Coles has found a way into the pharmacy
sector
, slipping right under the radar.

For
decades, the grocers have chipped away at the health sector. Many
products available only in pharmacies have become less regulated and
are now found on supermarket shelves. Products such as ibuprofen (often
sold
as Nurofen and Brufen) available only on prescription about a
decade ago, were first deregulated to pharmacy-only over-the-counter
purchases and eventually made available in supermarkets. The
distribution of
cosmetic brands such as L’Oreal and Revlon was once largely the domain
of pharmacies. There was even a time when grandma would not have bought
toothpaste, toilet paper or ladies’ products anywhere other than a
pharmacy.

The
big prize, still unavailable to anyone other than the registered apothecaries,
has been prescription drugs, and in particular those subsidised by the
government via the Pharmaceutical Benefits Scheme.

Woolworths and Coles have been eager to have
a more active presence in this sector,
but have repeatedly been stymied by Pharmacy Guild lobbying. Woolworths has
recently been more vocal in their lobbying than Coles, but to little or no
avail. A new five-year agreement between the Guild and the
federal government has been locked away, recently
passing the House, and awaiting Senate approval.

Now, Coles has acquired Pharmacy
Direct
, an online merchant
trading in prescription and pharmacy-only
over-the-counter medicines and other health and beauty products. At this stage, it is unclear what Coles
has in mind for the business, although
they are saying Pharmacy Direct will be operated separately and away from the supermarkets.

The business will provide Coles with
an ideal position from which to develop some expertise in the sector. Pharmacy Direct
currently sources much of its stock through the mainstream pharmaceutical
wholesalers. Coles may want to deal more directly with suppliers.

The next
stage may involve Coles and Bi-Lo
supermarkets taking orders, at a service desk or electronic booth, and
dispensing the medication through Pharmacy Direct. A prescription for an antibiotic or other medication
for an acute condition needs to be dispensed immediately. The fat is in repeat
prescriptions for medications for asthma, arthritis, high blood pressure and
other chronic conditions. Customers can plan ahead and may be willing to wait a
day or so to save a penny or two.

Coles
had a half-hearted go at this sector a few years ago with the ill-fated
Essentially Me stores. Initially, the plan was well conceived but was fatally
flawed in its implementation due to some poor property and ranging decisions. Like
other new Coles businesses (My Car, World 4 Kids, Let’s Eat, Harris Technology),
Pharmacy Direct might not quite dominate its sector.

Whatever the outcome, Coles’s latest move will certainly add new
elements to the next round of Guild-government
negotiations.

Peter Fray

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