Unichem Metro Bethlehem Pharmacy's owner Steel Shin has had a massive drop in sales. Photo / File
Unichem Metro Bethlehem Pharmacy's owner Steel Shin has had a massive drop in sales. Photo / File
Tauranga pharmacies have taken a hit after the opening of a major competitor, with one owner down three staff and up to 40 per cent in sales.
Australian giant Chemist Warehouse opened in Bethlehem on November 4, offering a free prescription service - also offered by two supermarket pharmacies inTauranga - which nearby pharmacies feared they would not be able to match.
The Chemist Warehouse, however, said it was making healthcare more affordable and had employed about 35 people in the new store.
When news arrived about the Chemist Warehouse's move into Tauranga, Unichem Metro Bethlehem pharmacy owner Steel Shin expected to lose customers.
Unable to offer free prescriptions, he began looking at ways to cut costs.
He said "so many" customers had talked about the Chemist Warehouse - either his loyal customers promising to stay that way or others mentioning his competitor's prices.
The $5 prescription fee customers paid was a tax that pharmacies paid to the Government.
Shin said the large corporate could absorb that cost on behalf of customers, but local pharmacies could not.
"if the trend gets worse ... we may have to consider [closing]," he said.
Tauranga Chamber of Commerce chief executive Matt Cowley said pharmacies around Tauranga needed to focus on geographical targeting and engaging with their communities.
Tauranga Chamber of Commerce chief executive Matt Cowley said pharmacies around Tauranga needed to focus on geographical targeting and engaging with their communities. Photo / File
"Whenever I'm sick, I always go to the closest place possible ... I don't want to travel across town just to save a couple of dollars," he said.
Cowley said it was natural for people to be interested in what was new and a normal balance usually resumed when the hype had quietened down.
For the Bethlehem pharmacies, he said there would be a lot of competition, as it was with any retail when a big chain opened.
The competitive prices and close proximity would be a challenge.
"Times will be tough."
Chemist Warehouse co-manager and managing partner Kaslin Naidoo the initial response in Tauranga "couldn't be better".
He said affordable healthcare was important and would improve the quality of life of New Zealanders.
The pharmacy provided free prescriptions, free medication containers and discounted prices on the wide range of products.
"We do absorb the hit.
"It makes healthcare affordable to everyone across the board, for everyone to have equal access."
Stores making less in the pharmacy could make money selling other products, he said.
Bureta Pharmacy has also noticed the impact of the new store, despite its loyal customer base, a location right next to a medical centre and being 10 minutes from Chemist Warehouse.
Owner Simon Hodgson said while no staff would be let go, staffing was something he considered in a time he described as stressful.
"It's a bit frustrating that a big Australian corporation is really upsetting the market place here in New Zealand."
He understood why people chose cheaper options, but local pharmacies simply could not match them.
"We can't match that and I think it would be detrimental to our business to do that.
"I've still got to feed my kids, and my staff have to too."
January is the end of the pharmacy year and Hodgson suspected this would be when people began to pay more attention to how much their prescription cost.
Two Countdown pharmacies - at the Bayfair and Fraser Cove supermarkets - started offering free prescriptions in June.
Countdown head pharmacist Jeremy Armes said the customer response to the free prescriptions had been "overwhelmingly positive".
A Ministry of Health spokeswoman said some pharmacies had started waiving the $5 co-payment fee for their customers.
"This is a decision each pharmacy makes in their capacity as a private business and the cost of that prescription fee is absorbed by the business."
She said if a pharmacy did not charge the co-payment the government still deducted the cost from the pharmacy's payment.
Co-payments, as well as equity, were being considered as part of a review of the New Zealand health and disability system.
The Bay of Plenty District Health Board implemented a policy in October for all new applications for an Integrated Community Pharmacy Agreement (ICPSA) in the region to ensure the sustainability of quality pharmacy services.
Health Board portfolio manager Andrea Baker said as part of that policy, consideration was given to the geographical location of the Chemist Warehouse application.
"As far are the DHB is aware the Chemist Warehouse has not contravened any rules in establishing a presence in New Zealand and operating under the ICPSA," he said.
Baker said the DHB had a relationship with all community pharmacies and worked collaboratively with the sector.
