Pharmacy contractors face profit pressures despite sales increases- Hutchings report

Pharmacy contractors continue to grapple with profit pressures despite many reporting significant sales revenue increases, according to Hutchings
Consultants’ England Pharmacy Market Update 2024.

The report emphasises that gross profit margins are under considerable strain due to factors such as rising wholesale drug costs, the dispensing of certain drug
lines at a loss, reduced drug tariff reimbursements, and ongoing medicine shortages.

These challenges have led to a growing number of pharmacies reporting substantial declines in their profit margins this year.

For instance, Cohens Chemists reported a £5.7 million loss in the last financial year, even as sales reached £253 million.

Similarly, Day Lewis, the UK’s second-largest independent pharmacy chain, experienced a 5.9% sales increase driven by growth in prescription dispensing,
over-the-counter sales, and pharmacy services, yet faced a 32% drop in pre-tax profits due to heightened administration costs, which included inflation-driven
increases in staff, energy, utilities, and rent.

The average profit margin has declined to 33% in 2024, down from 34.4% the previous year.