Drug Topics' 2012 Business Outlook Survey
Pharmacists are predicting another promising year for 2012, but it won't be without bumps in the road. Most pharmacists believe the pharmacy industry will continue to prosper in 2012; however, optimism isn't as high as it once was and pharmacists are predicting slower growth, fewer raises, and an increased surplus of pharmacists in the year ahead.
These were some of the findings from Drug Topics' 2012 Business Outlook Survey, an annual survey of more than 700 community, hospital, and long-term-care pharmacists that examines the industry's current climate and future prospects. This year's survey was fielded for 1 week in late October.
Lonny Wilson, DPh, president of the National Community Pharmacists Association (NCPA) and owner of 3 independent pharmacies in Oklahoma, said that pharmacies will be affected in 2012 by Medicaid cost reductions and continued pressure from third parties to lower reimbursements.
"I think 2012 has an opportunity for growth in sales, but certainly with decreased margins," he said. Despite the challenges of the past year, most pharmacists are reporting a successful 2011, and they expect that trend to continue through 2012. Of the 579 community pharmacists who responded to the survey, 77% said they were expecting an excellent, very good, or good business year in 2011, and 60% expect their net profits for the year to either increase or stay the same as they were in 2010.
When asked about the business climate for 2012, 70% of community pharmacists are predicting an excellent, very good, or good business year.
That optimism extends to health-system pharmacists as well. According to the survey, 71% of the 155 health-system pharmacists who responded to the survey expect an excellent, very good, or good business year in 2011, and 73% predict the same for 2012.
Community pharmacists have enjoyed another relatively successful business year, but the economy continues to struggle and consumer confidence has yet to fully rebound. Nearly half of community pharmacists (49%) described consumer confidence levels for retail spending as fair, while 28% described them as good, and 18% described them as poor. Similarly, 48% described the current economic climate for all retail businesses as fair.
Overall business view for 2012
In addition, the continuing recession was cited by 77% of community pharmacists as 1 of the negative factors affecting their business this year, along with lower reimbursement from third parties (cited by 71%) and mandatory mail-order programs (cited by 64%). While community pharmacists are predicting a relatively positive business outlook overall for 2012, 35% believe that their net profits will decrease in 2012, and 24% predict that they will remain the same. Of those predicting a decrease, the average decrease expected was 11%, while the 25% of community pharmacists who anticipate an increase in profits are expecting an average increase of 8%.
Growth in the community pharmacy market also appears to be slowing, with 59% of community pharmacists reporting that their company does not plan to open any new pharmacies in 2012.
"The companies are opening fewer stores; they are not expanding the way they normally did before," said James Scanlon, BS, RPh, a pharmacy manager at a Target store in Massachusetts and a Drug Topics Frontline editorial advisory board member. "It's much more calculated. They are spending an awful lot more time picking the right locations and closing poor locations. It's very different than it was 4 or 5 years ago." While the pharmacy industry is not immune to challenges, it has also seen its share of positive influences. Some of the top positive factors in 2011 that affected business were major brand drugs going off patent (65%), medication therapy management [MTM] (29%), and the increase of e-prescriptions (40%).
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