What were the financial ramifications on pharmacy businesses? Lachlan Ballinger and Morgan Whiting explain
The year 2020 will forever be chiselled into our memories for the arrival of Covid-19 and the devastating impact it has had on our everyday existence, and loss of life around the world.
Australia, due to our remoteness from the rest of the world and quick response to the pandemic, has been slightly insulated compared to other countries.
However, during such unprecedented times, our pharmacy industry has once again been at the forefront to support Australians with accessibility to advice and medication.
The impact of COVID-19 has been varied for community pharmacies dependent on the size, type and geographic location, based on our research and client data.
Generally speaking, most pharmacies have had a similar trading performance in the 2020 calendar year to the prior 2019 year.
However, if a pharmacy was located in a CBD, large shopping centre, lockdown area or a tourist location then this was not generally the case based on our data.
Thankfully, the ATO acted swiftly to pass legislation in the form of the CashFlow Booster and JobKeeper which assisted pharmacies that were subjected to significant downturn in trading.
The positive impacts on trading included the following:
- Whilst due to social distancing cold and flu medication sales were down, this was supplemented by patient medication compliance whereby the average scripts per patient was higher than normal.
- Other sales increased dramatically as pharmacies adapted to customer requirements through masks, sanitiser, vitamins etc.
- Pharmacies also adapted quickly to providing more deliveries during lockdown including utilisation of applications such as MyMedkit.
- Pharmacist trust was further elevated during this time due to the profession working through the pandemic, and often being the only retail business open and hence being on the frontline against the virus. Again, pharmacies were proven to be a vital part of the healthcare system.
- Pharmacies that had lease negotiations during this period were able to deal with a landlord that was experiencing the impact of COVID-19 on their business model and as a result were much more motivated to negotiate more commercially.
We have also seen negatives of Covid-19 as per the following:
- Due to everyone working from home, pharmacies located in CBD locations have been severely impacted.
- Telehealth has certainly impacted certain medical centre pharmacies, although a number of these pharmacies due to their deep connection with their local communities have thrived.
- The lack of travel at the early stages of COVID-19 meant that tourist areas have struggled with the lack of business, however this trend is changing dramatically as Australians are holidaying domestically again.
Looking back at the Global Financial Crisis (GFC), we saw many of our pharmacy clients performing well during this period and the current pandemic is no different.
The economic challenges of COVID-19 are extensive, but pharmacies have the opportunity to use these challenges to innovate and fast-track positive investments that will ultimately deliver better outcomes for Australians.
We are glad to see that as per other countries around the world that pharmacists here in Australia will be assisting with the roll out of the AstraZeneca and Pfizer vaccines.
The accessibility of pharmacies combined with the trust placed in pharmacists will not only ensure the vaccine is rolled out in an orderly manner, but also reinforces the vital role pharmacists play in Australia’s healthcare system.
Lachlan Ballinger is Managing Director and Morgan Whiting is Head of Advisory at Yield Advisory.
Yield advisory is an accounting and advisory firm that specialises in the pharmacy industry with a nationwide client base.