Women in pharmacy were urged to develop a strong business plan and identity at a Melbourne conference this week
Pharmacists do more than just sell products, pharmacy finance expert Frank Sirianni told delegates of the Medici Capital Women’s Pharmacy Conference Retreat held from 4-6 March on Victoria’s Mornington Peninsula.
“You’re not retailers,” he said.
“Once you start delivering professional services, they have nothing to do with the cost of goods sold.
“Your dispensing fee has nothing to do with the cost of goods sold.
“What business are you really in? You’re not in a product supply business for most of it, if you’re doing 90% prescriptions you’re in a customer management business. You’re doing business differently and you have to account for that.”
It’s a changing market at the moment, said Mr Sirianni, with a decline in the percentage of sales being scripts.
He encouraged women pharmacy owners to be aware of the changes, and to adjust their business accordingly.
“In about 2010, 70% of sales were scripts and 30% were other sales,” he said.
“Now what we’re seeing is a lot of growth in retail [and services] that we haven’t seen before. And the simple fact is, with PBS reforms, the script component has come down in value.
“It’s a good thing, because having 70% of your income coming from one customer – the government – is not a good thing. I think that’s a material change that we need to be cognisant of.”
Facing the competition
Threats to pharmacy are “greater now than they have been in 40 years”, said Mr Sirianni.
“For example, we’ve got doctors suggesting that scripts should be dispensed from a central dispensary owned by the doctors”.
However threats such as deregulation have generally always been around for pharmacy, he said.
Looking at the threat of competing pharmacy models, Mr Sirianni pointed out that big box discounters have a different business model to most community pharmacy models.
“They have the highest net profit, and they can afford to discount their stock because they have almost half the expenses,” he said.
Despite strong competition from big box discounters, Mr Sirianni said many pharmacies are doing well, particularly since the 6CPA with the AHI.
“But this may not continue indefinitely,” he said.
“What you need is a plan so that even if the worst happens, it won’t be the end of the world because you’re good at what you do.”
Mr Sirianni also reminded pharmacy owners to make the most out of their employees, saying that it makes financial sense to do so.
Wages are the second highest cost for a pharmacy business after cost of goods sold, he pointed out.
“Half the money that you’re making goes to your staff. They are your biggest asset, but some treat them as an expense.
“It’s a significant cost – or investment, whichever way you want to look at it – so manage it well, because it either makes or breaks you.”
Other speakers at the event included:
- Natalie Sirianni, Director of Attain Business Brokers
- Christian Sirianni, Head of Valuations, Medici Capital
- Regina Cowie, National Dispensary Operations Manager of Priceline Pharmacy
- Megan Kazantzis, Premium Programs Manager, Sigma Healthcare
Delegates told AJP they found the event to be “informative” and enjoyed learning from the expertise of the Medici Capital team and other speakers.
AJP was a sponsor of the event.