Periodic insights from our Investment and Private Client Teams on a broad range of investment and advice-related topics
By Mike Jaczko, Partner & Portfolio Manager at KJ Harrison, and Max Beairsto, Valuation Analyst at EVCOR
The COVID-19 pandemic has created an unprecedented degree of hardship for so many Canadians, both personally and professionally. The country’s pharmacists are no exception, and the challenges they have faced are numerous and complex. On the one hand, they are healthcare workers, and they and their staff have been an integral part of the healthcare system’s response to COVID – providing in-store testing and critical drug delivery, among other services. On the other hand, they are also retail workers, and pharmacies have been among the few retailers that have remained consistently open throughout the pandemic. And if we had a third hand, we would add that pharmacist-owners are also entrepreneurs, and they have had to manage through many of the same financial and HR challenges as other small business people.
As we mark Pharmacist Awareness Month, the realities of COVID make it more important than ever to recognize and celebrate the role pharmacists play in healthcare, in the economy and in our communities. Their role is about to become even more crucial and taxing, as several provinces have announced that pharmacies will be administering the COVID vaccine to the public. And pharmacists, simply put, are already tired.
The COVID environment has provided pharmacists with the opportunity to build considerable goodwill in the customer relationship, and it is something pharmacists should be able to leverage over the long term.
We have worked with hundreds of pharmacy owners over the years, providing wide-ranging advice on business valuation and strategy, transition planning and wealth management, and we talk with pharmacists on a regular basis. We can say with some confidence that they have never been more stressed or more overworked. They need and deserve our support.
So if you are among the millions of Canadians whose well-being relies on pharmacists, please join us in giving them a shout-out, just to let them know their hard work does not go unnoticed. And if you are a pharmacist, take heart. In our view, there is good evidence that Canada’s pharmacists will emerge from this global health crisis stronger than ever – if they recognize and
take advantage of the benefits that have come from being put in a very difficult position within the healthcare system.
For one thing, the revenue picture of most pharmacists is relatively healthy. According to our data, average pharmacy revenue in Canada was up slightly in 2020 compared with 2019, as prescription volume and margins increased. Costs such as labour and delivery also went up, largely negating the positive impact of higher revenue, and there was significant volatility in sales from month-to-month as COVID-related restrictions were implemented, retracted, and then implemented again. But at least pharmacies will be entering the post-COVID business environment without having to dig themselves out of a revenue hole. That is quite unlike other independent healthcare providers such as dentists and optometrists, whose businesses have been devastated by COVID lockdowns.
Yet there are other, more positive reasons for optimism, and the most important is that COVID has strengthened the pharmacist-customer relationship. Think about it: at a time when you couldn’t see your family doctor face-to-face or go to the dentist, pharmacists were still there in your community – open for business, providing care, answering your questions and addressing your concerns. That has always been what pharmacists and their staff are good at, but they have been more accessible than other healthcare professionals or even other retailers during the pandemic.
In short, the COVID environment has provided pharmacists with the opportunity to build considerable goodwill in the customer relationship, and it is something pharmacists should be able to leverage over the long term. In our experience, a strong relationship between customers and pharmacists is a key driver of pharmacy profitability. And it could be a real competitive advantage for those who can continue to build upon it post-COVID.
More broadly, the pandemic may have created an opportunity for pharmacy as an industry. Let’s face it: in the Canadian healthcare system, the work that pharmacists do often goes overlooked and under-appreciated. For all its anguish, COVID has thrown pharmacists into the spotlight, and they have risen to the challenge, demonstrating in no uncertain terms how vital they are to the health of the country.
Without being too mercenary about it, it is reasonable to speculate that pharmacy’s enhanced standing could improve the industry’s negotiating position in relation to payors, politicians and policymakers. For individual pharmacists, that could provide tangible benefits down the road.
Of course, it has been hard for anyone – pharmacists included – to see any silver lining in the dark clouds of the COVID pandemic, but we believe there is one. We are firm believers that what doesn’t kill you makes you stronger. For pharmacists, the pandemic has surely put that adage to the test, but as they look forward to Pharmacist Awareness Month and – at long last – to a future where COVID no longer defines their lives, we think it’s one that they can and should take to heart.