Pharmacy Financial 
      Survey 
       
      Research Report 
       
      March 2017 
       
       
      Quantitative research report 
      DRAFT 
       
                
      Hall & Partners | Open Mind 
      MEL: +61 (0)3 9662 9200 
      SYD: +61  (0)2 9925 7450 
      info@hpopenmind.com.au 
      Table of Contents 
      Executive summary ............................................................................................................................. 3 
       Background and methodology ............................................................................................ 3 
       Findings from the survey ...................................................................................................... 3 
      Research context and objectives ........................................................................................................ 7 
      Methodological approach and outcomes ............................................................................................. 9 
       Pharmacy engagement ........................................................................................................ 10 
       Pharmacy data collection .................................................................................................... 12 
       Data analysis and limitations of the data ...................................................................... 16 
      Pharmacist Profiles ........................................................................................................................... 17 
       Summary of Profiled Pharmacies .................................................................................... 17 
       PROFILE 1 – PhARIA 1 ........................................................................................................ 18 
       PROFILE 2 – PhARIA 1 ........................................................................................................ 19 
       PROFILE 3* – PhARIA 2 ..................................................................................................... 21 
       PROFILE 4* – PhARIA 3 ..................................................................................................... 22 
       PROFILE 5 – PhARIA 4 ....................................................................................................... 23 
       PROFILE 6 – PhARIA 4 ....................................................................................................... 24 
       PROFILE 7 – PhARIA 5 ........................................................................................................ 25 
       PROFILE 8 – PhARIA 5 ....................................................................................................... 26 
      Appendix A: Data tables .................................................................................................................... 27 
       Profile of participating pharmacies ................................................................................. 27 
       Store size and customer numbers ..................................................................................... 29 
       Staff levels ................................................................................................................................ 33 
       Business financials ................................................................................................................ 41 
       PBS data – Aggregate level detailed data from the DOH ......................................... 59 
       PBS data – Script type level detailed data from the DOH ........................................ 64 
       PBS discount data – Detailed data from the DOH ...................................................... 77 
       PBS discount data – Script type level detailed data from the DOH ...................... 78 
       Stated PBS data from survey ............................................................................................. 82 
      Appendix B: Self-completion questionnaire and contact materials .................................................... 86 
       
        
            
          16255 – Department of Health – Pharmacy Financial Survey 
           Executive summary 
           Background and methodology 
           The Australian Government Department of Health is facilitating a review of pharmacy remuneration 
           and regulation by an independent Review Panel,  which will base its recommendations on an 
           extensive review of pharmacy in Australia. Many voices and sources of data are part of this process, 
           including a range of primary and secondary data sources, stakeholder and community consultation, 
           public  submissions,  industry  and  publicly available data. On behalf of the Review Panel, the 
           Department commissioned Hall & Partners Open Mind to gather and analyse financial data from 
           community pharmacies to act as a further critical input into the review, supplementing existing data 
           sources regarding  remuneration for dispensing of medicines under the Pharmaceutical Benefits 
           Scheme (PBS) and the delivery of professional services. 
            
           Before gathering pharmacy data, a sample list of pharmacies was compiled from multiple sources, 
           involving consultation with stakeholders such as The Pharmacy Guild and banner groups. Manual 
           cleaning and de-duplication processes were applied to produce a final list of possible participating 
           pharmacies. Pharmacies were contacted initially by letter from the Department of Health, to notify 
           them of the survey and present the survey credentials. All listed pharmacies were then contacted by 
           telephone to obtain the email address for an appropriate contact (such as an owner). A link to a 
           standardised online self-completion  form  was then emailed. Follow-up reminders via email and 
           telephone were undertaken to maximise response rates. 
            
           Despite best efforts, the data collection stage faced unforeseen challenges and the final survey 
           sample fell short of the target of n=300. Close to 150 pharmacies began the survey, however most of 
           these part-completed the survey with a final sample of n=38 completed surveys. The data collection 
           process is discussed in greater depth in the section Methodological Approach and Outcomes. The 
           data from all pharmacies who provided responses are presented here. 
            
           Findings from the survey 
           Characteristics of participating pharmacies 
           The majority  of participant pharmacists were independent  community  pharmacies,  which  were 
           largely operated by their owner/s. Some of these had affiliations with a buying group, some were part 
           of a banner group, several were discount or warehouse pharmacies, and others had no affiliations. 
           The sample provides representation across all PhARIA classifications and types of pharmacy but the 
           largest single group of participants were non-affiliated,  independent,  PhARIA 4-6 pharmacies. 
           Hospital pharmacies not represented in this sample. 
            
           3 
                                                                          
          
         16255 – Department of Health – Pharmacy Financial Survey 
         The pharmacies who provided their data were most commonly positioned along shopping strips or in 
         isolated groups of a few shops and the majority were open for fewer than 50 hours per week. Very 
         few offered their customers evening or night hours - Saturday was the most common time offered 
         outside weekday retail hours. 
          
                                                           2
         This sample captured a spread of pharmacy sizes from small pharmacies of up to 100m , medium 
                        2                              2
         sized that are 101-200 m  and some very large pharmacies at more than 200 m . The pharmacies 
         included here most commonly allocated 11-20% of floor space to the dispensary. There is however 
         very  wide variation when it comes to floor space allocation for OTC medicines and therapeutic 
         goods, relative to other retail items. Space for private consultation by the pharmacist consistently 
         occupied the smallest floor space of less than 10%. 
          
         There was also wide variation in the  size of each pharmacy’s annual  customer base -  with a 
         tendency for PhARIA 4-6 pharmacies to have a smaller number of customers, than PhARIA 1-3 
         pharmacies. Around half of these pharmacies’ customers were seeking prescriptions only, while 
         retail-only customer sales were slightly more common for PhARIA 4-6 pharmacies. 
          
         Pharmacy ownership and staffing 
         The majority of participating pharmacies had one owner, this is especially so among PhARIA 4-6 
         pharmacies; while major city pharmacies had a greater tendency to have more than one owner. Most 
         pharmacies had between 1 and 5 full-time staff and about two thirds also had part-time or casual 
         staff to supplement this. There was a relationship between PhARIA location and staffing levels. The 
         majority of these PhARIA 1 pharmacies had 4 or more full-time staff and at least 2 part-time or 
         casual staff. While around half of the PhARIA 4-6 pharmacies had only 1 full-time staff member and 
         a similar proportion have 0 casual or part-time staff. Owner salaries varied widely from less than 
         $40,000, to a significant minority with salaries more than $100,000. This variation appears related to 
         PhARIA with owners' salaries for pharmacies in major cities mostly being a lot higher than those 
         outside metropolitan areas. 
          
         Pharmacy revenue and profit 
         Annual sales levels  in excess of $1,000,000 was more common for city pharmacies than their 
         regional, rural or remote counterparts in this survey. Though some PhARIA 4-6 pharmacies did 
         supplement their sales with income from other sources moving them up past $1M total revenue. 
         Among those pharmacies providing their revenue and expense data, PhARIA 1 pharmacies tended 
         to achieve greater profit than PhARIA 4-5 pharmacies - virtually no participating rural or remote 
         pharmacies reported a profit in excess of $200,000, while half of major city pharmacies achieved at 
         least this level of profit. 
          
         Payments and allowances 
         Overall, PhARIA 1, and to a lesser extent PhARIA 2-3 pharmacies, offered and received a higher 
         level of remuneration for a wider range of government supported services than do those in rural or 
          4