Aussie pharmacy chains fight to survive in booming global market
More than a dozen pharmacies in Australia have declared bankruptcy as Australia’s drug prices continue to rise.
In an effort to boost profits, a number of large pharmacy chains have begun to consolidate and sell fewer drugs at lower prices.
Australian pharmacies have been hit hard by rising drug costs, with drug prices rising more than 60 per cent in the last year.
Australia’s big three pharmacy chains, A&C, CVS and Serco, have all announced the start of a restructuring plan aimed at improving their profitability.
It comes after a number in Australia’s biggest drug companies including CVS, Serco and A&source have all seen their profits slashed by as much as 50 per cent since 2014.
As well as raising prices, consolidation in the pharmaceutical sector has also meant less competition.
Some pharmacies are planning to sell less drugs altogether.
A CVS spokesman said the company had been discussing the strategy with a number retailers and would take further steps to ensure that our business model continues to deliver value for consumers.
“Our focus will continue to be on achieving value for our shareholders and the Australian community, which will continue as we move forward,” the spokesman said.
But A<c said it was working to ensure its drug business remains competitive and would continue to support and protect the integrity of its supply chain.
The move by the three companies follows an agreement between the Australian Competition and Consumer Commission (ACCC) and Australia’s Pharmaceutical Benefits Scheme (PBS).
The PBS has been accused of giving drugs to consumers that were cheaper and better performing than the ones they were designed to treat.
CVS is currently facing a class action suit by more than 5,000 customers who claim the company did not properly monitor its supply chains and gave consumers cheaper drugs.
PBS chief executive John McTiernan said on Tuesday the move was the right thing to do for the PBS.
He said the PBS had been working with the Australian Health Practitioners Council (AHPC) to improve the way it monitored and treated its customers’ drugs.
“The AHPC has now reviewed and amended its contract with the PBS and will be moving to strengthen its oversight of the PBS,” Mr McTiernan said.
“I am confident that the PBS will continue its robust approach and will work with AHPC to ensure all customers receive the highest quality and value for money.”
This is a great win for our customers and their families.
“”This agreement is the right outcome for both parties.
“A spokeswoman for Serco said the consolidation was part of its long-term plan to diversify and improve its business model.
She said the group was taking a “wait and see” approach to the drug industry.
The deal will see Serco buy the Australian Pharmacopoeia and Pharmacoscience Australia’s (APPEA) subsidiary and APharmacy Australia’s pharmacy services arm. “
As a result of this consolidation, we will continue our commitment to deliver quality drugs to our customers at competitive prices,” she said.
The deal will see Serco buy the Australian Pharmacopoeia and Pharmacoscience Australia’s (APPEA) subsidiary and APharmacy Australia’s pharmacy services arm.
Under the deal, APharma will be owned by Serco.
This means APhar will no longer have the same corporate structure as its Australian rival, APPEA.
Serco said it expected the acquisition would help strengthen its global presence and help to drive efficiencies.
“Serco is very excited about this transaction,” it said in the statement.
“[It] will deliver on the company’s long-standing commitment to continue our business and achieve greater profitability.”
Sercos’ core business is based on pharmacy sales, but we are also focused on improving the pharmacy experience and delivering more value for customers through our strategic investments.
“The deal is expected to close in the fourth quarter of next year.