Pills, Potions and Trust

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-By John Boley

Strictly speaking, Chemplus is a franchise. Operating some 64 (at time of writing) retail pharmacy outlets around Adelaide and surrounding areas of South Australia, it consists of independent business operators working under an umbrella that gives them an identity and a range of ‘back-of-house’ benefits. Under this model, Chemplus enables its franchisees to run a competitive and profitable shop whilst providing the service and trust the general public has always demanded from their friendly neighbourhood ‘chemist’.

But as Chemplus’ chief executive Nick Tsamaidis told us, this is hardly a conventional franchise operation or business opportunity. After all, you cannot just identify a good business case for a pharmacy and open it up just like that. There is a process with the government that you must follow, criteria in place for a new pharmacy. “We have been involved in greenfield sites over the years, but certainly not many because it just doesn’t happen,” says Nick. “Here in South Australia I can count on one hand for the last ten years the number of greenfield pharmacies that have opened and that is part of the consolidation that the government is seeking,” to maximise funding.

Pharmacies are very much individually owned, as per the government regulations. But in 1989, a number of existing pharmacists got together and formed Chemplus as a breakaway from an existing grouping as a standalone brand. Since then, says Nick, just about all the new pharmacies that have come in have been existing independent pharmacies who have been observing the progress of the brand and are interested in joining it. “I could probably count on one hand the amount of times we have actually sought people out,” Nick says. The company believes it is most beneficial if a shop approaches demonstrating that desire to join in. “So it is a bit different to how some of the other groups might approach it.”

In fact Nick is a case in point. You might almost suggest he liked the company so much he bought it. With a pharmacy degree and a pair of his own shops, he saw “an opportunity to have a corporate involvement and get involved in strategy that was very appealing to me, taking the successes of the local practices into a broader context. So four years ago I took on a directorship of Chemplus and took on the role of CEO as well.” To do anything well you need to have passion, Nick believes, “and if you really believe in what you are doing and you understand it, if you have expertise but you are also very passionate about what you do, then you are more likely to succeed at it.” He himself spent some 20 years ‘hands-on’, in common with most of the other directors who make up the Chemplus board and who all bring with them skills in addition to their specific pharmaceutical understanding.

Nick says this method of management is one of the benefits of joining the group. Because the directors know the business at the sharp end, they have been able to put in place “checks and balances to drive good sound business structures and ventures, but also having an insight into opportunities. For example with doctors and collaborations, that can only come from a tight setup like we have. The company’s aim is to be the first port of call to health,” leveraging the size of the group. “Sixty four pharmacies in a city the size of Adelaide is quite a large number. I think the next group is probably somewhere in the 40s. We are in most locations and a third of those are regional. That allows us to have good pricing and the other benefits you get from a large group.”

Chemplus, he says, brings more depth to the pharmacy retail space, linking the dispensing process with other services in a holistic approach. Yes, there is a necessity to compete in a “very price-competitive environment.” But in this sector it’s more a matter of consumers’ health and, “it is not just about the price, it is getting the right product.” Advice from the pharmacist could mean not only price savings but also a more effective treatment. “That is the subtlety of value in health that we are trying to get across to the community and it is starting to have a bit of traction.”

In some areas away from the main metropolitan centres, the high street pharmacist is sometimes just about the only health professional left for the local populace to consult, Nick points out. This lends extra significance to the traditional element of trust that needs to exist between pharmacist and customer. Chemplus markets its outlets as offering “innovative customer service.” Nick is somewhat wary of this description, though. “It has always been customer focused; it is having those conversations, doing what we do best, going out there and discussing what the needs are, using our expertise in a targeted way to help customers on their path toward better health. That could be a referral, it could be suggesting some good products within a self-limiting condition; it could be just monitoring and helping them, supporting them in a chronic disease.” If they are diabetic, for example, the pharmacist might be seeing them five times as frequently as their doctor. “It is using that opportunity to support them in that process. It is patient centred, it is supportive as much as it is innovative; it is good common sense really.”

Nick is unusually sanguine about the way forward for retailers of ethical products. Unlike almost everyone else on the high street, he believes, the pharmacy has little to fear from the internet and the Godzilla of online retailing. Partly this is geographical, particularly for the regional shops which are relatively insulated, but the rest are also protected to an extent. “In the context of health there are more layers to supply. There is that triaging and supporting the customer’s confidence that what they are buying is truly the best option. There are some limitations to doing that online and I guess there will always be a role” for the conventional bricks-and-mortar approach.

“The convenience of online or some other similar way is good, but our experience has been that people do want that face to face contact. Our primary customers are a little bit more elderly because that is when the complex conditions start to take effect. They need time and we need to have the patience to help them through that decision making process. Online may have some role, but at this stage the vast majority of our sales and our business is very much face to face. My feeling is that we will probably see a turn back to a more community based retailing model. I think we are starting to see early signs of that here and overseas.”

It is no secret that Australia has an ageing population, something Nick says is at the front of government thinking in terms of managing future budgets and costs. “Here in South Australia, which is where our focus is, we have an even greater tendency to the elderly. I think our percentages are the highest in the country. Our model has incorporated that, with some of the home based services. We have a large proportion of pharmacies in our group that supply medication to nursing homes; it is another sub-specialty within pharmacies. There are also a large number of our pharmacies providing services in people’s homes. So they deliver the packed medicines to their homes and other products, and quite frankly they also act as a social support to those people.”

The federal government recently made a major announcement about aged care and its strategy moving forward, leaning very much toward keeping people in their homes longer with supportive care as a priority. “I see no other industry as well placed to do that as pharmacy, because that is where we are and what we are doing. Some of the work that we are doing with some district nursing groups here in South Australia, working in collaboration, is proof of the pudding.”

Overall, despite the massive changes in health care provision and developments in medicine, the pharmacist has retained almost precisely the same job and position in society as he or she has held for a hundred years. Nick says the focus is on “caring, the community, and the patient. People expect it and we want the consumers to demand more from their pharmacies. It is not just a commodity, come in ask the questions; we are there to support you through the journey.” He describes the relationship as “a life-long journey with a patient and a customer and we are here for the long haul.” This is not a business where the profit motive can override other factors; making an odd dollar here or there on products with a higher price tag can actually be counterproductive. “It is not about that,” says Nick, “it is about the long haul. Ultimately the business model shows that people trust you and that is always going to be key.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

September 26, 2018, 10:02 AM AEST