4 Min In Business news
Follow this topic
Bookmark
Record learning outcomes
As we look back at 2024, it is evident that the community pharmacy sector faced a period of change and upheaval, which brought challenges as well as opportunities.
All change
Following the announcement of the liquidation of LloydsPharmacy in early 2023, it wasn’t until the end of 2024 that the market regained a more stable footing.
The liquidation delivered a shockwave to the sector. But on a positive note, it offered both first-time buyers and more established businesses looking to expand the opportunity to purchase previous LloydsPharmacy outlets at a competitive price.
For purchasers, there were a number of obstacles to overcome – some pharmacies were underperforming, and there were staffing issues and low team morale to deal with, as well as falling patient numbers. Despite this, by the end of 2024, Unity customers who had purchased former LloydsPharmacy branches were performing at or above their forecast levels.
While challenges remain around staffing and patient retention, it is promising to see that the dissolution of LloydsPharmacy did open doors to sector growth, which will help to strengthen the market in the long-term.
Pricing volatility
Throughout 2024, the sector also had to respond to volatility around drug pricing, with ongoing price fluctuations impacting pharmacies’ gross profit margins – a key measure of performance.
In Scotland, changes to the Government-set tariff mechanism helped to alleviate some of the pressures. In September, Community Pharmacy Scotland (CPS) confirmed it had secured a 6 per cent funding uplift for the sector in a “long-awaited” 2024-25 funding package. CPS accepted the Scottish Government’s offer of a deal, with the guaranteed minimum for Drug Tariff reimbursement set at £110m – £10m higher than in 2023-24.
However, this positive step forward was curtailed by the delivery of Labour’s Westminster autumn Budget just one month later, which brought some expected announcements as well as a few surprises.
Budget headlines
Rachel Reeves’ first Budget was dominated by the headline figure of £40bn worth of tax rises. The changes, which are scheduled to take effect from April 6, include an increase in employer National Insurance (NI) contributions from 13.8 per cent on salaries over £9,100 to 15 per cent on salaries above £5,000.
The NI tax rise does not apply to the NHS, but this exemption has not yet been confirmed for other primary care providers, including community pharmacies, GP practices and care homes. In 2025, it is vital that pharmacies receive the right support to allow them to successfully navigate this new financial landscape. This could be achieved by strengthening government guarantee schemes to help improve SME access to finance and ensure they can manage increased costs.
Sector support
The Budget also announced an increase in NHS spending, with an additional £22bn for frontline services. While this investment is welcome, it is interesting to note that within the wider category of health and social care, the Budget made no specific mention of, or reference to, community pharmacies.
This was despite plans to transition certain healthcare services from hospitals to community settings, to help increase the delivery of personalised care. For pharmacists, this could mean providing healthcare services beyond their current remit, but the ambiguity around their role presents a challenge when trying to plan accurately for the year ahead.
Funding for growth
At Unity Trust Bank, we help socially driven organisations to invest for growth and, through our network of specialist relationship managers, we provide tailored financial support to a wide range of sectors, including healthcare. Despite the challenges facing community pharmacy, Unity’s pharmacy customers continue to deliver meaningful social impact, and the sector is one that we still strongly support.
Community pharmacies are key contributors to the UK economy, as well as being frontline providers of primary care. The upheaval of 2024 demonstrated that the sector is robust and responsive to change. As we enter 2025, it is vital that pharmacy owners receive the clarity and support they need to deliver their ambition – for the greater benefit of patients, communities and staff.
• Scott Hutchinson is deputy regional director (North & Scotland) and Paul Kelly is deputy regional director (South) of Unity Trust Bank.
[ends]
In Business news