harmacy-led health and beauty group Alliance Boots has slashed 200 UK pharmaceutical wholesaling jobs as part of a 1,500 global cull in the division fuelled by extremely difficult market conditions, a spokesperson has confirmed to PharmaTimes UK News.
The group is actually increasing its overall headcount this year but has been forced to make the job cuts in its wholesaling division following what it describes as “the most difficult market conditions” ever seen, with heavy competition, changes to regulation and currency effects creating a tough operational environment.
According to the group, wholesale market growth from the introduction of expensive new branded medicines is taking a battering from the increased penetration of lower priced generic medicines - with year-on-year rises in all its western European markets - and by generic price cuts. In addition, it says parallel trade in Europe is thinning as manufacturers increasingly look to curtail such activities.
So in order to further adapt its wholesale businesses “to meet the changing expectations of customers and payors”, Alliance Boots says it has kicked off a restructuring programme in the division that, while generating one-time charges of £60 million for the year 2008/9, should garner cost savings of around £55 million by 2011.
The news came as Alliance Boots’ wholesaling division booked revenue growth of 17.8% to £11.3 billion for the year ending March 31, 2009, helping to push trading profits up just over 4% to £215 million.
The group’s health and beauty division also fared well, with turnover climbing 3.1% to £6.3 billion. On the health side, dispensing and related income grew 7.5% to £2.3 billion, as growth in dispensing volume helped cushion a slightly lower average revenue per prescription, mainly because of lower generic reimbursement prices, the firm said.
Solid growth in pharmacy services
In addition, growth in pharmacy services income – which is mainly derived from medicine checkups (formerly known as medicine use reviews) and other locally-commissioned services, leapt 30% year-on-year, while retail health sales (including non-prescription drugs and vitamins) inched up 1.6% to £756 million.
Overall, the group’s sales for 2008/9 hit £20.5 billion, up 15.5% on the previous year, leading a profit increase of 11.6% to £953 million and leaving the company in relatively good stead to ride out the current economic downturn.
Stefano Pessina, Alliance Boots’ Executive Chairman, said he was pleased with the results and that the company’s financial position remains strong. Furthermore, he said since year-end the group has continued to perform well, and “as a result we remain confident about our prospects for the year ahead”.