Published by Computachem Services

P.O Box 297.
Alstonville. 2477
NSW Australia

Phone:
61 2 66285138

On the 8th May, 2003, a press release was launched announcing that since its successful move into petrol marketing, Woolworths is investigating setting up stand-alone pharmacies within its supermarkets, as part of a plan to tap into the $8 billion pharmaceutical market.
The press release gave further details of a trial being undertaken in two of its Sydney stores at Macquarie Centre in North Ryde, and at Kellyville.
The entire range of health and beauty aids is being set up in "pharmacy-like" surrounds within these stores.

This approach by Woolworths is not new, and the company has recorded a number of attempts to operate pharmacies, dating back to the mid 1960's.
While the climate was not right for the company on previous attempts, it should be now noted that the world is an entirely different place.
What you are now seeing is a carefully planned process that will be relentless until Woolworths achieves its aims and objectives.
This will take between three to five years as a best estimate.

When Woolworths arrives within pharmacy, so does every other major retailer, including additional global entrants.

The frustration of this writer is that official pharmacy is doing nothing to organise pharmacy infrastructure to assist in the retention of a major market share for Australian pharmacists.
The Pharmacy Guild of Australia (PGA) is on record as stating its opposition to corporately structured private pharmacies, giving a range of spurious arguments to back its case.
This publication has been pointing out for some years that corporate structure will be one of the only strategies available for future competition.
The ingrained culture of small community pharmacists possibly rebels against the thought, but is it better to have a "little of a lot rather than a lot of a little?"
Or with the advent of Woolworths ownership of pharmacies, perhaps nothing at all?

While the PGA may point to endeavours such as Quality Care Accreditation as a primary strategy for preventing open ownership, it is simply not happening, and pharmacists are getting lost in the detail, rather than keeping their eye on the main game.
At the same time, governments are introducing more complexity into their procedures and practices, in an endeavour to ensure taxpayers get the best cost effective health. This complexity is adding to the burden and cost of community pharmacy workload.

There will be a point when governments will realise that pharmacists are not able to cope, and at that point they will make an irreversible decision.
The decision will not be one of looking to reduce workloads, but of seeking business structures that can handle the workload.
Guess which company will be waiting in the wings?

Who knows, the process of complexity may be a deliberate process by government to vindicate the thinking of the economic rationalists, who are definitely not pharmacy-friendly government people.
The other strange thing about the economic rationalists is that they are prepared to pay a higher price to achieve their objectives, which does not then deliver cheaper prices to consumers.
The deregulation of other industries has already proven this.

You have heard all the arguments advanced by non-pharmacist corporates in the UK and New Zealand when they attempted to extend their influence and ownership.
Statement such as "pharmacists relieved of paperwork", "pharmacists will have time to counsel patients" etc. have all been advanced as arguments and regurgitated by government spokespersons.
Even Priceline here in Australia, is using the same style of argument, basically saying "leave the retailing to us-you get on with the dispensing business-we are more expert than you".
Priceline is also looking to own pharmacies outright.
The truth is that pharmacists are good retailers and they are good managers, but they do not totally control their environment because it is so highly regulated by government, who are not necessarily good managers.
The only way pharmacists can emerge from the bind of overwork and complexity, is to develop a larger corporate structure, which will then give pharmacy economies of scale and a more level playing field in the competition stakes.

Now the PGA is caught in a bind, because it derives its power from the majority of community pharmacist members, who have small business thinking and who may feel uncomfortable with the thought of dealing with a corporate world.
To discriminate against the majority and begin to focus only on larger corporate businesses, would be undemocratic, and would visit membership wrath in various forms.
Also, larger corporate structures ultimately means a diminishing, but more powerful individual member, up to the point where an evolved larger corporate would not necessarily need PGA membership at all.

On the other hand, to stand by, up to the point of an entry by Woolworths (and others) into the market, will mean a drastically reduced membership (as pharmacists find they cannot compete due to lack of resources, they will walk away from their businesses) and total loss of political influence.

The other anomaly in the world of pharmacy is the fact that the PGA negotiates on behalf of all pharmacists, while at the same time, only representing the narrow interests of its membership (some 35 percent of all pharmacists).
I believe it is past time for the PGA to begin to relinquish some of its power in favour of a more representative body.
If the PGA executive are mature thinkers, they will have already recognised this fact and may be working along these lines.
One can only hope.
If an all-embracing structure is supported, there needs to be a segment for corporate pharmacy, which has to be nurtured and developed as a matter of urgency.
If this is not going to occur, then a coalition of larger pharmacies, as a new and separate organisation of pharmacy owners, needs to emerge and negotiate their needs separately, and urgently

The recent PAN recall, in part, caught the PGA sucking its thumb.
As one of a number of players (including government, wholesalers and manufacturers) there has been no real move to adopt a standard universal product code.
Had there been one in place, the recall would have been more efficient and less controversial, certainly the field day that the media had, would have been minimsed.
This will now provide the impetus for the above process to take place.
The damage to the pharmaceutical industry has been immense, and it will take some time to recover.
Community pharmacy was the visible face of the industry and will bear a disproportion of the total cost in terms of loss of existing profits, loss of future sales, and a damaged reputation from consumer loss of confidence.
This is what the PGA is set up to help prevent!
The arguments that would have assisted the PGA in these (and other) endeavours have appeared in the pages of this publication for the past three years.
You are directed to Pat Gallagher's article in this edition, to refresh the collective memory.

The parallel to be drawn is, will the PGA be seen to suck its thumb again, when we have no corporate competing structures to go up against Woolworths and the rest of the pack?

The clock is ticking--the luxury of time is no longer available!

See also, additional material in Rollo Manning's article