Chemist shop monopoly delivers highest margin

Media Release

Date: 23 January, 2003

Chemist shop monopoly delivers highest margin in retail

Pharmacists who are fighting to retain New Zealand’s last retail monopoly currently have the highest profit margin of any retail category according to the New Zealand Retailers Association.

“Chemist shops have a retail margin of 11.1 percent* – easily the highest of any category and more than two and a half times the average for all retailing,” said Retailers Association CEO John Albertson.

“High prices are what you expect to find when someone has a monopoly, so it’s not surprising that chemist shops are so profitable and not surprising that the Pharmacy Guild is fighting very hard to maintain pharmacists’ monopoly on ownership of chemist shops.”

“The Health Professional Competency Assurance Bill currently before Parliament would continue pharmacists’ monopoly on owning chemists shops if passed in its current form. Ironically the same Bill will end a similar monopoly currently enjoyed by optometrists – but conversely has the support of the optometrists!”

“That would leave chemists as New Zealand’s only retail monopoly with all the downside for consumers.”

The New Zealand Retailers Association, supported by the supermarkets and other major retailers, are seeking to have the current restrictions on who can own a pharmacy removed.

“This would not change who was able to dispense drugs or provide advice – only a registered pharmacist could do that. But it would mean that a supermarket or department store could own and operate a pharmacy as a part of its store, employing registered pharmacists to provide dispensing and advice.

“Last year when the possibility of loosing their monopoly was raised, the Pharmacy Guild ran a campaign implying that standards were at risk. In fact the only things at risk are chemist shop owners’ high margins and shorter opening hours.”

* Source: Statistics New Zealand Net margin = Operating surplus before income tax as a percentage of total income. The salaries and wages paid to working proprietors have been included into the operating surplus. Net margins by retail category (%):

- Supermarkets 2.3
- Department Stores 4.0
- Clothing Retail 6.3
- Footwear Retail 7.2
- Furniture Retail 5.8
- Floors Covering Retail 6.7
- Domestic Hardware & Household 6.2
- Domestic Appliance Retailing 2.8
- Sports & Camping Equipment 7.2
- Chemists 11.1
- Garden Supplies 8.6
- All Retailing 4.4
(Note: some smaller subdivisions are available but the data is not highly reliable)

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