the profession well in the event of further examination of anticompetitive
forces within the industry structure. Questions needing an answer surround
some of the following: Why is there a "sameness" associated with the
pharmacy profile around Australia? And is it in the best public benefit?
How it is that a pharmacy in Gove or Cooktown receives the same remuneration
for dispensing as the pharmacy in the inner suburbs of a city? Why the
consumer cannot have a choice between counselling or no counselling,
and decide whether they are prepared to pay a premium? How the PBS can
be sustained with the granting of a PBS approval being the expected
"norm" of all pharmacies. How extra capital can be attracted to the
industry to try out different models of innovative practice? How long
the PBS can continue to contribute 65 per cent of retail turnover with
such a low return on capital investment. Is there a public benefit from
Pharmacy Boards meddling in commercial structures and decisions. If
professionalism is so essential in pharmacy practice, how is it that
renewal of registration carries no competency assessment? If registration
is so important, how long before it is essential to have a National
register, rather a State/Territory separate system? And so the questions
could continue. What to do? The first essential element is for pharmacy
organisations to have a proactive stance towards to change. It is not
too late, given the early initial reprieve from the COAG review, to
be a part of planning the change process and not just reacting to the
moves of governments. All pharmacists in retail practice could do well
to look back on how the practice was when they entered from University,
and how much it has changed. The result will be telling, as there is
not very much evident change. At a time when health service delivery
is moving forward at a great rate of change, pharmacy is stagnant. In
10 years time it could be the profession nobody wants if it does not
start to carve out its own place in the professional team. Ask yourself
what you are doing that technology cannot? You may find the answer worrying,
depending on your attitude to future generations of pharmacists. Be
competitive; make sure others who will decide how important they think
you are want you. The "government" is certainly there to help, but not
to provide all the time. One final question. What other health professional
is in such a protected environment as the pharmacist? There are not
many. Pharmacy has to earn the privileges bestowed on it. It is not
a right without responsibility.
E-COMMERCE STATISTICS
In 1999, according to the Australian Bureau of Statistics, 50% of Australian
households owned a computer. This is 3% higher than in 1998. During
this same period 25% of Australian households were online, which is
a rise of 6% over the previous year. It was also found that people utilised
the Internet equally at home or at work. With the rate of Internet connection
doubling the rate of computer purchases, it only takes some simple arithmetic
to see that in a short timespan, a majority of householders will own
a computer, and be actively using it to access the Internet. Fuelling
the expansion of Internet usage IS the Federal and State government
decision, to only transact business by e-commerce exclusively, by the
end of 2001. Nearly $9 billion is spent annually by government on supply
items, and organisations and persons wishing to deal with governments
will have to be online, or risk losing contracts. The savings to government
are estimated at around 10% of purchasing costs. Many people are currently
responding to government statutory requirements by applying for their
Australian Business Numbers via the Internet. The Australian Securities
and Investment Commission encourages you to do your annual company return
in a similar fashion (even uses the same ABN). Banks are allocating
more resources for Internet banking and the biggest problem of security
appears to have been resolved. Bank fees are also cheaper online (but
margins for the bank improve with minimal need for employees). In a
surprise move, Ford Australia has offered its 5100 employees a personal
computer, software, a printer and Internet access, all for $5 per month.
The company's aim is to give employees an understanding of how consumers
think and act online, at a time when car buying decisions are continuing
to increase online. The prediction is that more than 30% of new car
dealers could disappear, as the customer gets closer to the manufacturer.
This will force the remaining dealers to consolidate and innovate if
they are to survive. Various e-commerce platforms are planned for whole
industries. The office supply industry is hoping to pilot such a platform
to be accessible by small or medium size business. To date eleven major
suppliers have assembled to transform their distribution arrangements.
Similar activities are planned for newsagents, road transport, automotive
and pharmaceutical industries. It is estimated that 50% of supply chain
activity is currently done by fax and 40% by phone. This is intended
to be replaced 100% by Internet e-commerce connection. Recently, I was
asked how much I used my e-mail three years ago compared with current
usage. My response was that I didn't even have e-mail until early in
1999. I was then asked what volume of purchases I made by Internet currently.
My response was that I had only made a few modest purchases to date,
and that was mostly computer software. The final question was; "How
much in $ value do you anticipate purchasing by Internet three years
from now?" I pose the same question to readers of this publication.
With the rapid reorganisation of business-to-business e-commerce and
the major investments currently being made in business-to-consumer marketing,
do you really believe that you can stand outside of this amazing phenomenon?
Savvy people will be preparing now for this new wave, or suffer the
fate that new car dealers appear to have in store. Consolidate and innovate
seems to be the message for survival.
SUPERMARKET SHUDDER
In 1999 a little known German supermarket chain called Aldi announced
that it was going to set up shop in Australia. The then group managing
director of Woolworths, Mr Reg Clairs, made the pronouncement that Aldi
could not be successful in Australia given the strength of Coles, Franklins
and Woolworths and their grip on the supplier trade. It is now early
in 2000 and Aldi have purchased a modest number of sites in metropolitan
Sydney. At a recent Queensland Grocery Industry Association luncheon.
Mr Clairs reversed his earlier statement and sounded alarm bells for
the supermarket industry. It appears that globalisation has become a
reality in the past 12 months and what were regional players, have now
become completely global. Mr Clairs said,"Our supply base will be in
tatters and our retailers stranded." He further stated,"I was wrong.Over
the past months I have had exposure to some of the thinking now starting
to emerge as the concept of globalisation hits home. The strategies
being put into place to support globalisation of retailing are sinister.
It is my guess now that Aldi will be successful through a modus operandi
unknown to us in Australia." The marketing strategy of Aldi seem to
be to carry approximately 800 basic private label processed food items,
negotiated globally from countries providing the cheapest labour source.
Realisation is beginning to occur that these products will be sold at
20-30% under existing Australian retail prices, and Woolworths, Coles
and Franklins will not initially be able to meet them. Panic is setting
in. Worse is to follow. Tesco, Casino, Metro, Carrefour and Macro are
five other global players looking to move into the Australian and Asian
marketplace and this year, 100 new supermarkets are planned to be opened
throughout Asia. The problem for Australia is that these global giants
completely bypass local growers and producers, also local manufacturers,
and provide damaging competition to retailers. One may think that this
is poetic justice for one of Pharmacy's most predatory competitors,
but the implications for Australia's economy are enormous in respect
of loss of employment in all sectors, with small and large businesses
put under pressure. And don't think that it will not happen in pharmacy.
For the moment, we have a reprieve, and a five to seven year window
of opportunity to restructure ourselves and ensure there are some larger
players capable of becoming global in their own right or in collaboration
with strong partners. Should pharmacy lose the ownership battle down
the track, the pressure to let global operators in will be enormous,
given that the food industry will have already been globalised. Pharmacy
manufacturers have globalised themselves with a spate of amalgamations
and they are capable of exerting enormous economic pressure on a country
like Australia. Some Australian wholesalers have positioned themselves
to be potential global players and have recently gone to the market
to recruit capital. Whatever happens, we are certain to undergo rapid
change, most beyond our control. Pharmacists should be looking now toward
what they think they can control an plan some strategic alliances that
will build strength.
COMPLEMENTARY
THERAPIES: ITEMS OF INTEREST
On the 31st March next, the NSW Therapeutic Assessment Group will be
holding a one day seminar at the Centenary Lecture Theatre at the Royal
North Shore Hospital. The title of the seminar is "Complementary Therapies:
Fact, Fictions and the Future" It is designed for health professionals
and is in recognition that with the widespread use of alternate therapies,
mainstream clinicians must now consider these therapies as part of their
patient's total management. Obviously, this will be extremely difficult
for some orthodox clinicians, who have made a practice of belittling
people who dared to follow such practices. Patients, responding to this
attitude, simply don't tell their doctor anything. Alternatively, they
visit their doctor's surgery, armed with information downloaded from
the Internet, and systematically embarrass their doctor, who simply
does not know or understand. The TAG seminar is an admission by the
NSW hospital system that it must now come to terms with alternate therapies
and safely incorporate them within their protocols. Those pharmacists
who took the time to gain qualifications in this area, particularly
the Advanced Diploma of Clinical Nutrition, may now find their services
urgently needed. An opportunity exists here for a potential "gatekeeper"
role for pharmacists, even moving towards collaborative prescribing.
In America, pharmacists have forged a constructive partnership with
dietitians to be recognised as the primary information source for complementary
therapies. Initial studies are showing that simple therapies that are
low in cost, are very effective and are preventing rebound hospital
admissions. Large dollar savings are also showing up in hospital budgets.
Once this is known to the Australian hospital system, opportunities
will appear for pharmacists if they are alert to identify them and are
qualified to manage them.
Homoeopathy made news recently, when some scientific investigation revealed that there is a rationale for why it works. In homoeopathic circles, the more you dilute a drug, the more potent it becomes. Continual dilutions with water, accompanied by vigorous shaking is a process known as "successing". After repeating this process many times, the water is poured on to sugar pellets and administered. This intense diluting means that it is possible the drug is untraceable in its final form. In a different field involving car engine cleaners, researchers have found that water molecules, random in their normal state, begin to form a cluster when a substance is added to water and vigorously shaken (the exact process that homoeopaths use to create their medicine). It seems that every substance exerts its own unique influence on the water, so each cluster shape and configuration is unique to the substance added. With each dilution and shaking, the clusters grow bigger and stronger. This water (called "potentised" by homoeopaths) is considered as "structured water" because water molecules have taken on a shape influenced by the original substance. The clusters start to assume a form that mimics the structure of the original substance itself, and even though the original chemical is undetectable, its image is assumed by the water. Thus the original chemical becomes irrelevant. Up until now, everybody has been happy with the principles of homoeopathy (the body can, and knows how to heal itself) but have stumbled over the concept of greater dilution equals greater potency. It has been shown to work- and can now be claimed to be "evidenced based medicine".
INTERNET PREPARATION
At Computachem Services we believe in being well prepared for any major
change in the market place and that this currently means to be Internet
prepared. We have a strategy to build sites in a logical progression.........Business
to Business (B2B), followed by Business to Consumer (B2C) an then on
to Business to Government (B2G). For the moment we are offering B2B
sites free of charge to pharmacists as a means of establishing and using
a web connection. Once this is up and running we will then construct
a B2C site, but not just by itself. A B2C site needs a planned marketing
strategy to make it work, otherwise it will just sit there unused. The
principles of selling on the net apply even more stringently than the
"bricks and mortar" approach i.e product, price and where you get it
plus how and when you get it. Many sites are crowding out products with
free information, creating congestion and pages that load slowly. I
urge you all to study the simplicity of the Pharmacy Direct site and
ponder what the elements were that made it a success. Please visit our
web site at http://www.computachem.com.au to see what else we do. We
have currently published a new journal-type publication titled "Australian
Consultant" which you may like to subscribe to. The first edition is
posted on our web site. It has been produced in the belief that the
clinical elements of the Pharmacy Profession need to be defined and
marketed as never before, as global events are played out and Internet
marketing takes hold. It may be all that we are left with. If you have
any colleagues who would like to receive this free newsletter, please
pass on the e-mail address: neilj@computachem.com.au
More next month.
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links, plus a host of pharmacy relevant links. The directory also contains
a very fast search engine for Internet enquiries