Operational Reports
Dermot Ryan Managing Director Uniphar Retail Services
Retail Services
Tipping the balance in favour of Independent Community Pharmacy
The focus for Retail Services is to supply and support retail pharmacists nationwide . In the first half of the year , the division traded well , achieving a leading share in the wholesale pharmacy market for the first time . In March 2016 , Uniphar held a very successful major conference for community pharmacists in the Convention Centre in Dublin . The purpose was to showcase the additional services and supports that Uniphar is now providing its retail pharmacy customers and to celebrate the fact that Uniphar has almost doubled its market share in 5 years . The Axium buying group deal added approximately € 4 million in revenue per month and during that period , Uniphar fulfilled more orders than ever in its history , on one day achieving an impressive 110,000 lines .
Negative impact of IPHA Agreement The second half of the year was seriously negatively impacted by the IPHA agreement which left the wholesale business with a reduced margin over the period . Effective from August 2016 , the impact in 2017 will be even more significant . This was a major blow to the business and a series of cost saving and other measures were undertaken immediately to mitigate the damage .
Reference pricing pressures pharmacists We are not alone in feeling the pressure . Our retail pharmacy customers felt the full force of reference pricing in 2016 , losing approximately 45 cent per dispensed item . This occurred in an environment where there are changes to some of the HSE schemes , upward pressure on pay rates , especially locums , and a greatly increased burden of compliance from bodies such as the PSI , with the advent of self-regulation and the new OTC guidelines .
Renewed focus on customer margin creation and cost reduction In this context , Retail Services has focused , firstly , on supporting the independent pharmacist to concentrate more on Front of Shop , where they control their margins . Secondly , we have been providing expert-led training in areas such as regulatory compliance and category management . Thirdly , through continuing to invest in our digital strategy , we have been making it easier , quicker and cheaper for the pharmacist to do business with Uniphar .
Improved range and supports in consumer sales In 2016 , Retail Services moved closer to its long-term aim of being able to provide a ‘ one-pipe supply ’ to retail pharmacists , expanding its Front of Shop product offering by adding 1,500 stock items through LinkUp , the country ’ s largest buying group . In May 2016 , we launched our new Christmas range at the Cosmetics Show in the RDS in Dublin which was very well received by the market . In the second half of the year , we established our strategic buying team and added new skills and expertise to Retail Services to support the Front of Shop consumer product strategy . We launched our new eCommerce platform in autumn 2016 and have added new and improved functionality to allow seamless ordering through our digital LinkUp brochure , where the customer can click on the product in the brochure to add to their cart and order .
We also looked at pilot projects to examine optimum ranging and the most successful way to grow the wellness category in retail pharmacy , which yielded very promising financial results for the pilot stores . In Quarter 1 , 2017 , we launched our new wellness brands to the Irish market and supported this with regional training events in March and April 2017 . Uniphar also launched a branded accessories line called Kit & Kaboodle and a new eyewear brand , Filtral , in March 2017 . There are also a number of new Front of Shop ranges planned for launch in the second half of 2017 .
Training that supports real needs amongst independent pharmacists Launched in 2016 , our Category Management and Regulatory / Compliance services were immediately successful and are heavily over-subscribed . They are clearly meeting a need in the market place and we will be expanding these services to meet that need in 2017 .
The Uniphar-supported national retail brands of Life and Allcare continue to do well , reaching 57 and 86 stores respectively in December 2016 . We launched Rx Marketplace , a digital buying platform for both Life and Allcare during 2016 and we would hope to broaden it to the wider independent pharmacy community in 2017 . We continue to invest in both brands through the roll-out of our regional training programmes focussed on product , customer services , sales , health services and planogram training . The marketing team continue to support both Life and Allcare brands through digital , local and community engagement marketing campaigns and a customer loyalty scheme was rolled out to both brands in Quarter 1 , 2017 .
Outlook There is no doubt that the market remains challenging and margins in wholesale will remain low . However , we believe that by providing our customers with better value on a better range at the right price point , and by supporting them to run their businesses more profitably and efficiently , we have created a sustainable business that will continue to contribute to shareholder value and support independent community pharmacy .
16 | Annual Report 2016