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Pharmacy Retailing in the UK | Verdict Market Report

A new report exploring pharmacy market trends, opportunities and inhibitors in this fast changing and dynamic sector. It also includes the latest market sizes for NHS & OTC and market shares and profiles on the leading retailers.

Description

INTRODUCTION

With an ageing population, significant changes in government policy and consolidation in the market, Pharmacy is an ever-changing sector. Learn where the opportunities and threats are in the market and how to manage these most effectively for your business.

FEATURES AND BENEFITS

  • Reduce the impact of changes in government policy on your business by being prepared and understanding where the greatest threats will come from.
  • Use the data, forecasts to 2015, and insight on the market, including NHS receipts and OTC, to help form an effective growth strategy.
  • Understand the impact on pharmacy retailing of the Boots/Walgreens merger and how the investment will increase competitiveness in the sector.
  • Identify the opportunities to grow business in this sector by comparing strategies of the key players in the market and their performance metrics.

HIGHLIGHTS

In 2011, the government announced plans for changes in the control of entry rules that would end the 100 hours exemption and this has prompted a rush of opening applications which we forecast will dilute profitability. 250 new pharmacies opened in the first four months of 2012.

Furthermore price deflation is making the pharmacy model non viable. Cost per prescription has fallen 23.0% since 2004 as the government has reduced reimbursement rates. This, combined with imminent patent expirations, will lower prices further.

The takeover of Alliance Boots by the largest pharmacy chain in the United States, Walgreens, expected to be completed before 2016, will lead to a major reinforcement of Boots' existing economies of scale. The new group will have 11,000 stores in 12 countries and is expected to have a turnover of $130.0bn (£82.6bn) by 2016

YOUR KEY QUESTIONS ANSWERED

  • What impact is deflation and government strategy having on the market and how can this be managed to ensure success?
  • How are grocers and local GPs threatening pharmacy specialists and how can retailers deal with these threats and increase customer loyalty?
  • Which retailers will gain market share in 2012, which are expected to be the greatest share losers and why? What can competitors learn from this?
  • What are the factors that will impede or maximise future growth opportunities and sales in pharmacy retailing?

Table of Contents

EXECUTIVE SUMMARY

  • Key findings
    • (Untitled sub-section)
  • Main Conclusions
    • Market growth disappoints - NHS volumes up but prices down
    • GPs are now a competitive threat for retailers
    • 100-hour pharmacy openings have negative impact on profitability in sector
    • Uncertainty over national versus local commissioning could hit services income
    • Value-based pricing will hit prices in pharmacy market ...
    • ... as it heads towards patent cliff
    • Walgreens' takeover of Alliance Boots will intensify competition
    • Grocers aggressively targeting pharmacy growth - collective market share 11.8% in 2012
    • But strengthened Boots poses a danger to grocers
    • Other major specialists in retreat
    • Healthy Living Pharmacies future blueprint for growth
    • Market dependent on improved consumer environment
    • Need for format innovation like Lloydspharmacy's Health Village ...
    • ... and promotion as trustworthy places for advice

MARKET ANALYSIS

  • Pharmacy market definition
  • OTC sales much more resilient than NHS in 2011 and 2012
    • Volume growth diluted by rise in pharmacy numbers
    • Pharmacy growth slows in subdued retail market
  • Market drivers
    • Ageing population means greater medical need
  • Distribution channels
    • Pharmacy numbers rise
  • Prospect of further restrictions lead to wave of new openings

COMPANY DATA ANALYSIS

  • Market shares
    • Three leading specialists slip back and grocers gain share
    • Grocers strong in health & beauty but lag in pharmacy
  • Winners & losers
    • Co-operative and top grocers the biggest winners over five years
  • Key operating statistics
    • Space productivity likely to fall in 2012

OUTLOOK

  • Key Issues
    • Alliance Boots takeover could halt grocers' expansion
    • Other benefits on service provision and technology
    • Impact on other players and the market generally
    • Flood of 100-hour pharmacies worsens revenue problem
    • GPs often behind 100-hour applications
  • Squeeze on revenue per pharmacy will lead to further consolidation
    • Likely control of entry changes are destabilising the sector
    • Health & Social Care Act passed
    • What is the timescale for the changes?
    • Lack of clarity about services commissioning
    • Potential for conflict with GPs grows
    • Services grow but are they the future?
    • Healthy Living Pharmacies develop rapidly
    • Framework for service growth
    • Future funding packages also a factor
    • Medicine patent cliff comes closer
  • Value-based pricing looms
    • New pharmacy formats
    • Lloydspharmacy experiments with Health Village concept
    • Need for store innovation
  • Future key factor is NHS price deflation
    • OTC will lead weak recovery
    • Consumer lifestyles provide potential for growth
    • Marketing will be key

ASDA

  • Strong image on price drives sales
  • Recent key events
    • Raises pharmacy profile with free and low price offers
  • Proposition
  • Financials
    • Capitalises on value image to grow sales
  • Space
    • Netto acquisition gives major space boost
  • Market shares
    • Netto acquisition boosts OTC
  • Outlook
    • Needs to go beyond price promotion in pharmacy

BOOTS

  • Walgreens takeover makes market leader even stronger
  • Recent key events
    • Takeover by US pharmacy giant reinforces strengths
  • Proposition
  • Financials
    • Profit margins grow as latest sales fall
  • Space
    • Store portfolio begins to grow again
  • Market shares
    • Decline in share continues under pressure from grocers
  • Outlook
    • Bigger group will lead to even greater efficiency

THE CO-OPERATIVE PHARMACY

  • Increases efficiency to overcome pressure on profits
  • Recent key events
    • Revamping pharmacy chain
  • Proposition
  • Financials
    • Profits squeezed again by Category M
  • Space
    • Slow expansion resumes
  • Market shares
    • Under renewed pressure from grocers
  • Outlook
    • Continued struggle to maintain profitability

LLOYDSPHARMACY

  • Targets revival of bottom line
  • Recent key events
    • Cuts costs and increases efficiency
  • Proposition
  • Financials
    • Sales up despite very difficult market
  • Space
    • Cutting back on underperforming pharmacies
  • Market shares
    • Holding its ground by fighting back on OTC
  • Outlook
    • Likely to outperform smaller specialist rivals

MORRISONS

  • Ambitious growth plans
  • Recent key events
    • Increasingly ambitious in pharmacy sector
  • Proposition
  • Financials
    • Core food business strong but current trading a worry
  • Space
    • Expansion ahead of target
  • Market shares
    • Grows but still lags grocery rivals
  • Outlook
    • Catching up with grocery rivals will be hard
    • Health & Social Care Act creates uncertainty

ROWLANDS PHARMACY

  • Tough challenge from grocers
  • Recent key events
    • Aims to counter grocers
  • Proposition
  • Financials
    • Profitability recovers slightly
  • Space
    • Static portfolio in tough market conditions
  • Market shares
    • Losing further ground in OTC
  • Outlook
    • Increases focus on health service role

SAINSBURY'S

  • Aims to double pharmacy revenue by 2014/15
  • Recent key events
    • Presses ahead with expansion
  • Proposition
  • Financials
    • Sales growth slows down
  • Space
    • Reduces pace of expansion
  • Market shares
    • Pharmacy share resumes growth
  • Outlook
    • Lack of clarity over strategy
    • Supermarket competitors also targeting this market
    • Sainsbury's ambitious objectives will be hard to achieve
    • Online could help promote and grow pharmacy

SUPERDRUG

  • Revamp and loyalty card improve performance
  • Recent key events
    • Continues brand repositioning
  • Proposition
  • Financials
    • Profit margins remain very low
  • Space
    • Store portfolio stable as retailer concentrates on efficiency
  • Market shares
    • Share stabilizes under brand revamp
  • Outlook
    • Focus on beauty side of business

TESCO

  • Bets on 100 hour pharmacies for growth in health
  • Recent key events
    • Revamps whole approach to UK market
  • Proposition
  • Financials
    • Sales growth slows down
  • Space
    • Growth set to be slowed under new strategy
  • Market shares
    • Catching up on The Co-operative
  • Outlook
    • Race against time to expand pharmacy

GLOSSARY

  • Definitions
    • Financial Statistics - VAT
    • Trading Profile
    • Physical Development
    • Computer Rounding
  • Abbreviations
  • Disclaimer

TABLES

  • Table: Retail pharmacy market definition 2012
  • Table: Abbreviations and terms used in the report 2012
  • Table: Retail pharmacy market 2002 - 12e
  • Table: Retail pharmacy market by revenue source 2002 - 12e
  • Table: NHS prescription items, dispensed volumes 2002 - 12e
  • Table: Changing population by age band 2011, 2016 & 2021
  • Table: Pharmacy market per capita 2002 - 12e
  • Table: UK pharmacy store numbers 2002 - 12e
  • Table: Number of pharmacies by type 2007 - 12e
  • Table: Retail pharmacy market shares 2007 - 12e
  • Table: Market shares of NHS revenue 2007 - 12e
  • Table: OTC market shares 2007 - 12e
  • Table: Pharmacy sales per sq ft 2007 - 12e
  • Table: Asda company information 2012
  • Table: Asda retail proposition 2012
  • Table: Asda UK key operating statistics 2006 - 11e
  • Table: Asda UK trading record 2001 - 11e
  • Table: Asda store portfolio 2001 - 11e
  • Table: Asda pharmacy profile 2001 - 12e
  • Table: Boots company information 2012
  • Table: Boots retail proposition 2012
  • Table: Boots UK key operating statistics 2007 - 12
  • Table: Boots UK retail trading record 2007 - 12
  • Table: Boots store portfolio 2002 - 12
  • Table: Boots pharmacy profile 2002 - 12
  • Table: The Co-operative Pharmacy company information 2012
  • Table: The Co-operative Pharmacy retail proposition 2012
  • Table: The Co-operative Pharmacy UK key operating statistics 2007 - 12
  • Table: The Co-operative Pharmacy UK trading record 2002 - 12
  • Table: The Co-operative Pharmacy store portfolio 2002 - 12
  • Table: The Co-operative Pharmacy pharmacy profile 2002 - 12
  • Table: Lloydspharmacy company information 2012
  • Table: Lloydspharmacy retail proposition 2012
  • Table: Lloydspharmacy UK key operating statistics 2006 - 11e
  • Table: Lloydspharmacy UK trading record 2001 - 11
  • Table: Lloydspharmacy store portfolio 2001 - 11e
  • Table: Lloydspharmacy pharmacy profile 2001 - 11e
  • Table: Morrisons company information 2012
  • Table: Morrisons retail proposition 2012
  • Table: Morrisons UK key operating statistics 2007 - 12
  • Table: Morrisons UK trading record 2002 - 12
  • Table: Morrisons store portfolio 2002 - 12
  • Table: Morrisons pharmacy profile 2002 - 12
  • Table: Rowlands company information 2012
  • Table: Rowlands retail proposition 2012
  • Table: Rowlands UK key operating statistics 2007 - 12e
  • Table: Rowlands UK trading record 2002 - 12e
  • Table: Rowlands store portfolio 2002 - 12e
  • Table: Rowlands pharmacy profile 2002 - 12e
  • Table: Sainssbury's company information 2012
  • Table: Sainsbury's retail proposition 2012
  • Table: Sainsbury's UK key operating statistics 2007 - 12
  • Table: Sainsbury's UK trading record 2002 - 12
  • Table: Sainsbury's store portfolio 2002 - 12
  • Table: Sainsbury's pharmacy profile 2002 - 12
  • Table: Superdrug company information 2012
  • Table: Superdrug retail proposition 2012
  • Table: Superdrug UK key operating statistics 2006 - 11e
  • Table: Superdrug UK trading record 2002 - 12e
  • Table: Superdrug store portfolio 2002 - 12e
  • Table: Superdrug pharmacy profile 2002 - 12e
  • Table: Tesco company information 2012
  • Table: Tesco retail proposition 2012
  • Table: Tesco UK key operating statistics 2007 - 12e
  • Table: Tesco UK trading record 2002 - 12e
  • Table: Tesco store portfolio 2002 - 12
  • Table: Tesco pharmacy profile 2002 - 12e
  • Table: Pharmacy market categories & definition 2012

FIGURES

  • Figure: Retail pharmacy market growth vs total retail 2002 - 12e
  • Figure: Population growth by age band 2011 - 21
  • Figure: Change in number of pharmacies by channel group 2012e on 2007
  • Figure: Market share by channel group 2007 - 12e
  • Figure: Health & beauty and pharmacy market shares 2012e
  • Figure: Consolidation of leading shares of the UK retail pharmacy market % 2007 - 12e
  • Figure: Winners and losers in pharmacy market share 2012e on 2007
  • Figure: Pharmacy numbers at financial year end during 2012e
  • Figure: Changes in pharmacy numbers 2011/12e on 2006/07
  • Figure: Key Issues in pharmacy retail 2012
  • Figure: Average NHS revenue per pharmacy 2002 - 123
  • Figure: New structure under Health & Social Care Act 2012
  • Figure: Number of pharmacy contractors offering Top 10 local enhanced services 2010/11
  • Figure: Lloydspharmacy Health Village 2012
  • Figure: Retail pharmacy market, OTC, and NHS sales growth % 2006 - 15e
  • Figure: Pharmacy market sales growth vs total retail 2006 - 15e
  • Figure: Asda fascia 2012
  • Figure: Asda pharmacy market share 2007 - 12e
  • Figure: Asda OTC market share 2007 - 12e
  • Figure: Asda NHS revenue market share 2007 - 12e
  • Figure: Boots fascia 2012
  • Figure: Boots pharmacy market share 2007 - 12e
  • Figure: Boots OTC market share 2007 - 12e
  • Figure: Boots NHS revenue market share 2007 - 12e
  • Figure: The Co-operative Pharmacy fascia 2012
  • Figure: The Co-operative Pharmacy pharmacy market share 2007 - 12e
  • Figure: The Co-operative Pharmacy OTC market share 2007 - 12e
  • Figure: The Co-operative Pharmacy NHS revenue market share 2007 - 12e
  • Figure: Lloydspharmacy fascia 2012
  • Figure: Lloydspharmacy pharmacy market share 2007 - 12
  • Figure: Lloydspharmacy OTC market share 2007 - 12e
  • Figure: Lloydspharmacy NHS revenue market share 2007 - 12e
  • Figure: Morrisons fascia 2012
  • Figure: Morrisons pharmacy market share 2007 - 12e
  • Figure: Morrisons OTC market share 2007 - 12e
  • Figure: Morrisons NHS revenue market share 2007 - 12e
  • Figure: Rowlands fascia 2012
  • Figure: Rowlands pharmacy market share 2007 - 12
  • Figure: Rowlands OTC market share 2007 - 12e
  • Figure: Rowlands NHS revenue market share 2007 - 12e
  • Figure: Sainsbury's fascia 2012
  • Figure: Sainsbury's pharmacy market share 2007 - 12
  • Figure: Sainsbury's OTC market share 2007 - 12e
  • Figure: Sainsbury's NHS revenue market share 2007 - 12e
  • Figure: Superdrug fascia 2012
  • Figure: Superdrug pharmacy market share 2007 - 12e
  • Figure: Superdrug OTC market share 2007 - 12e
  • Figure: Superdrug NHS revenue market share 2007 - 12e
  • Figure: Tesco health & beauty display 2012
  • Figure: Tesco pharmacy market share 2007 - 12e
  • Figure: Tesco OTC market share 2007 - 12e
  • Figure: Tesco NHS revenue market share 2007 - 12e
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