Exclusive: The “huge cost” of running a centralised support centre makes it almost impossible for large community pharmacy chains to turn a profit, Rowlands Pharmacy managing director Nigel Swift has said.

In an interview in P3pharmacy’s January issue, Mr Swift – who is also deputy MD at Rowlands parent company Phoenix UK – said many companies are being forced to review their business model: “If you look at the larger chains – of which we were one at one point – the biggest problem is the huge cost of having a centralised support centre.

“Anyone that’s got a support centre can’t make pharmacy profitable – that’s what I believe.”

Rowlands was restructuring its support centre at the time of the interview, with Mr Swift commenting: “We’ve got to keep it as lean as possible.” The support office also offers its services to Numark members, and Mr Swift said it saw an uptick in activity in 2023 as independents bought up former LloydsPharmacy branches: “If you suddenly grow from five to 20 pharmacies, it’s not viable to create a huge support centre for them – this is where we can help.”

He described the disappearance of LloydsPharmacy from the high street as a “huge turning point” and said the situation in pharmacy is “heartbreaking – I’ve never seen it like this”.

Commenting on plans for the Rowlands Pharmacy estate, Mr Swift said: “We’re looking at the size of the estate and at profitability in the long term.” The company’s latest annual accounts, which revealed a £219m loss, outlined a close/merge/sell strategy for branches. The estate now stands at 380 pharmacies, down from around 500 in 2021.

Numark members get “first choice” on stores being divested by Rowlands, Mr Swift said.

Mr Swift said exiting pharmacies is “the last thing we want to do,” adding that the company has bought 34 stores in Scotland where “the contract is much more beneficial to pharmacy”.

He didn’t rule out further store divestments but said: “I think we’ve identified where we want to be and it’s important to have credibility with our new members that we have a retail estate and we’re sure we can run it.

“The sad thing about the divestments over the last two years is that the business top line is our items are growing, are OTC is up 45 per cent compared to two year ago and services are up 50 per cent.

“We’re doing everything we can, but we’re still having to exit some locations because we can’t make them work for us.

“You’ve got prescriptions coming in where you’re dispensing at a loss and that’s not a viable business for anybody.”