Developments in price and reimbursement demand tough measures
The intended restructuring comes as a direct consequence of the continuously deteriorating climate for pharmacies and pharmaceutical wholesalers in the Netherlands and a further drop in the price of pharmaceuticals prompted by insurance companies’ reimbursement policies.
“These circumstances mean that, without taking extensive measures, pharmacies and wholesalers will no longer be able to do business in a financially sound manner,” says Mediq’s CEO Marc van Gelder. “The continuing tough market conditions force us to carry out a new reorganization, whereas we finalized the latest restructuring only early 2012. This is a severe blow for our colleagues in the pharmacies, as well as in the distribution centers and at head office. Taking into account the continuing poor market circumstances, we have to act now, in order to continue to deliver the necessary care to the patient and to guarantee the continuity of our pharmacy operations.”
Since the introduction and expansion of the preference policy, the price of pharmaceuticals has dropped so significantly that some products are among the lowest in the world. Low pharmaceutical costs for patients are desirable. However the current business model of wholesalers and pharmacies is not suitable for this. One direct consequence is that fees for wholesale activities are significantly lower than in other European countries and, for the most part, no longer cover costs.
Care for the patient remains underlying principle
Mediq will continue to take patient care as the underlying principle for its policies. One of the spearheads in this strategy is to further implement the integrated pharmaceutical care program GFZ.
The cost reduction measures will focus on further efficiency improvements, centralisation and the automation of work.
Nearly half, i.e. 62 FTEs, of the intended lay-offs will be made at the Pharmacies Netherlands head office in Utrecht (NL). The majority of the measures will be implemented early 2013. The distribution center in Staphorst will also be closed early 2013, and distribution will be centralized at the distribution center in Oss, with on balance a loss of 15 FTEs.
Intensifying regional collaboration between Mediq pharmacies
In nearly half of the 225 pharmacies measures must be taken to safeguard an acceptable financial result. The core of the plan is an intensification of the cooperation between Mediq pharmacies on a regional basis, to be able to keep patient care on the highest quality standards.
This entails further collaboration between the various Mediq pharmacies and organizing work more efficiently, e.g. by expanding the central processing of repeat medication. Seven pharmacies will be downgraded to distribution points. On balance, 57 FTEs will be laid off over the course of 2013 and 2014 as a result.
Mediq is discussing the request for advice with the Mediq Apotheken Works Council and the social plan with the trade unions.
Financials
The restructuring will lead to savings of € 10 million in 2013, €18 million in 2014 and as of 2015 to annual savings of € 19 million.
Especially as of 2012 the result of Pharmacies Netherlands is under severe pressure; we expect this pressure on the underlying results to persevere for the time to come. The above mentioned savings as a result of the reorganization are essential to improve results.
Restructuring costs total €18 million, of which €13 million will have a cash effect. Mediq will book a provision of €12 million in the second half of 2012, and €6 million in 2013.