How pharmacies can navigate financial and operational challenges

A harsh funding regime that hasn’t adapted to changing macroeconomic realities means the viability of large parts of the pharmacy sector is at risk
unless the model changes. Very simply, across the sector, revenue has remained largely fixed while costs have increased significantly, making it impossible for
many pharmacies to sustain their business models.

The sector has seen the closure of more than 1,500 community pharmacies since 2015, with 700 of these closures occurring since 2021. Larger pharmacy operators
such as Lloyds, Boots, and Rowlands have seen the biggest decline in numbers, with smaller businesses operating between one and five pharmacies now accounting
for almost 50% of the sector.

Despite rising inflation and business costs, the NHS pharmacy funding model has remained fixed. Over the period of the current Community Pharmacy Contractual
Framework (CPCF) – 2019-2024 – pharmacies have experienced a 30% real terms cut in core funding leading to an annual shortfall of over £750 million, equivalent
to £67,000 per pharmacy in England.

The current CPCF is due to end in 2024, and there is still no arrangement in place for future funding, leading to delayed and inefficient spending decisions and
hampering the ability of the sector to plan and attract much-needed investment.