Independent community pharmacy : quo vadis?

Adams, Edries (2011-03)

Thesis (MBA)--University of Stellenbosch, 2011.


On 16 January 2004, the Parliament of the Republic of South Africa published the Draft Regulations to the Medicines and Related Substances Act No. 101 of 1965 (Republic of South Africa, 2010a) for comments due by 16 April 2004. These regulations would change the retail pharmacy landscape that generations of pharmacists had become dependent on in supporting themselves and the communities that they served. These regulations proposed a single exit price (SEP) that manufacturers might charge pharmaceutical wholesalers, which included the distribution cost. The wholesaler in turn would sell the pharmaceutical to the pharmaceutical retailer at the listed SEP, thus prohibiting discounts and in the process creating transparency in the pharmaceutical industry. This transparency would ensure that all people would pay the same price for their medication with the aim of making it affordable and available to those in need. Preceding these draft regulations was the amendment to the Pharmacy Act No. 53 of 1974 (Republic of South Africa, 2010c) concerning pharmacy ownership, which allowed non-pharmacist and legal entities to own pharmacies as of 2003. This amendment posed the first external threat to the autonomy of pharmacists regarding independent pharmacy ownership. Pharmacists now had to compete not only amongst themselves but also with large corporate food and health shops with in-house pharmacies. The resources and capabilities inherent to independent community pharmacies given the events of the past few years proved inadequate in competing with the corporate retailers. These two amendments to acts that influenced the existing pharmacy landscape posed a real threat to the sustainability of independent pharmacy business models. This paper investigates the issues that independent community pharmacies in South Africa are facing and their strategic options in the pharmaceutical and services value chain.

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