Pharmacy cuts: uncertain times

Funding cuts are still causing shockwaves throughout pharmacy. The second article in this series looks at what the cuts could mean for pharmacy staff and the changes that may be ahead

As you can imagine, running a business is challenging and there are many factors that contribute to making it a success. Firstly, and most importantly, the business has to make a profit to provide the owner with a return for their significant financial investment and the work they undertake. This involves ensuring that the business earns more than it spends on overheads such as heating, phone bills, staff wages and equipment costs, for example.

In pharmacies, there are the added complications of adhering to professional standards and ethical obligations as well as fulfilling the NHS contractual requirements and legal aspects of running a pharmacy.

All of this means that pharmacy owners need to employ the right people who are able to support them. As a result of the six per cent cut in the global sum, which is expected to cost each pharmacy around £14,500, it means that to make the same amount of profit, pharmacy owners either need to reduce costs or somehow increase income through other means.


As well as facing reduced incomes, pharmacy owners are also dealing with increasing costs, such as the national living wage that comes into effect from 1 April 2016. This means staff over 25 years of age will be paid at least £7.20 per hour, and this is expected to rise to more than £9 an hour by 2020. This will increase costs significantly for many. Other costs such as utilities, staff pensions and premises rent are also issues faced by pharmacy owners.

If a business is squeezed at both ends – income and costs – then changes need to happen to ensure that it continues to generate the required profit. If the same profit cannot be generated then savings need to be made.

Cost cutting and understanding

Most staff are used to receiving an annual pay increase and, notwithstanding the increase mentioned above, if you are already over this level of pay, then it’s possible that pharmacy owners may be considering pay freezes or your expected annual increase may be lower than you’d hoped.

An alternative is to reduce staff levels or the number of hours that team members work. Of course, if this were essential, it would need to be done through a consultation exercise with staff members and ideally on a voluntary basis. It may also mean that when staff leave they are not automatically replaced until the implications of the cuts on the business are really known.

This doesn’t mean you should start to worry, but it’s a good idea to talk to your manager or the pharmacy owner to discuss these issues and gauge the situation.

With our personal finances, if we are saving for a special occasion or if money’s tight, we know we need to spend money more wisely. It’s difficult to know at this stage exactly how your pharmacy will be affected by the cuts, but it’s possible that in trying to trim costs to prepare for any negative impact, a number of areas will need to be considered, such as staff uniforms, training and equipment.

Until the consequences of the cuts are known, it’s unlikely that owners will be prepared to invest heavily in their businesses with refits or the introduction of new technology, for example, as the funding required for these may no longer be justifiable or available.

Free services

Team members will know better than most that pharmacies provide many free services on a daily basis and these are now expected by customers. The most common of these include prescription collections from GP practices, prescription deliveries and dispensing of monitored dosage systems. Your pharmacy may provide many more free services over and above these.

While these services do benefit the business, there is still a significant cost attached to them – primarily staff time. As profit margins slip, pharmacy owners will need to look at all aspects of the business. The question is, can your pharmacy afford to continue to provide free services, or is it time to start charging customers?

Income generation

For most pharmacies, retail sales make up a minority of the business profit, representing around 10 per cent of the income. The remainder comes from NHS work.

While retail sales in pharmacy have been declining due to competition from supermarkets, other large retailers and discount stores, some pharmacy owners have decided to make a concerted effort to increase retail sales and introduce new private pharmacy services.

The aim is to provide a retail experience that focuses on health and wellbeing and remove the majority of non-health related items from the shelves. The advantage pharmacy teams have is their ability to build rapport with customers, their product knowledge and their availability for help and advice. Some pharmacies will consider changing the focus of their retail offer and owners will need your support to provide excellent customer service to help boost retail sales.

The future

As you can see, pharmacy owners have many issues to consider as a result of the pharmacy cuts, and we’ve mentioned just a few of them. However, the purpose of this article isn’t to worry you, but to make you aware of the issues facing pharmacy owners and the possible avenues open to them to ensure their businesses continue to operate profitably. By understanding the challenges, you will have a better grasp of the pressures that pharmacy owners are under and may be able to make suggestions to help support them in these uncertain times.

It’s a good idea to talk to your manager or pharmacy owner to discuss these issues and gauge the situation

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