The community pharmacy sector is “ready for disruption”, proclaims multinational accounting and consultancy firm EY in its recent pharmacy innovation report, published on November 17.

EY’s report adds nothing new. Its meat is the same bundle of facts about the sector that we all know by now; on this it adds the fat of the buzzed-up language of tech, and the tiresome glaze of “innovation”. The garish “omnichannel” is used as a garnish.

Its recommendations are sector-wide automatic dispensing, a shift away from a dispensing-dominated model of funding towards services, and for “pharmacists to work closely with partners in pharmaceutical companies, gathering data and referring patients for clinical trials”.

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“In time, most dispensing is likely to be done in a small number of regional centres and provided as a service to pharmacies,” it says.

This report – from a firm that people in high places take seriously, no matter the quality of the research – should give the sector pause. It calls for disruption to a sector that has already been disrupted for most of a decade.

The clearest indication of that this year was Lloydspharmacy’s exit from the community pharmacy sector. The mega-multiple is gone, mostly into the hands of smaller chains and independents.

We sensed it was coming from a long way off. When I arrived at C+D as a reporter in May, the first and loudest whispers I heard were about a fire sale at Lloydspharmacy. Everything must go.

In November 2021, the private equity firm Aurelius was announced as the buyer of over 1,300 Lloydspharmacy branches, the UK’s second-largest online pharmacy in LloydsDirect, wholesaler AAH and a number of other businesses for £477 million. In retrospect, Aurelius managed to snap up an incredible bargain.

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Contractors we have spoken to have described the prices that the Lloydspharmacy branches went for as a steal. But law firm Blackadders recently reported that it had helped its clients secure £35m for the purchase of 37 of these pharmacies across Scotland.

And while it might be that Scottish pharmacies are subject to a premium, one might extrapolate a fair guess at the massive profit Aurelius could expect to extract from its country-wide auction of over 1,000 pharmacies in the blink of an eye. 

Perhaps it should have been obvious that Aurelius would have no interest in running a large pharmacy business, with funding being what it is. But it says much about parts of the sector – and the banks that are funding the buyers – that there is such confidence in its future that the whole estate could be sold so quickly.

It is not clear that the Aurelius gambit can be replicated again – or what the market for pharmacies is going to look like in the next couple of years.

At the first sitting of the health and social care committee’s (HSCC) pharmacy inquiry, Dr Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies (AIMp), spoke of contractors reaching into their pensions to keep their businesses afloat. Jay Badenhorst, vice chair of the National Pharmacy Association (NPA), on the same panel, spoke darkly of coming instability in the market.

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The roots of the divided ideas of pharmacy’s future are to be found in 2016. Many of the current problems exist because we are still living in the world of former pharmacy minister Alistair Burt. Under his watch, obscure calculations determined that we had 3,000 pharmacies “too many”. This analysis motivated the funding cuts that have dropped the sector’s funding by 30% in real terms in the years since.

But the sector has resisted the vandalism of Mr Burt’s budget cuts. Closures since 2016 have only reached a third of his goal, according to the Company Chemists’ Association’s (CCA) recent figures. Even so, the cuts have left scars in pharmacist overwork, burnout, and temporary closures.

Community pharmacy showed its necessity during COVID-19 and rose to meet the challenge of a denuded primary care sector. It has embraced the addition of services on top of the crunch of dispensing. Its model means the UK’s share of healthcare spending is among the lowest of peer countries.

But if you push for a system that will lead to taking away dispensing from a pharmacy, as EY’s report does, you remove a job that is the specialisation of the pharmacist, and from the pharmacy 85-90% of its income.

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You cut out its heart and replace it with services that can frankly be done by any number of other healthcare professionals. To what end are the investments in consulting rooms and the like made by pharmacies to accommodate a service-led future, if the core business is handed over to hubs and distance-selling pharmacies (DSPs)?

Mr Burt’s vision of a drastically reduced sector has not been displaced in the government because if it had, funding for pharmacy’s core purpose would have been restored. Pharmacy could go a long way to solving the crisis in primary care – but it must exist to do that.

Perhaps, instead of “disruption”, EY should have used the word “disaster”.

Why should we ‘disrupt’ community pharmacy? It is not wracked by inefficiency; it must be defended.

 

James Stent is a digital reporter at C+D