‘You’re not retailers.’

Delegates participate in a discussion group workshop.

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.

Frank Sirianni presenting at the Women in Pharmacy Conference, hosted by Medici Capital.

“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.

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  1. D.Pharm

    “Mr Sirianni also reminded pharmacy owners to make the most out of their employees, saying that it makes financial sense to do so.”
    Frank, just curious, do you have any compassion or sympathy for poor employee pharmacists? Or is that just bad for business.

    • Frank Sirianni

      YES – absolutely. I have lots of compassion and sympathy for all the team – pharmacists and other staff. The point I was making, is that successful pharmacies empower all their team and work coherently to achieve better results for both the team and the pharmacy. More importantly, a sustainable pharmacy is good for all.

  2. PeterC

    “You’re not retailers”
    I think it’s tragic that this even needs to be said nowadays. But it does. Of course we’re not retailers. I attended a meeting of ‘official pharmacy’ people recently and made this very point and people wanted to challenge me and argue the point. There are actually people representing the interests of ordinary pharmacists including pharmacy owners who think there is something to be gained by arguing on the basis that we are ‘retailers’. Well heaven help us is all I can say.

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