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The pharmacy market in 2010-11: An analysis

Doctor owned pharmacies are rising

By Dr Allan Tennant 

7th of December 2011

There are a number of important findings within the recent pharmacy statistics report published by the NHS  Information Centre.  


Yesterday we reported on  Rural pharmacy applications soar. It is possible that there are now 500 pharmacies where GPs have an interest.


Looking at the dispensing volume bands (items per month per pharmacy) in detail:

  • The greatest increase is in the number of pharmacies dispensing more than 10,000 items a month; this is up from 9% in 2006-07 to 15% of pharmacies in 2010-11. These large pharmacies now account for around three in every ten items dispensed (31%), compared to 21% in 2006-07. This equates to around 13,274 items a month. To put it succinctly, there are now 71% more 10,000+ item per month pharmacies than in 2006, and they are dispensing 78% more items.
  • The number of pharmacies doing fewer than 4,000 items a month has fallen 13%, from 3,379 pharmacies in 2006 to 2,941 in 2010/11.
  • The number of pharmacies doing 4,000-6,000 items a month is static at 2,800. The 53% of the pharmacies doing 6,000 items or less are dispensing 31% of the items. In 2006, pharmacies in these bands accounted for 63% of all pharmacies and 40% of all dispensed items.
  • There have been small increases in numbers of pharmacies dispensing between 6,000-10,000 a month, they now account for 32% of the market compared to 28% in 2006.
  • The average pharmacy now does 6,473 items a month.

Why are these figures important?

The market is obviously changing, with larger pharmacies doing larger amounts of dispensing. Smaller pharmacies are declining and losing market share, the 4-5% dispensing item annual inflation notwithstanding.  In other words, the decline in smaller pharmacy numbers does not suggest that smaller pharmacies are simply getting bigger, and moving into a higher volume band.

Pharmacy entries

  • Over 1,000 (1,015 to be exact) pharmacies have entered the market since the introduction of the exemptions to the control of entry regulations in 2005. 260 joined the market in the last year alone.
  • 2010-11 is the second year that independent pharmacies share of the pharmacy market has been static. There now 200 hundred more independent pharmacies than two years ago.

There are three possible explanations for this:

1.       Profits fuelled the purchase of independent pharmacies by the large multiples; pressure on reimbursement has reduced the amount of profits the multiples have to spend

2.       There is an increasing number of doctor-owned pharmacies entering the market

3.       Reduced competition from the multiples has encouraged young pharmacists to open independent pharmacies.


Rural applications

2010-11 saw a huge increase in the number of applications to consider rurality in controlled areas (as well as the increase in pharmacy applications).  These applications have increased in number from 34 in 2006-07 to 263 during 2010-11, although we do not know whether the applications actually resulted in pharmacies opening: it may be that the development of PNAs triggered PCTs to look at rurality, rather than an actual pharmacy application.

I think there are two possible explanations for the increase in applications in controlled areas:

1.     Predatory applications from pharmacists including multiple applications by one company with no intention of opening, but maybe trying to extract money from practices "to go away"

2.     Doctor applications to locate a pharmacy in their surgery

It is worth noting that while the DDA has seen a small fall in the number of dispensing practices, it has not seen an increase in the traditionally small number of calls from practices suffering a predatory application.  


Undoubtedly, the market is changing. The increasing number of doctor-owned pharmacies is one factor, The market town doctors in larger practices with pharmacies will be one cohort within the high volume end of the market; opening a pharmacy requires a significant increase in income to cover the increased costs of employing a pharmacist, there business case will be based on high volume dispensing.


Another figure to note is that 19 pharmacy applications were granted in controlled areas using the exemptions to the control of entry. None were refused. Since 2005, 1,561 100-hour applications have been granted.


Pharmacists I have spoken to do not believe that 100-hour pharmacies, even some of those within supermarkets, are viable in the current environment; however, I am aware of successful ones operated by doctors.  


Nigel Morely, Managing Director of Surelines, told DDA Online, "I believe that the number of pharmacies where GPs have an interest in (either wholly or in partnership with pharmacists) is circa 500." He added, "Another point to consider is that when long existing collocated pharmacy leases come up for renewal, there is a window in which the GP landlord can consider the possiblity of not renewing the lease and establishing their own pharmacy. This is complex but we have advised several practices on this strategem."


Boots  have 2,200 pharmacies in England. 

Lloyds have 1600 pharmacies within the UK 

There are 1337 dispensing doctor practices in the UK and possibly 500 pharmacies partly or wholly owned by doctors.


In conclusion for the first time ever the number of independent pharmacies is increasing, partly due to rural doctors opening pharmacies. High volume dispensing item pharmacies are on the rise. This again maybe partly due to the emergence of doctors as owners of pharmacies.


A lot of patients are now getting their medication from their doctor.


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