Pharmacies' Profit Struggles in Germany Last Year
Drugstore sales experienced an upward trend throughout the preceding year - Pharmacy sales witnessed an upward trend in the previous year
Let's dive into the financial figures of pharmacies across Germany over the past year. The average pharmacy witnessed approximately €3.7 million in sales, with a whopping 80% of that going towards the cost of goods. That leaves a mere pre-tax operating profit of around €162,073. Sadly, a staggering 26% of these pharmacies ended up with less than €75,000, and 7% didn't even turn a profit.
These numbers raise some red flags, as they've barely seen any change in the past 20 years, even after accounting for inflation. The situation is alarming, yet the federal government has kept the pharmacy fee untouched for a whopping 12 years. This inaction has only led to a continuous decline in the number of pharmacies in Germany. As of the first quarter of this year, we witnessed a total of 16,908 pharmacies—133 more than expected by the end of 2024.
ABDA, the association of German pharmacists, warned about this gloomy state of pharmacy sales. However, the government's lack of action may delay the necessary adjustments in the pharmacy fee, ultimately exacerbating the downward trend in the pharmacy industry.
Insight
Pharmacies across Germany are grappling with low profitability, a problem that's persisted for the past 20 years. This stems from the pre-existing conditions in the market, such as government regulations that limit dispensing fees and drug reimbursement rates. The consolidation and vertical integration of large pharmacy chains further exert influence over pricing and reimbursement, making it difficult for independent pharmacies to survive. These factors work together to keep pharmacy profits stagnant in real terms, despite inflationary pressures.
- Pharmacy Profitability
- Regulated Market
- Competition
- Intermediary Influence
- Rising Operational Costs
- In the struggle for profitability among pharmacies across Germany, exploring alternative revenue streams such as community-based health-and-wellness workshops and vocational training programs for customers could provide a valuable supplement to income.
- To counter the stagnant pharmacy profits in the regulated German market, it's imperative for independent pharmacies to invest in innovative science-based solutions and offer cutting-edge vocational training programs to attract customers, maintain a competitive edge, and sustain long-term profitability.
