By Nigel Swift
A new analysis undertaken by Edge Health UK for Sandoz makes clear that community pharmacy is grappling with deep structural pressures.
As managing director of a chain of more than 400 community pharmacies, these pressures become even more tangible, and the data shows that longer-term systemic issues are contributing to an environment where pharmacies across England struggle to cover the true cost of delivering NHS services.
Research conducted by IQVIA found that nearly 99 percent of pharmacies in England were funded below the full economic cost of providing NHS services in 2023/24, and around 78 percent were not even covering basic pharmacy‑level and centralised costs.
Running a multiple inevitably magnifies these gaps, every branch absorbs its share of workforce costs, property costs, stockholding expenses, and the administrative burden of coordinating dozens of deliveries per week.
As a result of these sustained cost pressures, pharmacies are naturally chasing the best prices they can find. This is very often a false economy; multi-wholesaler purchasing adds complexity and cost, staff time, multiple deliveries, extra administration, and the financial gains are rarely realised.
Wholesale prices for commonly dispensed generics have dropped to levels that are fundamentally unsustainable. Existing economic pressures on margins are compounded by this volatility in generic pricing.
The way pharmacies purchase medicines not only impact supply chain, but it also directly undermines income. Even when efficiencies are achieved, they’re quickly neutralised, benefiting no one.
The broader picture is stark. Core funding for community pharmacy has fallen in real terms over the last decade, leaving many pharmacies operating at a loss or facing very thin margins. Somewhere between 45 percent and 96 percent of pharmacies are funded below their essential operational costs, and as a result, many owners are forced to change how they operate simply to survive.
Whilst the 2024/25 CPFC funding uplifts were welcome and show a willingness to engage, they still leave a substantial shortfall between the true cost of running multiple pharmacies and the reimbursement received. Chasing the lowest prices may make sense in the short term, but when everyone does it, it drives wholesale prices down, erodes supply chain stability, and ultimately limits the financial benefit for pharmacies themselves.
If community pharmacy is to fulfil its potential, delivering care in our communities and reducing pressure on the wider NHS, policymakers must look at funding models that recognise the full reality of running a network of pharmacies.
At the same time, the sector needs to take a broader view of procurement behaviour, understanding that a relentless focus on marginal savings contributes to a race to the bottom that no one wins.
(Nigel Swift is the managing director of Rowlands Pharmacy)
