Too many chemist shops ?

Australians are paying more than double what people in the UK and New Zealand pay for Generic medicine.   When the patent expires on a drug developed by one of the giant pharmaceutical companies, smaller manufacturers can produce a copy of that formulae - and the price drops accordingly.  

The price of generic medicine in Australia is governed by an agreement by the Federal government in which the price is eighty percent higher than the market price that chemists pay for their supplies.   This fat margin is creamed off by the chemists - who claim that without it many chemist shops would not be commercially viable.    The loss to the wallets of customers Australia wide amounts to $3 million a day.

It is a fact of commercial life that anything with a decent profit margin attracts competition to share in the loot.    Selling really good coffee brewed by a clever barista has become an Australian habit - and so we have a glut of coffee shops across the entire retail sector.

The average Australian shopping centre probable has an equal number of chemist and coffee shops - and that indicates that both return a handsome profit to their owners.   In the case of chemists, this over supply situation is keeping prices unnaturally high - and is leading to the emergence of a new breed of " discount chemists ".

A new Federal government has taken office and one of the things that should be high on it's agenda is a review of this generic medicine price arrangement.  We should not be paying more than double the prices charged in the UK and NZ, and if that means a thinning out of the number of chemist shops - then so be it !

Every other form of commerce has to adjust their margins to meet competition, and there is no reason chemists should be protected at the expense of the public.   Chemists have long feared the intrusion of the grocery duopoly into their trade.   Retaining unsustainable profit margins indefinitely would tend to make this an eventual certainty.

No doubt there will be a long and loud squawk from the industry if a more realistic price regime for generics emerges, but this is the " real world " and this is also the twenty-first century.

A pricing change for generics is inevitable !