Employment cost pressures continue to be a significant challenge for pharmacy businesses and are expected to persist throughout this financial year
Pharmacy businesses continue to face rising cost pressures despite increased services and dispensing activity, according to Christie & Co’s Pharmacy Market Review 2024 report.
The report revealed that in the 12 months leading up to March 2024, dispensing activity across England increased by 8%. This contributed to a rise in the average number of items dispensed by community pharmacies, reaching 8,565 items per month.
In addition to this year’s rollout of the Pharmacy First Scheme, 9,261 pharmacies in England undertook an average of 336,525 New Medicines Services per month, equating to an annual total of 4,038,300.
However, the report found that, despite seeing increased turnover through additional activities, remuneration under the 5-year deal was “unable to offset the increased cost pressures the sector has experienced.”
Analysis of the broker’s transactional and valuation data for the last 12 months showed the average combined gross margins fell by 1.7% to 31.9%.
The report noted that, without the increased service offerings they generated, overall margins would have declined further.
Jonathan Board, Director – Pharmacy at Christie & Co, said: “With any operational efficiencies that can be delivered having now been delivered, the continued cost pressures are unsustainable, a situation which, without an urgent funding boost, will lead to further distress in the sector.”
“With the recent news that clarity will not be seen until after the Chancellor’s Autumn Statement, contractors in England will have to wait to see whether any proposed increase will offer respite for the remainder of the financial year and how much this will offset further National Living Wage increases anticipated in April 2025.”
Employment cost pressures remain one of the key issues impacting pharmacy businesses. With the 9.8% increase in the National Living Wage in April 2024, these pressures are expected to persist throughout the remainder of the financial year.
The report also highlighted that price concessions continue to challenge the sector.
In April 2024, the Department for Health and Social Care imposed changes to its approach to concession pricing without prior testing or consultation. Community Pharmacy England has strongly opposed these changes, warning that putting further pressure on pharmacies to dispense at a loss will have profound consequences for the sector, patients, and the primary care system.
Jonathan stated that while cost pressures are likely to persist in the foreseeable future, there remains a strong market appetite for “those businesses that can weather the storm.”
“Following the glut of corporate disposals over recent years, we anticipate that the market will return to some sense of normality as potential purchasers eye up more traditional independent pharmacy opportunities. Market appetite in England will be tempered by the outcome of the much-needed funding settlement negotiations,” he added Read More…..