With pharmacies now often utilising multiple wholesalers to source medicines, Jeremy Meader looks at the long-term future of this model…
Pharmacy owners must regularly determine the benefits of various buying platforms versus traditional ordering predominantly through a preferred wholesale supplier.
While buying platforms may appear the easier option - thanks to the speed, wide access, and cost of drugs - there are a string of positives to be had from dealing directly with the wholesaler.
In my experience, collaborating with wholesalers fosters a strong relationship with your staff, reduces the number of deliveries required and makes monthly tracking of orders and deliveries easier, especially when combined with regular face-to-face sales calls that add value.
A buying platform may seem like a one-size-fits-all solution for busy owners, but there are many who believe it is not quite the be all and end all it is promised to be.
This leaves me to ponder the question - while the buying platform is an alternative option for pharmacies, is it the right alternative?
Around 70% of pharmacies are now using buying platforms as their primary purchasing method, meaning that they have a large share of market space. Many are using a platform as part of a wider buying strategy or approach and there are numerous variations.
Many, including groups operating a hub may tender at the start of month on the top 50 or 100 products, then utilise a platform after that.
The buying platform growth has been remarkable, driven by the impact of the 2019 contract, falling margins and financial cost pressure facing the sector. Owners who understandably have been increasingly desperate to prevent their margins heading further south have been tempted to try.
The largest buying platforms have two thousand plus users and there are many smaller players with several hundred users. While they offer convenience, is it really true that buying platforms are the best option from a pharmacy point of view?
Initially, you may well be inclined to think yes, knowing as we do in the sector that a buying platform seeks to find the lowest price with availability, across several thousand lines, to optimise buying and savings in theory.
This takes away the need to try and keep track of pricing across the board and saves valuable time for other key tasks to be completed. Alongside the pricing, there is flexibility to choose which Wholesalers you use or how many supply your pharmacy.
It must be said for the positives mentioned above, which are good at helping a pharmacy, there are also a variety of other issues which require consideration.
The first of which is that the number of suppliers who will be servicing your pharmacy will double from around four or five to probably at least eight or even more. This does of course add more complexity.
This then leads to a significant increase in daily deliveries which must be managed by your staff. It is not as easy with many suppliers to be sure who is delivering what and when. Having more deliveries can be harder for your staff to co-ordinate and potentially slow down the operation or impact on your customer service.
Returns also become more complicated as the number of suppliers increases.
The most concerning piece of feedback I get from buying platform users concerns reconciling invoices at the end of the month. If the invoice does not match what you thought was the purchase price, then raising queries and managing this can become very time-consuming and even unmanageable.
And, as always, the bottom line is the biggest consideration that must be made, the financial reality check on buying platforms. Does your profitability really increase versus other buying models including a trusted preferred supplier, with a limited cascade after that?
Commissions are charged by many platforms, and these are effectively margin from wholesalers, which is not necessarily passed on to users, plus of course most platforms charge users a monthly fee.
Many have tried a buying platform or two and then decided to return to a more traditional model, with a primary or preferred supplier, who rewards loyalty, followed by others in chosen priority.
The NHS has benefitted from platforms, as ultimately falling prices tends to link to lower reimbursement, so “better pricing” may have an unforeseen consequence.
While there are owners who clearly enjoy what a buying platform has to offer, as is their right, there are others who clearly do not. It is also interesting to note that owners do change platforms, again, suggesting that not everything has worked as well as they had originally anticipated.
Clearly there are almost as many buying variations as there are pharmacies and there are numerous options or combinations possible.
Bestway Healthcare provides a range of options. Lexon, for example, offer a wraparound support package for loyal customers as well as pricing support and guarantees with a market benchmark. Our sales team support customers with ongoing advice and market information that is not necessarily provided by buying platforms. Our Medhub business collaborates more closely with owners seeking a platform solution.
In 2025, there is more than enough room for both buying platforms and traditional wholesale models to co-exist. Ultimately, it is up to you to decide what fits your business best and which has most impact on the bottom line and satisfaction of your customers.
Jeremy Meader is the Chief Wholesale Officer of Bestway Healthcare, overseeing brands such as Lexon, Wardles, and Bestway Medhub. Jeremy has over 25 years of experience in the UK pharmaceutical sector, and has worked in executive roles across the industry.
