The New Frontier for Pharmacy Growth

Attending the Australian Pharmacy Professional Conference 2022 on the Gold Coast recently has once again reinforced the notion that competition is healthy across all industries and pharmaceutical is no different.

Although highly regulated here in Australia, there are still opportunities for pharmacy owners to increase penetration in areas that are either growing, or experiencing a shift in demographics. According to the Pharmacy Guild of Australia, there are over 5,800 community pharmacies in Australia with over 97% of people in capital cities having access to at least 1 pharmacy within a 2.5km radius of where they live, which works out to be 4,400 people to every pharmacy.

So who are the major players within the pharmacy industry?

  • API operate over 1300 pharmacies (including brands Priceline/Soul Pattinson)
  • Sigma operate over 1200 pharmacies (including brands Amcal/Guardian)
  • ÉBOS Group operate over 500 pharmacies (including brands Terry White Chemmart/Good Price Pharmacy)
  • Chemist Warehouse operate over 300 pharmacies in Australia

The Pharmacy Guild of Australia and the Federal Government have legislated rules around the location of pharmacies relative to supply/demand that are negotiated into the 7CPA agreement signed in June 2020 for a 5 year period. This also covers the continued exclusion of supermarkets to provide pharmacy services in accordance with previous negotiated outcomes.

Pharmacies provide an enormous benefit to the public which cannot be underestimated. Like any businesses, pharmacies can over or underperform expectations for a number of reasons. For example, locating in a low demand area, being surrounded by too many competitors, and not having the right mix of products can all negatively impact sales performance.

What factors can positively or negatively affect pharmacy sales performance?

  1. Firstly, there needs to be enough of the right demographic target market surrounding the pharmacy. This usually represents families with younger children and older consumers.
  2. Having adequate activity present that brings potential customers into the vicinity of a pharmacy which would include hospitals, medical centres, aged care homes and supermarkets etc.
  3. The position in the precinct is critical- being located on a main pedestrian ant trail, with complimentary adjacencies are all important.
  4. Site specific characteristics that include prominent branding/signage, adequate parking, are all very important factors.
  5. The number and location of competitors can also be highly influential to performance. If there is enough demand in an area present, competition becomes less influential.
  6. Another factor to consider is to make sure you align the products/services you offer to the demographic make up of the catchment around the pharmacy. Demand for certain products/services will vary from location to location based on the spend profile of potential customers in the area.

Geotech has extensive experience in the health services industry, including modelling across a number of different sectors from radiology to pharmaceutical and can assist your business to better understand how all of the above factors currently impact your business performance.

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