INDUSTRY analyst IBISWorld says the development of more sustainable pharmacy models and an increasingly affluent ageing population are likely to see growth in overall pharmacy revenue over the next five years, reversing a decline apparent since 2008/09.
In an IBISWorld pharmacy sector report released this week, author Arna Richardson predicted a $900m increase to $17 billion across the industry by 2022/23 - however she also noted that the growth will lag behind the general economy.
That increase follows an annual growth rate of -0.2% for the industry between 2013 and 2018.
Key issues facing the industry include PBS reforms and the drift of products to competitor retailers such as supermarkets, she wrote.
The proliferation of "corporate warehouse-style pharmacies with aggressive pricing strategies" was threatening the traditional community pharmacy business model, along with new entrants such as Ramsay Pharmacy and online pharmacy operators.
"The industry has become increasingly polarised between small, high-service pharmacies that offer allied and preventative and primary healthcare services, and large, high-volume, low margin pharmacies that compete on price," Richardson noted.
The report estimated that the Chemist Warehouse/MyChemist Retail Group is the largest pharmacy network in Australia, with a market share just under 30%.
Sigma Healthcare covers 20% of the retail market, followed by TerryWhite Chemmart with 12.5% and then API's brands with 11.6%.
IBISWorld found profit margins in pharmacy had crept up over the last five years as pharmacies focussed on front of shop, professional services and other non-PBS revenue.
In 2016/17 a total of 424 new pharmacies were opened, with Vic the fastest growing state with 119 new outlets and an overall forecast that pharmacy numbers will grow to more than 6,150 by 2022/23.
Interestingly the report also predicts increasing sales of cosmetics in pharmacy, at the expense of department stores.
It estimated that "micro pharmacies" turning over less than $2 million annually derive more than 77% of their income from prescriptions, while for pharmacies with revenue of $5 million plus the script proportion drops to 60%.
The full report is available for purchase at ibisworld.com.au.
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