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PHARMACIES
for growth,” says Ramsunder. “Our ? Above left: Dis-Chem now has around 100 pharmacy are heavily penalised through
medium-term target is to have 600 big-format drug store-type outlets. Below right: co-payments for prescribed medicines.
Clicks stores, each with a pharmacy.” PHOTOS: GETTY/GALLO IMAGES, ISTOCKPHOTO, SUPPLIEDClicks’ medium-term target is to have 600 According to the Independent
It is a target Group CEO David Kneale stores, each with a pharmacy Community Pharmacy Association,
believes can be significantly exceeded using a non-DSP outlet can result in a
in the long term. of the retail chains is not the only member paying between 20% and 60%
pressure faced by small pharmacies. of the cost of their medicines.
Ramsunder argues that Clicks’ drug They are also up against heavy-handed
store model, and by implication Dis- tactics by medical aids in a market “It is imperative that a private
Chem’s similar approach, places it at where scheduled medicine prices pharmacy becomes a DSP,” says Deon
a distinct advantage compared with are strictly controlled by government Schoeman, owner of 13 pharmacies
pharmacies owned by the supermarket through the Single Exit Price (SEP) in Port Elizabeth and the neighbouring
groups. “The drug store model, with its regime introduced in 2004. towns of Uitenhage and Despatch.
strong emphasis on health and beauty, “To do so you must belong to a national
is a far more appealing environment Under SEP, the profit margin for group.” To this end, Schoeman was
than a supermarket,” he argues. pharmacies lies in their dispensing instrumental in forming Scrip Favours,
fee, which is also strictly controlled. For a banner organisation with 300
The attraction of the in-store example, the current limit on dispensing members, including Spar Group.
pharmacy model for Clicks is not that fees is R64.08 for medicines costing
dispensing prescriptions makes money, between R249.06 and R840.22. The NO MONEY IN MEDICINES
it’s that pharmacies attract customers maximum fee for medicines costing over But while being a DSP ensures
who will then shop for more general R840.22 is R154. prescription pharmaceutical sales
merchandise in the front. Reflecting to medical aid members, it doesn’t
this, Clicks stores generate about 25% “The government’s scaled price
of sales in the pharmacy and 75% in model is fine,” says Spar’s Grant.
the front shop, where it is already a very “But pharmacies can’t charge laid-
powerful player. At the end of February down fees. They are dictated to by
2016, its national market share medical aids who generally stipulate a
stood at an impressive 29,1% in non- far lower maximum fee of R30 to R36,
prescription health, 26,8% in skincare irrespective of a medicine’s price.”
and 25,7% in haircare.
Medical aids have strengthened their
Potential pharmacy customers may grip on the pharmacy sector through
also be attracted by another powerful their Designated Service Provider (DSP)
weapon in the chain’s armoury, the regime, under which many dictate to
Clicks ClubCard. It is claimed to be the members which pharmacies they can
oldest retail loyalty scheme in SA and use for medicine dispensing services.
has 5,7-million active card holders.
Members who step out of line and
SMALL PHARMACIES buy their medication at a non-DSP
The huge consumer bases and
daunting buying and marketing power
16 strategicmarketing October 2016 – January 2017
