UK Retail Pharmacies Market Update 2015
- ID: 3429838
- August 2015
- Region: United States
- 32 Pages
- Key Note Ltd
This market update examines the pharmacies sector in the UK. Pharmacies are registered outlets that are entitled to dispense pharmaceutical products, which are available on prescription only (POM). They are also able to sell a wider range of over-the-counter (OTC) medicines than other retailers, including those classified as pharmacy-only (P) pharmaceuticals. Many pharmacies also sell cosmetics and fragrances, toiletries, electronic goods and offer services such as advice on giving up smoking, diabetic testing, etc.
Pharmacies are reimbursed for dispensing National Health Service (NHS) prescriptions and remunerated for the service they provide. Income derived from dispensing NHS prescriptions is vital for the majority of pharmacies. The vast majority of pharmacies/dispensing chemists in the UK (approximately 99%) have an NHS dispensing contract. The dispensation of NHS prescriptions makes up over 90% of a pharmacy’s revenue. Around three-quarters of prescriptions are free to groups such as children, the elderly and those on benefits.
In addition to standard remuneration and reimbursement payments, small community pharmacies in the UK also receive extra payments under the Essential Small Pharmacy Local Pharmaceutical Services (ESPLPS) scheme. These payments provide financial assistance to pharmacies that are not economically viable because of their location, but which are considered vital to the provision of pharmaceutical services to their local community.
Most community pharmacists provide services under a contractual framework agreed for England and Wales - the Community Pharmacy Contractual Framework (CPCF) - which came into force in 2005. The CPCF provides the basis for improving the quality and range of services provided through community pharmacies. Funding for the CPCF is delivered through a combination of fees and allowances and retained medicine margins. Each year, the Department of Health (DH) and the Pharmaceutical Services Negotiating Committee (PSNC) undertake negotiations related to the annual funding for the CPCF and carry out a medicine margin inquiry to find out how much medicine margin pharmacy contractors retained in the previous year.
For the purpose of this report, the market will be split into the following two sectors:
- Dispensing chemists
- Pharmacies - including both community pharmacies and in-store pharmacies.
It should be noted that there will be some overlap between the two sectors, as both terms may be applied to any store that dispenses prescriptions and supplies OTC products. Individual categories can be broadly defined as follows.
In the UK, the dispensing chemists market can be divided between independent retailers and large chains. Boots and Lloyds pharmacy are two examples of large dispensing chemist chains. An independent retail chemist, however, may also be a community pharmacy (see below) and can be located in a supermarket store.
The current regulatory framework for pharmacies dates back to 1987. Since then, this policy area has been devolved, although the regulations remain more or less the same throughout the UK. Under these regulations, it is possible to open a pharmacy anywhere, although the granting of contracts to dispense NHS prescriptions is regulated. As around 90% of an average pharmacy’s turnover is generated from NHS prescriptions, the regulation of NHS contracts effectively amounts to full regulation of market entry.
The main responsibilities of a community pharmacy include the counselling and dispensing of prescription medicines to patients. A community pharmacy may sell a wide range of OTC pharmaceuticals products, as well as supplying POMs. Community pharmacies often have a close relationship with the general public and aim to provide a professional service to the local community.
In-store pharmacies refer to registered chemists/pharmacies that are licensed to operate within supermarket premises and health and beauty stores. Health and beauty stores are involved in the retail distribution of healthcare and personal care products, as well as certain household goods. The range of OTC products that these stores sell is confined to that of other retailers and therefore does not include P products. The introduction of in-store pharmacies within health and beauty retailers was initiated by Superdrug in the mid-1990s. The relaxation of the licensing rules governing pharmacies that took place in April 2005 also led to a significant expansion in the number of in-store pharmacies in the UK and major multiple grocers continue to expand into this market at this time.
Broadly speaking, the pharmaceuticals market can be divided into two main sectors:
- OTC pharmaceuticals.
POMs are available on prescription from a qualified doctor or dentist and may only be dispensed through a registered pharmacy. These products cannot be advertised to the general public.
Also known as proprietary pharmaceuticals, OTC pharmaceuticals can be purchased without a prescription. OTC products can be split into the following two main categories:
- P Products - these can only be sold via registered chemists or in the presence of a qualified pharmacist. Examples of P products include some sleep aid tablets, such as Nytol; painkillers with small amounts of Codeine; and pseudoephedrine.
- General sales list (GSL) products - the legislation regarding the retail distribution of these products is more relaxed. In addition to retail chemists, GSL products may be sold in outlets such as health and beauty stores, supermarkets, confectioners, tobacconists and newsagents (CTNs) and independent grocers. Examples of GSL products include paracetamol and ibuprofen, anti-allergy tablets and skin creams.
New medicines are usually authorised for use as POMs. After some years of use, if adverse reactions to the medicine are few and minor, it is possible that the medicine may be safely used without a doctor’s supervision. If there is sufficient evidence of safety, a medicine may be reclassified for sale or supply under the supervision of a pharmacist. P medicines that have been safely used for several years may then be deemed suitable for general sale and reclassified as GSL products.
Reclassification of a substance normally follows a request from the company that holds the marketing authorisation for it. However, requests can be made by any interested party, such as a professional body, or be initiated by the Medicine and Healthcare products Regulatory Agency (MHRA) - the government agency responsible for ensuring that medicines and medical devices are safe for the public.
Pharmacies and chemists may also supply a range of other associated products in addition to pharmaceuticals. Such products include:
- other healthcare products, including herbal remedies, homeopathic remedies, natural remedies and aromatherapy products
- personal care products, e.g. toiletries and cosmetics
- miscellaneous goods, such as optical products, baby-care items, sanitary protection and contraceptives
- other products, e.g. gifts, household goods and electrical goods. SHOW LESS READ MORE >
1. Introduction & Definition
2. Report Coverage
- Market Sectors
- Dispensing Chemists
- Product Sectors
- Prescription-Only Medicines
- Over-The-Counter Pharmaceuticals
- Other Products
- Executive Summary
3. What’s Key In The Market?
- Key Drivers
- Market Trends
- The Ageing Population
- Financial Constraints on the National Health Service
- Supporting Self Care
- Community Pharmacists Help to Ease Pressure on the NHS
4. Economic Trends
- Market Position
- How Robust Is The Market?
- Market Size, Segmentation & Forecasts
- Market Size & Segmentation
- The Total Market
- By Market Sector
- Prescription-Only Medicines
- Over-The-Counter Pharmaceuticals
- Future Trends
- Future Economic Trends
- Forecast Total Market
- Market Growth
- International Perspective
6. Strengths, Weaknesses, Opportunities & Threats
- Funding For Community Pharmacies Flat-Lined
8. Company Financials
- Company Profiles
- League Tables
- Further Sources
- Government Publications
- Other Sources