Terry Maguire recalls August 1, 2016 with a shudder. It was the day pharmaceutical wholesaling in Northern Ireland changed forever….
Monday August 1 brought a huge shock; nothing to do with Brexit, Islamic radicals or the prospect of a Trump presidency. That day pharmaceutical wholesaling in Northern Ireland changed forever.
The old order that existed for over 30 years was wiped away overnight and pharmacists woke up to a logistical nightmare.
What seemed a simple process – you order medicine, it arrives in a van, you dispense it to the patient – ceased to work and we all soon realised that shouting down the telephone at a vulnerable 20-year-old was not going to solve the problem. Things are still not as they should be.
It all started, ironically, with Dublin-based healthcare business and wholesaler United Drug Group (UDG). Years back UDG bought the local pharmaceutical wholesaling success Sangers NI. Sangers had given sterling service to customers since it was set up by a local consortium of pharmacists in the early 1980s.
Those who bought shares in that enterprise made a lot of money in the UDG buyout and subsequent stock share rise. Sangers had the local touch and I was delighted with their service over the years. I was perhaps in hindsight too comfortable and never checked if I might get better terms elsewhere; I’m too easygoing to be a real businessman.
UDG, it seems, got bored with wholesaling as it focused on other areas of healthcare and sold its operation which included Sangers, to McKessons, owners of Celesio, the parent company of AAH and the chain Lloydspharmacy.
The UDG ROI deal went through in April 2016. Because of objections in Northern Ireland, however, the UK competitions body made Sangers keep separate from AAH and this matter was only resolved in late June when the sale was finally completed.
Sangers has always been a keen and innovative company with excellent service and excellent staff. Being a big fish in a small pond – and few ponds area smaller than Northern Ireland – management realised that it needed to do things differently if it was to retain market share.
It had a local relationship with Numark, owned by wholesaler Phoenix, and Sangers also did deliveries for wholesaler Alliance for its chain Boots. Everyone was happy until AAH, already on the scene, sealed the Sangers deal.
I had a bad experience with AAH as a second-line wholesaler some years back but I had to continue doing business with them because Direct To Pharmacy (DTP) schemes introduced by big pharma to control its markets and stop parallel exports were often exclusive to a single wholesaler and sometimes that was AAH. I had an AAH account for these products only.
To be fair that was the old AAH – the German company Allied Anthracite Holdings – a company that having made a lot of cash in mining, diversified in the 1970s into pharmaceutical wholesaling among other things. They had a brittle approach to service.
The new business Celesio might be different and the American McKesson organisation might be different; and let's hope they are.
On August 1 2016 Numark stopped business with Sangers, only dealing through Phoenix (who own it) and Alliance set up a new depot with over 30 vans on the road. Since Sangers was keeping a distance from AAH they lost DTP deals and very quickly independent pharmacists had to decide how we were to get our stock and retain the profit margins we enjoyed.
It remains an evolving picture. Phoenix, with its Numark offering, will gain some share, Alliance will service the 100-plus Boots stores and will supply a lot of the DTP drugs, AAH will retain what it had and will get some DTP from those pharmacies who remain with Sangers.
Northern Ireland, as I have said, is a small pond and it will be difficult to justify four full-line wholesalers visiting most pharmacies each day; some villages are impassable early mornings with myriad multi-logoed vans parked outside pharmacies.
But there is a much bigger game going on here and this is a bigger challenge for community pharmacy than a few stray boxes of insulin.
Vertical integration will typify the globalisation of community pharmacy and is the next big thing. Boots have its wholesaler Alliance, AAH will eventually merge with Sangers and will begin establishing its Lloydspharmacy chain which has been only modest locally to date.
Phoenix has its Moss pharmacy chain in England and is yet to venture to these shores. Lloydspharmacy and Boots are well advanced in 'hub' and 'spoke' technology which will see medicines made up for individual patients in warehouses – the hub – before delivery to local stores – the spoke – for collections.
Whatever the recent discomfort of independents, it’s only a foretaste of the discomfort to come.
Terry Maguire is a community pharmacist based in Northern Ireland. With more than 30 years' experience, he has spearheaded the development of services across the UK.
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