The Pharmaceutical Journal
Vol 268 No 7191 p419-425
30 March 2002

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GEHE's pharmacies show strong sales growth as it expands in Europe

Pharmacies owned by GEHE AG, including the Lloydspharmacy chain in the United Kingdom, reported strong increases in sales, profits and prescription numbers last year. The company's wholesale division also reported strong growth.

During the year to 31 December 2001, GEHE entered the pharmacy market in Norway, Ireland, the Netherlands and Belgium. It gained 318 new pharmacies bringing its total to 1,721. Lloydspharmacy accounts for 1,339 of these. Sales in the retail division increased by 26 per cent to €2.1bn (£1.3bn), with like-for-like growth (excluding acquisitions) of 10 per cent. Pre-tax profits grew by 50 per cent to €56m. Lloydspharmacy saw sales rise by 8 per cent to €1.68bn.

Michael Ward, group retail director of GEHE and managing director of Lloydspharmacy, spoke to The Journal after a press conference in Stuttgart, Germany, last week. He said: "Our performance in prescription numbers, up 13 per cent, was well above the market level. Our investment in electronic point-of-sale systems and category management has resulted in a 4 per cent increase in over-the-counter sales when our competitors are not reporting any growth." A second national television advertising campaign is to start shortly.

Overseas, GEHE now has 91 pharmacies in Norway, 66 in the Czech Republic, 36 in Belgium and 22 in Ireland. Some of the larger edge-of-town pharmacies in the Czech Republic are to carry the name "Lékárna Lloyds" and the Lloyds mortar and pestle logo is to be used in all overseas pharmacies. GEHE expects to go on acquiring around 250 pharmacies a year.

Commenting on recent developments in Ireland (PJ, 9 February, p162), where regulations covering the control of entry to new pharmacy contracts have been overturned, Mr Ward said that he did not feel that it had any implications for the UK. "The action in Ireland was taken without consultation. When the UK Government examines the evidence to support contract limitation, I believe that it will find it strong and will conclude that control of entry should be retained. When you look at the distribution of pharmacies around supermarkets, you find that there is almost perfect serving of local needs. There is no need to grant extra contracts to supermarkets.

"We can see that following the abolition of resale price maintenance, customers are prepared to pay a small price premium in order to ask pharmacists for advice."

GEHE's wholesaling division, including AAH Pharmaceuticals, reported sales of €14.9bn, up 9 per cent, and pre-tax profits of €240m. AAH now has a 37 per cent share of the UK market and its sales increased by 11 per cent to €3.1bn.