Retailers' sights on pharmacies

By SIMON HENDERY retail writer

The Retailers Association has taken the lid off a fresh campaign to overturn pharmacists' monopoly on owning chemist shops.

Debate over whether the law should be changed to remove the monopoly has been percolating for more than a year.

The association's latest salvo - in the form of statistics showing chemist shops have the highest retail margins of any store type - comes just days before a select committee is due to hear submissions on the issue.

Association chief executive John Albertson said Statistics New Zealand figures showed chemist shops had a retail margin of 11.1 per cent, "easily the highest of any category and more than 2 1/2 times the average for all retailing (4.4 per cent)".

"High prices are what you expect to find when someone has a monopoly, so it's not surprising that chemist shops are so profitable and not surprising that the Pharmacy Guild is fighting very hard to maintain pharmacists' monopoly on ownership of chemist shops," Albertson said.

The association wants supermarkets and department stores to be able to own and operate pharmacies as a part of their stores, employing registered pharmacists to provide dispensing and advice.

But Pharmacy Guild president Richard Heslop said cherry-picking of top pharmacy sites by major companies would not be in the interest of consumers because pharmacists would be lured away from small towns and suburban shopping centres by the larger salaries the retail chains could offer.

Heslop said the margin figures being cited by the Retailers Association were misleading because they did not take into account a salary component for proprietor pharmacists, whereas for many retail chain stores the manager's salary was excluded from margins.

He said Government-mandated gross margins on medicines, before taking into account operating costs, were 3.5 per cent in the North Island and 5 per cent in the South Island.

"The rest of the non-medicine products [on pharmacy shelves] can be sold by anyone, anywhere and frequently are, so we are not sure what the Retailers Association is trying to say."

The association, supermarkets and other major retailers want pharmacy ownership restrictions removed through the Health Practitioners Competence Assurance Bill, which is before Parliament's health select committee.

The country's largest general retailer, The Warehouse, and supermarket heavyweight Progressive Enterprises will be among submitters arguing for a change to the bill removing the monopoly when hearings take place in Auckland next week.

The Retailers' Association and the Pharmacy Guild will put their arguments to the committee when it hears submissions in Wellington next month.

The Cabinet decided in August 2001 to deregulate pharmacy ownership but last May it released new papers which showed the deregulation plans had been dropped.