Pharmacistweb’s consulting arm has been reviewing the current events in the community pharmacy world. Our succinct research into the industry was based on secondary and primary research from views of pharmacists.
This review was conducted to provide information to support members of our website (known as Pharmacistweb.com) to help them stay ahead of the trend and make strategic decisions. We structure our analysis utilising the Porter’s five forces model.
Buyer Power – strong
In the community pharmacy sector, we have seen a growing rise in the buyer power, those who buy/purchase services from locum pharmacist. Indeed, we have seen a strengthening in positions of employers and locum agencies when it comes to negotiating locum rates and services. Why have we come to this conclusion? Well, there is an overall continual decline in locum rates across the country1. The results from the Chemist and Druggist’s surveys carried out on an annual basis highlights this declining trend. The recent survey findings by the Chemist and druggist(Kennedy,2016) is particularly concerning. The survey findings showed that locum rates in some parts of the country:
“hit lowest point since 2008”
The report by Kennedy,2016 which was based on a sample of 252 locum pharmacists ran from October, 2015 to December,2015. It stated that, “the average hourly locum rate is now £20.50”2. However, our findings indicate that locum rates in some parts of the country such as London are as low as £16 per hour. Buyers have also found ingenious ways to reduce the rates including creating ‘bidding systems’ of which pharmacists are pitted against each other in a downward bidding spiral. Furthermore, there has been a recent trend in locums performing flu vaccinations with no reimbursements. Locum pharmacists are urged by some businesses to fund their own flu-vaccination training, perform the service with little or no remuneration. Whilst, there are some companies who fund locums to carry out the training or possibly offer some remuneration, this is a growing trend.
Figure 1 The trend in locum rates from 2008- 2016 (source, chemist and druggist,2016)
The UK, has arguably in most regions an oversupply of pharmacists and we have seen the PDA campaign against this through various avenues to reduce the numbers such as: “The campaign to cap student numbers”3. The effect of this is that the competition for locum work has grown. The introduction of bidding systems to gain work is evident of this strong competitive rivalry. Also, the willingness of pharmacists to carry out self-funded flu vaccination training and the decline in some emergency shift rates indicates this. Ultimately, this increased competitive rivalry leads to an increased work-load for locums, little reimbursement and weakens their professional negotiation strength.
Supplier power – weak
The UK pharmacy sector is consolidating, we have seen a rise in multiples which now account for over 60% of ownership of Pharmacies. The effect of consolidation is that suppliers now have a huge influence over the market, it increases their negotiating power. A recent example of this is evident by the unprecedented drop in locum rates by tesco to £18-19.504 which it claims is “inline with it’s competitors”4. Our analysis suggests that other companies will follow tesco’s move due to the precedent it sets and based on previous trends we have seen a domino effect, were companies follow each other in dropping rates.
Figure 2 Tesco store (source, Lewis,2016)
Threat of substitution – strong
The current regulation means for a pharmacy to operate legally, it must have a responsible pharmacist, which acts to ensure and safe-guard the role of a pharmacists. However, there is an increase shift of pharmacy responsibilities delegated to accuracy checking technician (ACT)5 whilst pharmacists are urged to perform increasing services.
The biggest threat to substitution comes from the proposed pharmacy cuts. The burden created by the cuts will eventually lead to a lack of pharmacies. The solution proposed that the pressure from closures is to be eased by the ‘hub and spoke model’. The cuts could potentially mean that 1 in 3 pharmacies are closed in London6 and thus leading to an increase unemployment. The effect of this displacement of pharmacists and lack of pharmacies to offer employment if not managed effectively could lead to an increase competition within the industry with more locum cuts looming.
Threat of rivalry -strong
It can be concluded that based on the analysis above the community pharmacy locum sector faces significant challenges.
For locums to increase their power and manage current events they must endeavour to change the competitive landscape by increasing their buyer power through consolidation. We have built pharmacistweb as a platform for pharmacist to unite and share ideas. We also urge pharmacists to believe in themselves and consider alternative supplements to their pharmacy career. We are able to support those considering moving into other industries such as the pharmaceutical industry. We often have entry level roles posted on our job hub and offer a CV consulting and writing services.
I hope you found this article useful.
Adebola Tojuola MpharmS, MBA (Principal consultant and founder)
To contact us visit www.pharmacistweb.com
- C+D, (2014).”The Problem Of Locum Rates. Chemist+Druggist”. co.uk. N.p., 2016. Web. 15 Oct. 2016.
- Kennedy, B.2016.”C+D Salary Survey: Locum Rates Hit Lowest Point Since 2008 | Chemist+Druggist”. co.uk. N.p., 2016. Web. 15 Oct. 2016.
- PDA, 2016.”The Campaign To Cap The Numbers Of Pharmacy Students – News & Views – The PDA (The Pharmacists’ Defence Association)”. The-pda.org. N.p., 2016. Web. 15 Oct. 2016.
- Lewis, G.”C+D Salary Survey: Locum Rates Hit Lowest Point Since 2008 | Chemist+Druggist”. co.uk. N.p., 2016. Web. 15 Oct. 2016.
- “Pharmacist Or Technician: Who Is Accountable When An Error Is Made? | Chemist+Druggist”. co.uk. N.p., 2016. Web. 15 Oct. 2016.
- Lydall, Ross. “One In Three Pharmacies In London ‘Will Close Due To NHS Cuts'”. Evening Standard. N.p., 2016. Web. 15 Oct. 2016.