Sick of it: Operators change business models in the face of ongoing regulatory reform

The Pharmacies industry plays an important role in community primary health care. Retail pharmacies are the primary distribution points for prescription and scheduled over-the-counter medicines. The traditional community pharmacy segment has undergone significant shifts over the past decade. Intensifying retail competition from new internal and external operators, such as discount pharmacies and supermarkets, has changed the industry's operating landscape. The industry has become increasingly polarised between small, high-service pharmacies that offer allied preventative and primary healthcare services, and large, high-volume, low margin pharmacies that compete on more.

Industry Statistics & Market Size
Annual Growth 13-18
Forecast Growth 18-23

Industry Threats & Opportunities

  • Intensifying retail competition has changed the industry's operating landscape
  • Fundamental changes to the PBS have significantly influenced industry operations
  • Industry operators will diversify revenue streams as they move towards service-based models
  • Industry Report - Industry Locations Chapter

    The geographic distribution of the Pharmacies industry reflects the nation's economic, social and demographic breakdown. As at June 2017, the three eastern seaboard states accounted for 76.7% of total approved community pharmacy numbers, with similar proportions expected in 2017-18. Similar proportions were also in place five years earlier, with the three eastern seaboard states accounting for 77.0% of pharmacy numbers. These three states also account for a similar proportion of employed community pharmacists.The largest growth in industry enterprises has occurred in Victoria. Data provided by the Department of Human Services shows that over the five years through 2016-17, an additional 424 pharmacies were established across the industry, 119 of which were in Victoria. A f...purchase to read more.

    Additional Insights for the Pharmacies Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Pharmacies Industry are

  • Membership of joint marketing/distribution operations
  • Ability to control stock on hand
  • Production of goods currently favoured by the market
  • IBISWorld analysts also discuss how external factors such as Federal funding for the Pharmaceutical Benefits Scheme and Demand from supermarket and grocery stores in the Pharmacies industry impact industry performance..

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    What's in this report

    What is the Pharmacies Industry?

    The industry includes all community or retail pharmacies that sell prescription drugs and patent medicines to general consumers. Products are sourced either from pharmaceutical wholesalers or directly from upstream pharmaceutical manufacturers. Key pharmacy groups include independent community pharmacies, banner groups (both wholesaler-owned and independent), friendly societies, buying groups and discount pharmacies. Hospital pharmacies are not included in the industry.

    Industry Products
  • Prescription medicines
  • Scheduled non-prescription medicines
  • General retail
  • Industry Activities
  • Drug retailing
  • Patent medicine retailing
  • Pharmacy retailing and operation
  • Prescription and medicinal dispensing
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Federal funding for the Pharmaceutical Benefits Scheme
  • Demand from supermarket and grocery stores
  • Population aged 50 and older
  • Real household disposable income
  • Demand from department stores

  • Current Performance
  • Ongoing PBS reforms
  • Profit pressures
  • Intensifying competition
  • Industry consolidation pressures
  • Chart: Revenue Growth

  • Industry Outlook
  • Government reviews
  • Increasing competition
  • Continued profit pressures
  • Table: Pharmacies Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Pharmacies Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers
  • Aged Care Residential Services

  • Key Selling Industries
  • Cosmetics and Toiletry Wholesaling
  • Cosmetics, Perfume and Toiletries Manufacturing
  • Pharmaceutical Product Manufacturing
  • Pharmaceuticals Wholesaling

  • Products & Services
  • Prescription medicines
  • General retail
  • Scheduled non-prescription medicines
  • Chart: Pharmacies Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Consumers aged 45 to 64
  • All other consumers
  • Consumers aged 65 and over
  • Chart: Major Market Segmentation for the Pharmacies Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Pharmacies

  • Basis of Competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Pharmacies Industry

  • Industry Globalization
    My Chemist Retail Group, Sigma Healthcare Limited, Terry White Group Limited, Australian Pharmaceutical Industries Limited,
  • Table: My Chemist Retail Group - financial performance
  • Table: Sigma Healthcare Limited - financial performance
  • Table: Terry White Group Limited - financial performance
  • Table: Australian Pharmaceutical Industries Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Pharmacies Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Pharmacies Industry
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Banner Groups
  • Groupings of individually owned stores formed to provide support and undertake joint advertising and promotions.
  • General Sales Medicines (Gsm)
  • Unscheduled medicines that can be sold outside of a pharmacy.
  • Over-The-Counter (Otc) Products
  • Medicines sold without requiring a prescription, including Schedule 2, Schedule 3 and general sales medicines.
  • Pharmaceutical Benefits Scheme (Pbs)
  • Government scheme that subsidises the cost of most prescription drugs.
  • Schedule 2 Pharmacy Medicines
  • Non-prescription medicines that can only be sold in a pharmacy.
  • Schedule 3 Pharmacist-Only Medicines
  • Non-prescription medicines sold through a pharmacy on the provision of pharmacist advice.
  • Section 90 Approved Pharmacies
  • Pharmacies authorised to supply Pharmaceutical Benefits Scheme medicines under Section 90 of the National Health Act 1953.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Pharmacies market research report offers insightful industry analysis and research into the market at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The industry report contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Pharmacies:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Pharmacies market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Pharmacies, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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