Welcome to the current edition of i2P (Information to Pharmacists) E-Magazine dated Monday, 29 May 2017.
Since our last edition the news that made headlines in that period was the split between Chemist Warehouse and Sigma, which has resulted in a legal fight that could prove costly to both sides.
As I write this editorial, Sigma share price has fallen by 40 percent as the share market reacts to the news that Sigma might lose up to $10 million in earnings capacity.
This has triggered me to adjust the ongoing i2P strategic analysis for future of community pharmacy – a permanent document in our knowledge repository.

The split is not unusual in the sense that the Chemist Warehouse business model requires ever increasing access to capital to fund above average sales increases at discount prices.
Because the original trading terms with Sigma were a very generous six months extended credit, Sigma eventually collapsed under the weight of carrying such a heavy cash liability, which in itself could have eventually sent Sigma deep under water – even to the very bottom of the harbour.

A renegotiation of Chemist Warehouse trading terms saw Sigma engineer a successful recovery as of the current date, with gains to the bottom line more within expectations.

Obviously Chemist Warehouse had to juggle some internal economies to absorb the impact of reduced terms of credit, even though they remained generous compared to the industry at large.
But their business model needs continuing access to cheap capital that can expand, rather than contract, and Sigma would not have been in a position to accommodate this need.

As you would expect, Chemist Warehouse has simply leveraged its market power to attract a newer and more accommodating supplier, leaving Sigma with egg on its face.
The dispute evidently involves a generics manufacturer with prices Sigma is unable to match.

The fact that a legal agreement exists between the two players and that it might stand up under court scrutiny is what Sigma would hope for.
Chemist Warehouse would probably fight using the strategy that the agreement is a restraint of trade and that Trade Practices Legislation should be invoked to nullify the restrictive components of the agreement.
I am certainly not a lawyer, but I would think that the betting odds might favour Chemist Warehouse.
And the share market tends to agree with that as well!

A process, currently running in the background for the entire pharmaceutical industry, concerns Location Rules and Ownership Rules, already being processed under the King Review.
While it might seem that Location rules are secure for the short term, an internal study by i2P indicates that their removal or variation is simply delayed and that changes in Location Rules may occur around 2022, and that these changes would favour the Chemist Warehouse type of business model.
i2P predicts that these changes will occur approximately two to three years before ownership rules are changed to allow global pharmacies to enter Australia, giving a brief period for the warehouse model to stabilise, by buying out a range of independent but viable pharmacies within Australia.
Again, more need for future capital.

If Sigma loses its legal battle it will also impair Sigma’s ability to progress its own plans with the global conglomerate fronted by Boot’s Drug Stores.
Market share represented by Chemist Warehouse will substantially reduce Sigma’s attractiveness to Boots and that may continue to be a disruptor for Sigma’s ambitions to be part of a global pharmacy group.

So who will be the ultimate major suitor for Chemist Warehouse logistics and supply system given that eventual divorce seems inevitable?

i2P would hazard a guess that this could be Symbion Pharmacy Services, and this choice leads directly to the possibility of a future merger with the Terry White-ChemMart group.
The introduction of Amazon later this year might also become a driver as well, because they will impact most in the online markets of Chemist Warehouse and Terry White-ChemMart
Location and ownership rules are initially bypassed by Amazon, utilising a francised approach common to all pharmacy groups.
The alternative may be to go independent – but that will absorb a lot of capital and may destabilise the retail expansion.
A new wholesaler may break a few backs including Chemist Warehouse.

But I stress that i2P has no strategic knowledge of the above, only that it would seem to make sense, because that amalgamation would create an Australian pharmacy participant capable of becoming a global entrant in its own right.
It would also lead to government thinking that it might have the moral right to later remove Location and Ownership rules, thus creating an international pharmacy alignment for all of Australian pharmacy.

i2P has been pushing for Location Rules to remain in place because they provide infrastructure that would support additional public/private partnerships.
Some of this thinking may have rubbed off and found its way into the King Review, encapsulated in the somewhat curious comment by Stephen King that he sees “pharmacists as government agents”.
That he used the word “pharmacist” and not “pharmacy” may imply that he sees public/private partnerships emerging with presentations other than as “pharmacies” e.g. clinical pharmacist professional practice companies; and that these may be a good fit under existing or modified Location Rules.
In the latter format there would be a stimulus for health literacy (known to be an underlying public need as a strategy for the containment of health costs while simultaneously providing an improvement in the quality of health services).
Pharmacists delivering those benefits would be valued, thus eliminating the problem of poorly paid pharmacists and the need for new pharmacists to own pharmacies, substituting instead, their own version of practice companies that can operate in collaboration with existing pharmacies, public and private hospital pharmacies, or work collaboratively in GP settings – all at arms-length to avoid conflict of interest (particularly with prescribing activities).

However, there would be a further need to accelerate change in the culture of the profession of pharmacy, and the infrastructure to deliver that change is described in our lead article for this edition.
The faster that changes in culture can be agreed to and become an active component of pharmacy practice, the faster will become the positive rate of change, particularly in the building of motivation and the formation of new skills.

So does all of the above herald an exciting and stimulating force that will carry pharmacy forward in the best possible practice format?
i2P certainly hopes so!

Our lead article this week illustrates a process that can be created for continual culture change.
Pharmacy is still marking time trying to “make do” with an outdated culture, an exhausted PBS product, and leaders who are less than strategic in moving our profession forward in a consensus-shaped format that would help pharmacists engage with their profession, creatively and profitably.
Part of the problem exists because pharmacists have lost the art of collaboration and sharing among themselves and find it difficult to follow industry leaders who themselves find conflict of interest so common that it has become the new norm.
Of course there are exceptions, but they are in the minority.
Health literacy for patients is simply a bottom-up process that forces infrastructure and delivery change.
Provided it involves patients at the centre and open experiences shared between all levels of pharmacy personnel you will arrive at a continual culture change process that will keep you out in front of the game.
Read: Setting up an Open Innovation Program

The argument for using statins routinely is beginning to hold less water by the day.
What does this say to the evidence used to market statins and create a multi-billion dollar market?
Was it just poor quality or was it just fraudulent?
Do I sense that the façade is beginning to crumble and truth is beginning to seep back in?
Read: Statins are for primary prevention of cardiovascular disease….really?

Clinical nutrition is a valid and valuable branch of medical science.
Intelligently combined with selected mainstream medicines it can enhance outcomes or reduce side effects by reducing the need for high medicine doses.
OMNS provides yet another example of how Vitamin C can achieve this in the most accepted of medical settings – the emergency department of a hospital.
Read: OMNS News Service – Vitamin C and Sepsis

Barry Urquhart’s Marketing Focus column provides real insights into current management and marketing culture.
Pharmacists can readily adapt this material for incorporation into their own policies and forward planning exercises. Pharmacists specifically should read the section regarding future retail trends and increasing store closures in this contribution.
Read: Marketing Focus – 1. Mixed Messages 2. Fabulous Fads 3. Future Retail Trends – Closing Stores 4. Ageism 5. Amazon – River of Change

Harvey Mackay brings perspectives that are often overlooked in our current business climate.
In his current article he writes about optimism and how it helps to underpin positive culture.
In these days of seemingly continuous bad news a spirit of optimism might just light up a beacon that would attract patients and differentiate your pharmacy from all others.
Read: Optimists see opportunities in challenge

It seems that in these days of “Scientism” that comments on safe vaccination are automatically relegated to an anti-vax “pigeon hole”.
We even have the recent spectacle of a New Zealand GP disrupting the screening of the film “Vaxxed” in a theatre, by performing an unscheduled haka, and delivering a rant about anti-vaxing.
Desperation? Utter idiot? Unethical perspective on evidence-based medicine? A new variation in medical marketing?
You decide.
The safe vaccination debate is continued in i2P, despite the fact that it is not recognised by the extreme pro and anti-vax participants.
The pro-vax proponents sustain their immoral position with dishonest tactics and communications.
The anti-vax proponents also hold extremist views because vaccination principles are sound.
It is only the manufacturers who are the real villains in this drama because they continue to make unsafe vaccines and develop new vaccines without any formal evidence.
The consistent reports submitted by Dr Judy Wilyman illustrates clear examples of Scientism, a corrupt system of power that is permeating the entire medical spectrum of health delivery.
Read: Safe Vaccine Debate 1. World Mercury Project 2. Dr Judy Wilyman Report 3. Call for anti-vaxer violence

Medical cannabis represents one of the more interesting opportunities available to pharmacists for the treatment of existing patients and to attract new patients.
Pharmacy leaders need to be proactive in the regulatory area because other health professionals will be competing to lock pharmacy out of any opportunity whatsoever
Potential for pharmacists is found in the compounding of THC and CBD in specific ratios to match the best result for patients with chronic illness.
Further pharmacist potential also lies in using cannabinoids in harm minimisation programs involving opioid dependencies and as an adjunct for the management of pain.
Pharmacists also need to be active and have a voice in the regulation of these substances ensuring that maximum patient access can be obtained through the application of Schedule 3 of the Poison’s Act.
Additional future potential for pharmacists may also be found in the 3D printing of specific cannabinoids and the tailoring of these substances to match the genetics of each individualised patient.
Read: Understanding Medical Cannabis – 1. Basic Cannabinoid Education 2. United in Compassion Education Event 3. Bill Shorten opposes Malcolm Turnbull  by backing Greens on drug ruling

And we complete the current edition content with media releases from some pharmacy leadership organisations:

PSA – PSA Media Releases – 1. Headquarters Launch 2. PSA & NAPSA Support Pharmacist Future

NPS – NPS Media Releases -1. Jennifer Morris Appointment 2. Current Australian Prescriber

And we have a late message from the Pharmacist’s Support Service that we include here:

Pharmacists’ Support Service donation call – pharmacists supporting pharmacists

The Pharmacists’ Support Service (PSS) seeks help from our profession to support the wellbeing of colleagues (it may be you who needs help this year) through a tax deductible donation – it can be a single donation or an ongoing commitment.

Gilly Swinnerton, Vice President of PSS, said:  “Calls to PSS have increased by 33% this year.  More calls and training more volunteers bring extra overheads.  It is good that members of the pharmacy profession can access and find help from our team of pharmacist volunteers.”

Gilly also said “We have expanded our volunteer team by providing comprehensive training in Sydney.  PSS operates economically through a unified service to the whole Australian pharmacy community.  Your donation helps build financial surety for the future of the service.”

Can you and will you support PSS as we support pharmacists in need?

Click the Donate Now button on

www.supportforpharmacists.org.au or https://www.facebook.com/supportforpharmacists/

You will be then access our online giving portal, hosted by Give Now https://www.givenow.com.au/pharmacistssupportservice.
Choose a one off donation or elect to make a regular monthly gift.

The Pharmacists’ Support Service –

• Is available to all pharmacists, intern pharmacists and pharmacy students throughout Australia every day of the year between 8.00 am and 11.00 pm EST.
• Call 1300244910 (have it listed in your contacts).

We thank these organisations, all represented on our Management Committee, for their ongoing support:

• Australian Friendly Societies Pharmacies Association
• Pharmaceutical Defence Ltd
• Pharmacy Guild of Australia
• Pharmaceutical Society of Australia
• Pharmaceutical Society of Victoria Ltd
• Professional Pharmacists Australia
• Society of Hospital Pharmacists of Australia
• National Australian Pharmacy Students’ Association.

—————————————————————————————–

We hope that you enjoy i2P content and please do not hesitate to stimulate further debate by adding your comment in the space provided at the foot of each article.

Neil Johnston,
Editor i2P E-Magazine
Monday 29 May 2017