The Pharmacy2U boss on saving the ailing NHS and stockpiling medicine
The first ever UK chemist opened its doors in 1734, says Mark Livingstone when I meet him for breakfast.
But it’s not so much this 285-year history that’s remarkable – it’s the fact that the business of dispensing drugs has barely been disrupted during that time.
As the former managing director of Lego says: “When you think of all the innovation in healthcare, it’s incredible to think that the pharmacy business hasn’t changed for almost three centuries.”
Until now, that is, because subscription company Pharmacy2U, which Livingstone now runs, is giving the pharmaceutical sector a twenty-first century healthcheck.
The drugs do work
Billed as an alternative to a chemist, Pharmacy2U is for those of us – and there are lots – who have repeat prescriptions. In fact, Livingstone tells me that 43 per cent of UK adults have a repeat prescription. It’s an £8bn market in England alone.
Having spent much of his career building subscription mammoths like Amazon-owned Lovefilm and healthy snack firm Graze, Livingstone seems like the right man for the job.
But it wasn’t always about medicine. Initially, Livingstone’s plan was to create a subscription service for vitamins and supplements. He bought into a company called ChemistDirect with the intention of using the platform for his new business.
However, he later stumbled on what he describes as the “far better idea” of an online-only business for repeat prescriptions.
This already existed in the form of Pharmacy2U, which had been founded by Daniel Lee back in 1999, who still works for the business as chief pharmaceutical officer. Livingstone saw the potential, and raised £40m to merge the two entities, creating the largest online pharmaceutical supplier in the UK.
Healthy circulation
Here is how it works. When you are prescribed medication through your GP, you simply nominate Pharmacy2U to dispense your drugs. It delivers them straight to your home or workplace at no extra cost, eradicating the need to queue at your local chemist.
It’s a bit like Ocado for drugs.
Chief executive Livingstone admits that none of this would be possible without the NHS electronic prescription service. This sends information about your prescription to a central database known as the NHS Spine, which allows for the exchange of data between pharmacies, GP practices, and hospitals. Surprisingly, this is an example of NHS IT actually working well.
If you give Pharmacy2U permission to access information about your repeat prescription, the firm receives a real-time message and will ship your meds from its dispensary in Leeds.
While I know that the NHS is one of the sacred cows, something has got to give
The company also sends a reminder when you are about to run out of medication, and can liaise with your GP to dispense a fresh batch.
“From a consumer perspective, it’s a breakthrough because it takes all the hassle out of getting your drugs,” says Livingstone.
But it could also be a breakthrough from a business point of view, because Livingstone reckons that we’ll get to a point in the next 10 years when patients can receive the full GP treatment in a pharmacy.
Admittedly, this will need to be driven by government policy – namely through changes to how chemists are paid. “We believe that the way community pharmacies will be remunerated in the future will be far more about services, rather than the current system where remuneration is dependent on how many pills they dispense,” he says.
“At the moment, they haven’t got much incentive to be service-oriented. But we believe that’s changing.”
Free at the point of delivery
Livingstone is an efficient talker, often preempting my questions before I have a chance to ask them – such as how the company can afford to deliver the drugs for free.
Unsurprisingly, this comes down to scale. “Our total cost base is much lower than bricks and mortar chemists – because, rather than having 100 stores with 3,000 staff, we have a single dispensary that has 100 staff and uses lots of automation.”
Compared to a traditional chemist, Pharmacy2U claims to be 15 to 20 per cent cheaper for the NHS. In turn, this means that the health service is able to save money, which can be spent on other vital services.
Many will applaud a company that is working to aid the ailing NHS. And despite its struggles, Livingstone says that our health service has the admiration of the world. “No country has a health service with the same level of central databases that the NHS has – we are world leaders.”
But he doesn’t deny that it is facing some huge challenges, and reckons that semi-privatisation of certain NHS services is “inevitable”.
“While I know that the NHS is one of the sacred cows, with an ageing population and a funding ability that is at best standing still, something has got to give.”
Stockpiling epidemic
We can’t talk about medicine without mentioning the fears that a no-deal Brexit will threaten the supply of drugs in the UK. But Livingstone is firm when he says his company is not stockpiling drugs, adding: “We have been specifically told not to.
“If there are problems, I think we’ll be able to weather it better than other chemists. We are a service of scale, so we are able to build in a greater degree of buffer on our drugs – so we think we are very well placed. And because we are a repeat business, we have predictable demand curves.”
Pharmacy2U has raised £100m in funding in the past two years, and now has 300,000 active patients. Livingstone predicts that the company will be able to serve around three million patients in the next five years.
Perhaps over time, the 12,000 pharmacies in the UK will be the place people go to for a primary healthcare consultation, freeing up time for GPs to deal with more serious cases, while traditional pharmaceutical services will be conducted purely online.
I guess we’ll have to be patient to find out.