Community pharmacy is changing. The impact of an ageing population (the average life expectancy in New Zealand is now 81.46 years old according to the World Bank), along with technological innovation, market disruption and proposed new government legislation means pharmacy has become one of the most exciting and dynamic industries in the country. We caught up with Gina Cook and Rachel Shoebridge, Advisory Partners at BDO Auckland, to find out more about the state of the community pharmacy industry in New Zealand.
The impact of living longer
The ageing population is having a huge impact on healthcare across the board. As Gina point out, the pressure that it puts on the wider healthcare system presents an exciting opportunity for pharmacists. "Baby boomers are beginning to move into the 65+ category in large numbers, and the more of a burden this puts on healthcare, the more the role of pharmacists will change over the coming years," says Gina.
The New Zealand government is making moves towards giving pharmacists the option to administer some GP services. "Rather than just straight dispensing, the government is looking to take advantage of pharmacists' many qualifications and skills to widen their service offering," explains Gina. Already, some pharmacists have started administering flu shots and these services will likely expand in future in order to take the pressure off GPs.
"The funding for future services is still uncertain, but once they have a clear plan, it'll be an exciting avenue for pharmacists," says Gina.
Dealing with deregulation
Expanding their service offering is one of the main ways pharmacists will be able to respond to the potential for deregulation. Currently, at least 51 per cent of a pharmacy must be owned by registered pharmacists, and you can only own up to 5 at that 51 per cent level. Deregulation would open this up so that anyone can own a pharmacy, making way for large corporate entities such as supermarkets to have direct ownership.
"A deregulation bill is currently being drafted, and no-one is quite sure when it will go through or in what form," says Rachel. "When it does, it has the potential to disrupt the pharmacy industry significantly."
However, as Rachel points out, it's not all doom and gloom. "The same sort of thing happened in Ireland," she says, "but it didn't change the industry as much as anyone expected - pharmacists continued to own the majority of pharmacies."
The retail side of pharmacy is also facing increased competition from new market entrants looking to come into the sector with a discount model, while Amazon also presents a challenge. Expanding their service offering and focusing on good health outcomes for patients/customers is one of the main ways pharmacists will be able to respond to this challenge.
Even if the competition does increase, there remain lots of opportunities to restrategise, allowing pharmacists to differentiate their services.
This would include the GP services mentioned above, as well as finding other ways of adding value to patients. The government's Pharmacy Action Plan for 2016-20 included the need for pharmacists to play a role in sharing their considerable professional knowledge in order to educate people about health and disease. It is hoped that this will also decrease pressure on the healthcare system.
As with any industry, pharmacy is feeling the impact of the rate of technological change. In the case of pharmacy, we are already seeing the use of robotic technology and pharmacy technicians to dispense medicines. This will free up pharmacists' time so that they can deliver the more service-based offerings mentioned above.
The government's Action Plan details proposals to make the dispensing of medicines easier through the use of mobile and internet technology. It's also hoped that pharmacists will be able to use technology to better integrate healthcare services across the board.
Changes in funding and valuation
Pharmacies have seen quite a bit of change in the way services are funded over the past 5 years, with the Community Pharmacy Services Agreement (CPSA). As pharmacists begin to expand their service offerings, funding will have to change slightly to accommodate this.
Another key trend in pharmacy is valuation. At present there's a high demand for pharmacy businesses and so the price vendors are expecting is currently high. "Those that are looking to buy pharmacies are now finding it difficult to raise the capital required, meaning negotiations for acquisitions are taking a lot longer," explains Gina.
Luckily, BDO New Zealand are here to help. Rachel and Gina's years of experience providing services to community pharmacies across the country means they're in a prime position to assist in whatever you need them for. This could be assisting negotiations for buying or selling a pharmacy, facilitating funding, helping you review your profitability, or making the most of technological change. For more information on how BDO NZ can help your pharmacy succeed, contact us today.