Loblaw takeover of SDM: what does it mean for the profession of pharmacy?

Begin by answering this question, utilizing the right brain  hemisphere .  How do most pharmacists feel intuitively about this takeover?  I have yet to meet many practising pharmacists who have reacted positively to this development to the pharmacy landscape.

This buyout transaction represents one of the largest of its kind in Canadian business history.  The largest Canadian grocery chain, already with over 600 pharmacies, takes over the largest Canadian pharmacy chain to create a behemoth retailer with 1800 pharmacies in a country of 35 million population.  This represents incredible reach and market dominance.

Assertions have already been made by company officials about how SDM will become “a unique and separate operating division of Loblaw”.  It has been described as “a partnership grounded in complementary strengths”.  The word that company officials avoid is ‘takeover’.  ‘Takeover’ has a negative connotation and our left brain hemisphere’s more analytical bent suggests that this is not a good thing too; so ‘takeover’ is avoided.  But a takeover is what it is.  It sure looks and quacks like a duck.

Experience suggests that takeovers (or even softer transactions like mergers) are all about consolidation.  All costs not at store level like district managers, vice presidents, marketing types, information technology, human resources, finance and legal would normally all be up for grabs.  The savings (and the profits) to be derived out of consolidation will run into the 100s of millions.

Suppliers must be quaking in their boots.  Imagine the control over the distribution supply chain this one retail entity will now have…a good guess would be in the neighbourhood of 35 percent of the retail pharmacy marketplace.  This one entity will tell suppliers what the cost of good are.

To extrapolate from these numbers on an order of magnitude basis, it also means that somewhere between 3 and 4 out of every 10 Canadian practising pharmacists will now be employed by this one employer.  Now that’s power!

Kind of sad to think that almost half of all Canadian pharmacy students now in school across Canada will now approach a 50/50 decision upon graduation…’do I spend the rest of my life working for Loblaw/SDM or not?’

When retail driven operating standards like performance metrics, quotas on professional services, forced flu shots become unbearable, where do practising pharmacists turn for alternative employment to make a living as a professional pharmacist?  Answer: not too many places.  The other pieces of ice floating around in this stormy sea have names like Wal-Mart, Rexall, Costco, Sobeys, Metro, Target etc.  These big retail entities are not likely to offer much of a difference in terms of compensation or working conditions.  The singular focus of all of these big retailers is to maximize sales.

These retailers achieve their goal directly or indirectly through the sale of drug store type merchandise (DSTM) associated with a retail pharmacy environment.

This takeover therefore leads practising pharmacists to two separate conclusions: despair and opportunity.

The despair comes from the realization that community pharmacy is becoming even more and more concentrated in the hands of a very few big players: box stores, grocery chains, & big merchandisers.  All are in the business of selling as much stuff as possible. Where does the profession of pharmacy fit in this tight matrix/retail dominance?   How do pharmacists exercise professional judgment in an environment where tight controls, retail systems, quotas, sales targets, cost control, all created and enforced by non pharmacists, prevail?  It does seem to be getting darker out there.

So where is the opportunity?

First, practising pharmacists must remind themselves every single day that this multibillion dollar industry is totally dependent on them showing up every day.  Although pharmacists (like the produce manager or the meat manager or the deli manager) are employees, only pharmacists must be present physically in the premises or the store does not open.    That’s power too; big power…if only it could be marshaled.

Second, (and I remember Ken Burns making this point in an earlier blog entitled “What does it take?”) maybe now when pharmacists are confronted with the bleak reality of how limited their professional employment options are,  will make the decision to strike out and create their own destiny.

More and more pharmacists are walking away from the corporate scene and striking out on their own. I receive dozens of emails from pharmacists who have taken the plunge and feel totally liberated for it.  They may not be building big businesses, but they are certainly doing better compensation wise than working under Big Pharmacy, and their working conditions have changed from night to day.

From Kingston Ontario, to Cranbrook BC, to PEI and all over this country, more pharmacists are deciding to take a chance.  They are determined to practice pharmacy the way they want, not the way determined by retail sales enforcers/non pharmacist owners.

Pharmacists have the power to take their future into their own hands.  They can do this by refusing to do anything their non pharmacist owners dictate to them which they believe is not in their patients’ interests.  Pharmacists are accountable to their patients first, not their employers.  Those who choose to compromise on this daily struggle in a retail environment will eventually pay a price professionally, ethically and morally.

Pharmacists must begin to turn back the clock…’backwards into the future’.  They can open their own practices and begin to provide outstanding patient services every day.  They can provide more high quality billable services and immediately receive payment directly for these vital services.  The investment is modest, the risk is small and the rewards will be overwhelming.

If more pharmacists took their destinies into their own hands Big Pharmacy would not stand a chance.  Pharmacists still own the means of production.

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