Pharmacies in Australia - Industry Market Research Report

Hard pill to swallow: Ongoing PBS reforms and external competition to constrict revenue growth

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. Intensifying retail competition from internal and external operators, including discount pharmacies and supermarkets, has gradually changed the industry's operating landscape over the past decade. These competitive forces have increasingly polarised the industry into small, high-service pharmacies that offer allied preventative and primary healthcare services and large, high-volume, low-margin pharmacies that compete on price. Simultaneously, ongoing PBS price disclosure reforms have progressively cut the cost of PBS medicines (including a growing number of commonly used drugs), negatively affecting traditional industry revenue streams. In response, pharmacies have focused on increasing non-PBS and other retail revenue streams to become less reliant on dispensary revenue, supporting revenue growth.

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

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.