Chemist Warehouse is a “supermarket duck”, according to an article in the Australian Financial Review
The AFR has taken aim at pharmacy regulations for the second time this week, in an article which describes the Community Pharmacy Agreements as “Stalinist” and suggests that pharmacists “bleed wholesalers dry”.
Terry Barnes, principal of Cormorant Policy Advice, writes that Chemist Warehouse’s ownership structure undermines the “outdated” ownership and location rules, as well as the Pharmacy Guild’s claims around the legislation.
“If something looks, walks and acts like a duck, it’s a duck,” Mr Barnes writes. “In the case of pharmacy giant Chemist Warehouse, however, it’s anything but.
“With its in-your-face presence with garishly liveried stores across Australia, extensive all-media advertising, and a volume-driven, one-stop health and beauty care business model, Chemist Warehouse looks a supermarket duck.
“But according to the Pharmacy Guild of Australia, successive governments over many decades, and federal and state regulators, Chemist Warehouse is a cassowary: a colourful but protected species that survives solely because of government protection.
“For that is the way retail pharmacies are treated, backed by the political clout of the Guild’s political brawn.”
Mr Barnes outlines Chemist Warehouse’s reach into the pharmacy sector, saying that its “dominance” gives the brand and its “secretive” owners “huge market power”. The effect on Sigma’s share price this week when it was announced that EBOS had won the tender to become the My Chemist/Chemist Warehouse group’s wholesaler was a case in point, he writes.
“Whether EBOS benefits in the long run remains to be seen,” Mr Barnes writes. “Pharmacists already bleed wholesalers dry in terms of unreasonable demands for medicine stocking and timely delivery, and by extracting generous terms of trade, as well as financial and logistical support, with no obligation to give purchasing loyalty in return.
“When the EBOS lamb lies down with the Chemist Warehouse lion next year, it therefore risks ending up as lunch.”
He outlines Chemist Warehouse’s ownership structure and says the group “isn’t much bothered by draconian pharmacy location rules”.
“For too long the Pharmacy Guild has got away with its mantra that medicines are not, as it cutely claims, ‘an ordinary item of commerce’.
“The Chemist Warehouse scale-driven business model, with its controlling pharmacist families as entrepreneurial as any other self-made AFR Rich Listers, makes a mockery of that and the other principle the Guild has spent millions over the years to defend: that only pharmacists can be trusted to own pharmacies and supervise medicine dispensing directly,” Mr Barnes writes.
“When the Pharmacy Guild’s ownership claims are exposed as hollow by its own Chemist Warehouse members, outdated ownership and location rules that can lawfully be got around so easily are pointless.
“The days of independent high street pharmacy businesses are gone: turn the Chemist Warehouse cassowary into a genuine supermarket duck and allow other supermarkets to compete on equal terms with it.”
But the article was like water off a duck’s back for the unflappable Greg Turnbull, the Pharmacy Guild’s communications adviser.
“With a consultancy named Cormorant, it is no surprise Terry Barnes favours ornithological references – but really, ducks, ostriches and cassowaries in one article?” Mr Turnbull wrote to the AFR’s letters editor.
“He left out the wise owl who recognises that the regulation around pharmacy in Australia provides public benefit and forms a vital part of our health system.
“To do as Terry suggests and allow pharmacies to be ‘owned by anybody and located anywhere’ would be, well, cuckoo.”