The last couple of months have seen a resurgence of the coronavirus in Australia, with Victoria forced into a lockdown of unprecedented severity. What impact have recent developments had on pharmacies and on the overall business outlook?
Community pharmacies across Victoria have continued to operate as usual during the Victorian ‘State of Disaster’, although some were encouraging patients to stay home and have their medicines delivered to reduce contact during this time.
From 6pm on Sunday 2 August, Melbourne moved to Stage 4 restrictions and regional Victoria moved to Stage 3 restrictions as the number of COVID-19 cases across the state continued to rise.
While most businesses and retail stores were forced to shut in the state, pharmacies continued to trade as they were considered “essential services”.
Meanwhile the Stage 4 restrictions required individuals to remain within a 5km radius of their home when exercising and shopping.
Guild Victorian branch president Anthony Tassone told the AJP: “We have received clarification from the Victorian State Health Minister’s office that patients are able to travel beyond a 5km radius from their home if it is for the purposes of receiving care, and this includes visiting a community pharmacy that they have an existing relationship with.
“Given working in a community pharmacy is largely something that cannot be done from home, like the lockdown restrictions to date—we expect that pharmacists and pharmacy staff will continue to be treated as an essential service whose children may be able to attend school if their parents or guardians cannot supervise them for remote learning from home.”
Doing the job 24/7
Many pharmacies across Melbourne trade over extended hours and there are also 24-hour SuperCare pharmacies that receive funding from the Victorian government.
One of these SuperCare pharmacies is Ascot Vale Pharmacy, in inner north-west Melbourne. The AJP spoke with owner Jane Mitchell, who confirmed that the pharmacy continued to operate as usual as an essential service.
“It’s hard to gauge what’s going to happen from one day to the next, every day presents new challenges and a lot rides on what the next announcements or recommendations the government is making from day to day and week to week,” she said.
“A different thing for us is we’re open 24 hours—there’s a curfew at 8pm now, but you are allowed to travel to get essential care after the curfew.”
Ms Mitchell said her staff have been coping “really, really well” under the circumstances.
However “when you get to the stage where the numbers [of COVID-19 cases] are big, it affects the morale of the community, [and] the staff, and obviously there’s a greater risk if the numbers are high that we’re going to get someone walking into the pharmacy that could have coronavirus,” she said.
Her pharmacy team has continued to emphasise medicines delivery with the hope of reducing the amount of people coming in to the premises.
“Although the community can come into the pharmacy, we’ve tried to continue to communicate to the community that we deliver and we have had an increase in deliveries and I expect that to continue,” she said.
“We’ve gone from two hours of deliveries a day to four hours of deliveries a day. What’s happened is, because we’re considered an essential service, people feel like they can justify an outing by coming to the pharmacy. And often the pharmacy is a chance for elderly or vulnerable people to be able to communicate once a day with someone, say hello and have a small chat, so people still want to come in. But we try and encourage delivery and contactless services. That’s a new thing for people to get their head around.”
Both sides of the border
Gabrielle Wilson, a pharmacist at TerryWhite Chemmart Wodonga, where Stage 3 restrictions are now in effect, said her pharmacy has been doing the same thing in encouraging medicines delivery.
Stage 3 restrictions across regional Victoria mean there are only four reasons people should be away from home—for food and essential supplies, for care and healthcare, to exercise, and for study or work if you can’t work from home.
However Albury–Wodonga, which sits on the Victoria–NSW border, has been presented with a unique set of challenges during the pandemic crisis.
“It’s just been a crazy time around here,” she said. “It is changing every day. It has been tough because we’re right on the border. We’re pretty much one city being Albury–Wodonga—we’ve never seen it as being a border between us,” she said.
“Now needing a permit has increased the restrictions even more, you can’t really go across at all if you don’t have a valid medical reason or anything like that, it’s made it a lot more difficult.
“I was working in the Albury TerryWhite for a while and I live in Wodonga, which was generally a 10-minute commute. That’s turned into about an hour commute as we have to stop at the border, we have to show passes,” explained Ms Wilson.
“Legislatively it’s been difficult—we’ve got patients living in Wodonga that have DD scripts in Albury, and they can’t move those scripts because legally they need to be kept on file in NSW, they can’t be moved from that pharmacy. So that’s another issue. So there have been hurdles like that, that really have been impacted with the border change.
“Usually we get people coming in locally that need scripts compounded as well and our compounding pharmacies are in Albury. Couriers can still come over and patients are like, ‘how am I going to get this done?’.
“Courier drivers can still come across because they’re transporting essential medicines across the border, we’re trying to get that information out there as well.
“But the thing we’re also trying to get across is that you need to stay at home. We can deliver to you, we can knock on your door, we can do contactless delivery if you can just stay at home,” she told the AJP.
“People just want to get out, I understand that it’s frustrating being at home but if you can just stay at home, it’ll be over quicker.”
Prior to the upswing in cases in Victoria, and to a lesser extent, NSW, experts had been predicting a gradual easing of the impacts of the retail crisis on community pharmacy.
Leading pharmacy business analyst Bruce Annabel says the recent developments have forced an adjustment to those predictions.
“I had speculated we would enjoy a U shaped recovery with a longish bottom part of the U and then a more or less 45 degree up-kick to complete the U, “ he told the AJP.
“But the Victorian situation will extend the length of the U bottom section, which will likely be very bumpy after the support (governments, landlords and banks principally) is tapered down and then expires next year some time”.
“I refer to this as being like when the tide goes out—we see what lies beneath which isn’t always very pretty,” he says.
“In this case we will likely see high unemployment and bankrupt businesses along with commercial property owners and banks wearing a lot of the fallout.
However, he says pharmacies are likely to “do okay” as they did in the 1989–1992 recession and the brief GFC recession, but advises that they will need to make some changes.
“Mal Scrymgeour and I have written [in this issue] about pharmacies needing to re-shape their businesses during the next few months to be in the best shape possible to get through and help patients. That is, they need to differentiate, avoid discounting because they won’t afford it, get their pricing right, re-merchandise by cutting back on the sundries, and pharmacists need to prepare to help patients many of whom will struggle,” Mr Annabel says.
“Wary and worried consumers will cut back hard on discretionary spend, while maintaining demand for essentials such as scripts, medicines, etc”.
A change of location
Recent reports predict a difficult future for many suburban shopping malls.
Shopping Centres Australasia Property Group has reported a 22% slump in full-year earnings as specialty tenants fall behind in paying rent, with coronavirus restrictions denting their sales, News Ltd media reported in mid-August. Their COVID-19-related rental shortfall amounted to $22.7m.
Reports such as this had led some retail experts to warn of a coming rise in potential US-style ‘dead malls’ in Australia.
“Pharmacies located in the costly high-end shopping centres have been slowly dying over the past 5 to 10 years due to lack of growth, difficult landlords, excessive space and ridiculous rents,” says Bruce Annabel.
“Due to the excessive space into which banners/owners have plonked huge ranges of retail sundries, front-of-shop, non-health related sales have plummeted. I expect these are regarded as discretionary and people are buying more on price and range from hard discounters and supermarkets, not to mention online,” he said.
“These pharmacies suffer from excess-to-needs space per m2, excessive rent and less traffic, particularly in the retail sundries section. It’s a nasty cocktail that they will only survive through relocating or radically trimming space and rent”.
Mr Annabel said some of his client pharmacies located in shopping centres are doing well because they have two entrances, one being accessed directly from the carpark.
“They aren’t buried within the centre,” he said. “By comparison pharmacies in strip and smaller neighbourhood locations are doing well as they are more convenient, easily accessed and people perceive them as being less risky. Many of these carry a lot less stock weight of the retail sundries and enjoy lower overheads.”
Also, some ‘locked in’ medical centre pharmacies, dependent entirely on scripts generated by the GPs, were struggling as GPs expand their telehealth usage.
“Location has become even more important than before the virus, requiring owners to think differently about where they should practice, as some of the old rules have changed markedly”.
Frank Sirianni of Medici Capital agrees that the “biggest impact seems to be in CBD and larger/major shopping centres. Also, medical centre pharmacies where the GPs have moved to telehealth”.
“Smaller malls and strip pharmacies seem to have traded well, particularly if the supermarket is close by and well stocked,” he said.
“Other pharmacies have pivoted well to offer relevant services to cater for COVID-19 restrictions and opportunities”.
He agreed with Mr Annabel that pharmacy’s need to review their location: “There may be a case for long-term, strategic reviews of location by all pharmacy owners”.
Is the market holding up?
Natalie Sirianni of Attain Business Brokers said the pharmacy real estate market in Melbourne is still strong, dependent upon the location.
“Smaller shopping centre pharmacies do seem to be doing quite well as many locals are now shopping nearby as they are working from home and we can now only travel in a 5km radius for shopping in Victoria”.
“The sales market is varied depending on the pharmacy location,” she said.
Attain has recently conducted a Pharmacy Market Sentiment Survey and found that just over 54% of the sample (both pharmacists and current pharmacy owners) are looking to buy a or another pharmacy, with 13.3% of the sample wanting to do so within the next six months.
Approximately 31% of pharmacy owners in the sample said they would be looking to sell their pharmacy (or one of) within the next five years, Ms Sirianni said.
And almost half (44%) believed that pharmacy business prices will increase over the next 12 months, while 37% believed they will stay flat.
Strip locations are rated as the most sought after by prospective owners, followed by pharmacies in a small shopping centre and those located in single pharmacy towns.
The locum dilemma
Recruitment and locum supply (and opportunity) is another facet of pharmacy that has been heavily impacted by the pandemic, and the response to it.
Sue Muller of LocumCo Pharmacy Recruitment describes the situation as being “really difficult at the moment, the biggest challenge being that we’re basically only able to source locums from the same state as the request”.
Ms Muller said there is a decline in the availability of locums with it being apparent that some are “starting to take permanent positions due to the unreliability of locum demand, which I suppose is good for pharmacies looking for permanent employees”.
“I see full time positions filling quickly with lots of applicants whereas previously the pharmacies would go for months without a single interested party”.
Ms Muller spoke to the AJP earlier in July about some of the issues she has experienced.
“The need to keep up to date with requirements in all the states and territories is one of the biggest changes, especially with states in different stages of lockdown since March.”
She described a case where one of her Victorian locums was forced to quarantine in a cabin after accepting a job in South Australia (before the latest pandemic resurgence) due to not having the requisite paperwork.
The pharmacist had started work at the Aussie Discount Chemist Orroroo Pharmacy & Newsagency in the town of Orroroo, 270km north of Adelaide, when police arrived to question his lack of appropriate authorisation to work in the state.
According to pharmacy owner Irfan Hashmi, the pharmacist’s exemption notice as an essential health worker was not with him when he crossed the border at the beginning of the week. It had instead been sent ahead to Orroroo.
The South Australian authorities had not issued him with any notifications when crossing the border.
“The number of requests for locums was just starting to pick up again when the second wave began,” she said. “People are unsure about going away on holiday, and the number of available locums is dropping.”
In the face of ongoing restrictions and the many changes facing the industry, pharmacy bodies have encouraged staff to reach out for support.
Anthony Tassone encouraged people to be mindful of mental health and wellbeing, and check on friends and colleagues in Victoria.
The PSA’s John Jackson highlighted that pharmacists are providing vital face-to-face healthcare to all Victorians.
“I am incredibly proud of how the profession has stood up as frontline health professionals and cared for the community during the pandemic with over 8000 pharmacists working in community pharmacies, hospitals, aged care facilities, general practice and beyond in Victoria,” he told the AJP.
“This continues to be a very stressful period for pharmacists, especially those facing increased levels of restriction and greater uncertainty,” he said, encouraging staff to reach out to the PSA or PSS for support.