Independents ‘charge more for drug dispensing'

Although the government had set single exit medicine prices, there is no limit on what a pharmacy can charge on dispensing fees.

New Clicks CEO David Kneale said: “Our dispensing fee is very competitive and we always offer generic alternatives where they exist.” Its nongeneric drugs were less expensive than those of its rivals because it did not charge administration fees.

Absa asset management analyst Christopher Gilmour said: “Although they should be charging a similar price than the likes of Clicks and Dis-Chem, you probably pay significantly more at an independent pharmacy than at a corporate pharmacy.”

Clicks services more than 70-million customers who buy health and beauty products and was able to capture that market by offering the convenient in-store pharmacy model in late 2004.

Clicks has about 200 pharmacies in 350 Clicks stores. It intends to open more in the near future, at a rate of 40 to 30 a year.

Kneale said before 2004 Clicks was a “drugstore but without the drugs”. Now the group received at least 20% of its revenue from the pharmaceutical business.

Clicks has about 35% market share of healthcare products such as vitamin supplements and a 15% share of the prescription market.

Kneale was not fazed by the trend of in-store pharmacies at food retailers: “I think Pick n Pay and Shoprite are likely to take market share from the independents rather than Clicks.”

Pick n Pay, which operates 17 pharmacies, said it planned to introduce 40 more soon. “After that we will assess our geographical footprint in respect of consumer demand and plan further,” said spokeswoman Tamra Veley.

Woolworths and Netcare have only recently launched a third pharmacy trial in Eastgate — in May — after announcing its pharmacy plans in 2007.

“We have trialled pharmacies in different store formats and locations and also assessed the convenience of having a pharmacy for our customers. The final decision ... will depend on the outcome of the trials,” the group said.

Gilmour said the biggest test for food retailers would be to introduce enough pharmacies to compete with Clicks and Dis-Chem.

Source: Business Day

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