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‘Challenging environment’ behind 19% Lloydspharmacy profit drop

The decrease follows a 50% drop in profits for June-August in McKesson's European business
The decrease follows a 50% drop in profits for June-August in McKesson's European business

Lloydspharmacy’s parent company has blamed a “challenging retail pharmacy environment in the UK” for a 19% drop in profits across its European business.

Adjusted operating profit for McKesson’s European pharmaceutical solutions division – which includes Lloydspharmacy and wholesaler AAH – in the three months to September was $43 million (£33.4m), a 19% drop on the same period the previous year, it said in its latest financial report published today (October 30).

This was mainly “driven by the challenging retail pharmacy environment in the UK”, McKesson said.

The latest decrease follows a 53% drop – not taking currency rates into account – for the three months to June. At the time, McKesson CEO Brian Tyler attributed this drop to “temporary, wide NHS underfunding…and to a lesser extent volume weakness”.

Growth in wholesale

Revenue for the European business was up 4%, once currency rates were taken into account, “driven primarily by growth in the pharmaceutical distribution business”, McKesson explained.

Meanwhile, revenue across the whole McKesson group increased 9% to $57.6 billion (£44.7bn) for July-September, compared to the same period last year, “primarily driven by growth in the US pharmaceutical and specialty solutions” business, the company said.

Lloydspharmacy attempted to close or sell 190 pharmacies in 2018, in an effort to cope with the funding cuts in England. C+D has since identified 78 of these branches that Lloydspharmacy has closed, and another 104 that it sold.

Announcing its 2018-19 financial results in May, McKesson said it expected to close more pharmacies across Europe.

What do you make of the latest financial results?

Farmer Cyst, Community pharmacist

ANyone know what's going on with Lloyds items - down some 30% in July when other multiples remain interesting if they're up in August with the new tariff

RS Pharmacist, Primary care pharmacist

Lloyds have been selling or closing many branches. Also staffing levels in their brances are really low, not to mention staff morale. It seems that staff actually dont want the prescription as a result....

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

Careful now, chaps. They have VERY powerful lawyers and they need to boost their profits somehow.

Seriously though, those profits (and they are still heavily in profit unlike a lot of good independents) have been gained , quite literally, from the blood sweat and tears of their employees and yet in these statements there is never any mention of that. In the dim and distant past, Allen Lloyd used to go around his shops and personally thank his staff every Christmas (no bonus but hey-ho). The man was far from perfect but at least he was still connected to the grass roots and he acknowledged that his fortune was mostly based on the graft of others.

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