Ken Murphy, global brands president for WBA, told The Sydney Morning Herald that the company was exploring such options as establishing distribution for its health and beauty aids brands, starting a Boots retail franchise network and opening company-owned stores in the Australian market. However, he noted that current pharmacy ownership regulations in Australia prohibit the latter option.
In terms of setting up a pharmacy franchise or owner model, “the returns on investment are a lot tougher,” Murphy said in the report. “To justify the investment in Australia, we’d have to have the capability to establish our own chain.”
According to the Morning Herald, the Australian government’s Sixth Community Pharmacy Agreement restrict where pharmacies can be located until 2020, but states and territories have commissioned a review of pharmacy regulations that could re-evaluate rules on pharmacy ownership. That report is due out in March 2017.
Murphy said WBA would look at creating a new Boots franchise or partnering with a wholesaler in Australia if pharmacy ownership rules are upheld. “I’m in the middle of exploring every option at the moment,” he told the Morning Herald.
Murphy said the Australian retail pharmacy market is facing the same pressures as other markets around the world — efforts to rein in soaring health costs are narrowing margins from prescription drug sales — and WBA could provide scale and efficiency benefits, such as in supply and logistics and areas like pharmacist training.
“As pharmacists find it increasingly difficult to make money from their prescription business, I think that will force a change in the market,” he said in the article.
Another avenue that WBA is exploring is acquiring Australian HBA brands to distribute in its retail network — including Walgreens and Boots stores — and expanding retail distribution of its own brands in the Australian market, such No7, Soap & Glory, Boots Laboratories, Liz Earle and Sleek. Currently, Boots has a relationship with Sigma Pharmaceuticals, which distributes the Boots Laboratories brand to Australia’s Amcal pharmacies, the Morning Herald reported.
Australia stands as one of the developed markets where WBA has no footprint. Overall, the company has a presence in more than 25 countries and is the largest retail pharmacy, health and daily living destination in the United States and Europe, with more than 13,100 stores in 11 nations and over 350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and hospitals in 19 countries.