23-year-old pharmacy parent company collapses

The company behind a 23-year-old pharmacy chain with 17 stores across Melbourne has collapsed.

Pharmore Pharmacies went into voluntary administration on February 5, with Brooke Bird’s Robyn Erskine and Peter Goodin appointed as administrators.

Brooke Bird confirmed to SmartCompany Pharmore performed various head office administrative functions on behalf of the 17 independently owned and operated pharmacies.

A joint statement from Erskine and Goodin said the individual pharmacies were not subject to their appointment and would continue to operate independently of the administration process.

“We understand that our appointment occurred as a result of the inability of the company to undertake a necessary restructuring of its operations and an overhead structure that exceeded its revenue base,” said Erskine and Goodin.

The Pharmore chain has 17 stores throughout metropolitan Melbourne, mostly across the eastern suburbs. Pharmacist John White founded the chain in 1992.

Brooke Bird confirmed employees of the pharmacy “ought not to be impacted” by the administration.

Each of the stores has its own buying, supply and account payment arrangements, according to the statement, and suppliers have been requested to deal directly with the individual pharmacies.

The first meeting of creditors will be held in on February 16 in the Melbourne suburb of Hawthorn.

The appointment of administrators comes at a time when the Australian retail pharmacy industry is battling declining revenues.

A 2014 IBISWorld report on the $15.3 billion Australian retail pharmacy industry forecast an annual decline of 1.4% across the sector in the next five years due to a number of pressures.

Spencer Little, IBISWorld senior industry analyst, told SmartCompany one of the biggest burdens on the industry over the past five years was the ongoing regulatory reform on prescription medicines and its effect on prices.

“The growth of discount pharmacies has also put further pressure on prices, creating strong internal competition” says Little.

Pharmacies are currently required by law to be owned only by pharmacists, but there has been building interest in recent years from major supermarkets and other large corporate players attracted to the space.

Little says if supermarkets or other health and beauty retailers enter the market, it will place further external pressure on smaller pharmacy chains.