A new report by real estate agency Christie & Co has found that 40% of UK community pharmacies are owned by corporate or supermarket operators, while independents make up 25% of the total.
Of the total, 1,298 pharmacies were located in Scotland, 526 in Northern Ireland, 730 in Wales and 11,816 in England.
However, it also said that corporates have struggled more than independents to remain open consistently, which it warned would ‘come at a cost, with patients moving to local independents offering a more consistent service’.
In addition, it found a ‘renewed appetite of multiple operators in the sector’, citing sales of pharmacy groups this year including the acquisition of Pickfords Pharmacy Group, JM McGill Limited and D & R Sharp (Chemists) Limited by Connection Capital LLP, as well as the sale of The Hub Pharmacy Limited to Allcures plc.
It found that there was a total of 4,730 operators in the sector, with just 8 operators holding over 301 pharmacies, 29 operators holding 21 to 300 pharmacies, 9 operators owning groups of 16 to 20 pharmacies, 29 operators holding 11 to 15 premises, 94 holding 6 to 10 pharmacies and 911 operating small chains of 2 to 5 pharmacies.
There has also been a continued growth in online pharmacies, the report said, with 12.1m items dispensed by key online pharmacies in 2020, 24.5m in 2021 and 29.9m in 2022.
Margins and costs
Christie & Co also analysed the business accounts of over 850 pharmacies, a sample which it says is representative of a broad range of pharmacies and pharmacy types across the UK including independent-owned and group-operated pharmacies.
It found that wages, excluding locum costs, comprised an average of 14.3% of total revenue, a 0.5% percentage change increase compared to last year. When locum costs were included, wages made up 16.1% of total revenue, 0.2% higher than last year.
The Christy & Co report said that locum costs made up an average of 17.8% of total wage costs for pharmacy contractors, 2.9% less than last year.
It said that pressures on the pharmacy workforce were an ‘inevitable consequence’ of structural changes introduced by the five-year deal, as well as the cap on funding and the introduction of primary care networks (PCNs) and GP pharmacist positions.
The report argued that the introduction of GP pharmacists ‘has undoubtedly placed a huge strain on community pharmacy, with the inevitable decrease in staff lured away from its frontline role’.
In addition, the ‘significant resourcing challenges’ faced by the sector in the last 12 months ‘will inevitably impact on wage cost margins in the year to come’.
It also said that ‘whilst the PSNC is seeking urgent improvements to the current concession pricing system’, price concessions imposed by the DHSC was ‘likely to impact future gross profit margins’, while ‘the rapid escalation of energy costs’ would ‘no doubt impact’ profits and losses.
In addition, it found that while dispensing activity for England increased by 4.5% in 2021/22, independents saw a combined average increase of 3.5% from the previous year compared to a 1.8% increase in corporate dispensing.
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