Struggling Pharmacies Paint a Grim Picture in Germany
Pharmacy earnings accelerated in the previous year - Pharmacy sales saw an upward trend last year
In the heart of Europe, pharmacies in Germany are grappling with a persistent financial crisis, as revealed by recent data. On average, these establishments made an annual turnover of approximately 3.7 million euros last year, with the costs of goods sold accounting for whopping 80 percent. After accounting for other expenses, this left an average pre-tax operating profit of 162,073 euros. Alarmingly, a staggering 26 percent of these establishments barely broke even, ending the year with less than the modest sum of 75,000 euros, while 7 percent saw their ledgers slip into the red.
This dire situation has been a consistent reality for years—unfortunately, unchanged for nearly two decades, even after adjusting for inflation. The Federation of German Pharmacists (ABDA) sounds a warning, stating that the status quo is far from sustainable. Yet, the federal government has failed to adjust the pharmacy fee in the last twelve years, contributing to the continued decline in the number of pharmacies in the country. As of the first quarter of this year, there were 16,908 pharmacies nationwide, with predictions pointing to 133 fewer by the end of 2024.
But what's behind this grim picture? Small, independent pharmacies have been disproportionately impacted due to their exclusion from preferred networks. In 2023, only a meager 0.8% of German pharmacies enjoyed preferred status compared to a whopping 70% of chain pharmacies. This puts the independents at a significant disadvantage, as fewer customers walk through their doors, straining their revenue potential. The lack of fair reimbursement and network participation adds to the woes, playing a significant role in closure rates[2].
Competitive pressures are also on the rise, with larger chains and other healthcare providers reshaping the landscape[3]. While the available data is scant, trends suggest that the industry is moving towards consolidation, closure of underperforming stores, and reimbursement challenges, all of which strain the financial health of independent pharmacies [4].
However, there may still be hope on the horizon. The market for related pharmacy services, such as repackaging systems, is booming, indicating growing demand for pharmaceutical logistics and services, despite the shrinking number of physical pharmacies [4]. Yet, closing the gap between independent and chain pharmacies and addressing the shrinking number of pharmacies in underserved areas will require concerted efforts from all stakeholders.
- Pharmacy
- Turnover
- Independent Pharmacies
- ABDA
- Chain Pharmacies
- Germany
[1] ABDA (2022) "Pharmacy Results Slightly Different After 20 Years," [2] Pharmacy Times (2023) "Financial Challenges Facing Independent Pharmacies," [3] Journal of Pharmacy Management (2022) "Consolidation and Closures in the Pharmacy Sector," [4] Statista (2023) "Growing Demand for Pharmaceutical Logistics and Services."
- The grim financial situation facing pharmacies in Germany, as revealed by recent data, has persisted for nearly two decades, with small, independent pharmacies being disproportionately impacted.
- To address this issue, concerted efforts from all stakeholders might be necessary, possibly including vocational training programs aimed at improving business management skills in the pharmacy sector, as well as exploring opportunities in related fields such as science, health-and-wellness, finance, and business to diversify income streams.
