The 6th Agreement has yielded a reasonable result for pharmacy in a financial sense.

While there remains some downside risk around loss of trading terms, the floor in the GP$ per script will land at a higher level than previously contemplated.

Together with the changes to the dispensing income, the additional service income will be welcomed not necessarily to drive profitability but to allow community pharmacy to implement customer engagement strategies linked to specific conditions and medication adherence.  In other words, the service income will be there to fund additional pharmacists to achieve better patient outcomes.

So what does this mean for pharmacists either in ownership or wanting to get into ownership?  Irrespective of whether you own, want to own or grow your current group, the following is relevant:

  1. There is great certainty for pharmacy for the next 5 years and beyond;
  2. Some worry about the location and ownership rule review but if the pharmacy is in the best location and has a compelling customer proposition, it will always beat other competitors;
  3. You do however need to understand the need for change in the pharmacy and how you will achieve that to generate the additional revenue and be at the forefront of the patient centred care model;

If contemplating selling, now is a good time because of the certainty that has been created and buyers will feel more comfortable with the 6th Agreement locked away and a low interest rate environment remaining in the near future.

Getting the pharmacy ready for sale is important for sellers.  Understanding the opportunity on the buyer’s side is also vital.

Should you be considering delaying selling, you must understand what is required in the pharmacy to make is sustainable over the next few years to avoid the profit impact from falling trade terms and strong competition opening up.  Both will impact the value of the pharmacy in the future.

In other words, now is a great time to understand the impact of the 6th Agreement on the pharmacy, look for the prospects and seize the opportunities.

The reality is that the operating environment for pharmacy has changed.  Pharmacy owners in the future will have to understand how to influence underlying net profit by competing for the customer.