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Pharmacy report 2016: Steady as she goes


Pharmacy report 2016: Steady as she goes but work on wages bill


Challenging times experienced by the country’s pharmacy industry over the past few years may have flattened out and, for most. profitability levels are steady, according to the latest Moore Stephens Markhams New Zealand pharmacy benchmarking survey.

The 2016 survey report released this month (December) is based on data provided by 114 pharmacies of various sizes from throughout the country.

Atul Mehta, Director, Moore Stephens Markhams Pharmacy business unit spokesperson says, “While there’s been a small increase in median profit, it is indicative that most businesses have not recorded significant growth.

“Pharmacies are reporting that their dispensaries are busy and this is borne out in the number of scripts and scripts per hour data, but it is only that more expensive medicines are being dispensed that has led to an increase in script revenue.”

The survey results reveal some common themes when looking at the performance of pharmacies located in different areas around the country. Auckland continues to have higher occupancy costs, lower wage bills, and overall smaller businesses.

In contrast, South Island pharmacies surveyed had the lowest overall costs and highest profit as a percentage of revenue, despite having the highest wage level. These South Island pharmacies also showed significant drop in the percentage of retail revenue when compared to previous years.

As in previous years, medical centre pharmacies have the highest dispensary sales percentage and the highest wage bills, generally due to having more pharmacists on the payroll. Pharmacies in malls have a growing portion of retail sales, higher occupancy costs and lower wage bills but as they are generally turning over higher revenues despite lower net profit as a percentage of revenue, are still profitable overall.

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Mr Mehta urges pharmacy business owners to “think out of the box” regarding trimming their wages bills. “The wages bill is one area that can be controlled to a degree by the business,” he says. “Yes, it’s important to employ professionally qualified pharmacists and experienced customer services people, and staff must be reimbursed appropriately, any small savings made can go a long way towards operating a profitable business.”

Reducing the number of employees on roster during quiet times, and possibly reducing opening hours were two suggestions Mr Mehta makes. Adjusting the ratio between pharmacists and technicians, locums versus employees, and looking at robotic dispensing machines for greater efficiency, are other options that could be employed.

He also suggested that pharmacy business owners check the Pharmacy Guild remuneration survey results to ensure they are paying staff at the appropriate levels.

The national chartered accountancy and advisory network, Moore Stephens Markhams works with over 130 of New Zealand’s community pharmacies. Again, this year the survey was opened to businesses that are not clients of the national group.

Of the 114 participants, 36 percent were Green Cross Health branded stores; 51 percent were owned by those who held shares in more than one pharmacy; and 35 percent were owned by more than one independent owner.


ENDS

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