Market Research

Market research has been used to support the development and implementation of the CP2025 strategic planning project. Research helps the Guild and its members to understand:

• Current and future stakeholder needs, preferences and expectations for community pharmacy
• Trends in business, workforce, technology and consumer behaviour
• Stakeholder opinions about potential pathways to transition community pharmacies to 2025

The focus of the market research is:

• Australian health and pharmacy consumers (patients)
• Pharmacy owners and Guild members
• Pharmacy employees and other professional community pharmacy staff
• Pharmacy students

The research program summarised in this report involved a multi-stage, mixed methodology incorporating both qualitative and quantitative elements. Focus groups with patients, Guild members and employees were followed by large-scale general population surveys in late 2017 and July 2018. In early 2018, pharmacy owners, students and pharmacy employee national surveys were also conducted.

• Patients: n = 1,550 National Panel Survey, December 2017.  n = 1,000 National Panel Survey, July 2018.
• Owners: n = 527 Online survey - Guild members and other owners, February - March 2018.
• Employees: n = 830 Open link survey - Pharmacists, assistants, other employees, March - April 2018.
• Students: n = 54 Open link survey at NAPSA conference, January 2018.
• Nine focus groups with owners, workforce and patients across Brisbane, Melbourne and Wagga Wagga, November 2017.

• 91% of Australians used a community pharmacy in the last 12 months, but usage for services is more limited. Patients expect to use pharmacies more in 2025 compared to 2018.
• Satisfaction with pharmacies is very high (93%) and consistent across different types of pharmacies. While satisfaction with the sector is very strong, for individual pharmacies this means that advice and service is, to an extent, somewhat commoditised.
• 62% of patients used only one pharmacy for dispensed medicines in the last 12 months, and in general, show a strong level of apparent 'loyalty' to individual pharmacies. However, much of this is based on convenience and cost, rather than personalised service relationships.
• One-third of patients say that a convenient location is most important to them when choosing a pharmacy, and owners understand this. However, 36% of patients say they are primarily driven by lower cost, but only 4% of owners believe that lower cost is the most important factor. Instead, pharmacy owners (47%) and employees (43%) over-estimate the extent to which personalised service matters to patients (just 13%).
• While owners and employees describe a fairly homogenous pharmacy offer based around one-on-one personalised service, patients describe a more nuanced and diverse market, with different preferences and drivers. The personalised service segment tends to be older, lower social-economic status, and with higher healthcare needs; while the younger segments tend to be more oriented to cost and convenience. If there is even a partial generational dimension to this, then the emphasis on cost and convenience may increase over time.
• A State of the Sector index based on nine dimensions of perceptions sits at 7.2/10 as of July 2018.
• The highest scoring dimensions are ethics and expertise - and there is strong patient support for an expansion of medication management services offered by pharmacists, especially emergency dispensing and prescription renewals for stable conditions.
• Pharmacy owners report generally weaker financial performance than 5 years ago (62%). However, they are somewhat more optimistic about the next 10 years, with as many expecting performance to improve over that timeframe (35%) as expect it to deteriorate (29%0.
• Only 4% of owners feel 'very well prepared' to deal with the challenges of the future, though 56% are 'at least somewhat prepared'. Owners give themselves high business capability ratings.
• Less than half of owners believe that their business model will need to undergo major adjustments (36%) or will even need to be fundamentally different (8%). Given owner understanding of patient drivers that is sometimes misaligned, deteriorating community pharmacy, and high levels of business capability self-confidence, many owners may be underestimating what is needed to prepare for the future.
• Owners and employees underestimate patient's willingness to pay for pharmacy services.
• The strongest support from patients for specific scenarios of how community pharmacy might evolve in the future were for provision of in-home services, and for an expanded range of health services delivered by pharmacies and pharmacists. Technology and automated services were less immediately appealing, and generally not enhancements patients expect to pay for.

Nine-in-ten (91%) of adult residents in Australia have used or had experience with a pharmacy in the last 12 months, for either themselves or for someone else. Among the 9% who did not use a pharmacy in the last 12 months, 54% said they had no need for any pharmacy products or services, 19% said someone else in their household uses pharmacies, and 19% said they got what they needed from somewhere other than a pharmacy.

Most Australians use Community Pharmacies - but use of pharmacy for services is limited.

Patients express varying degrees of loyalty to a given pharmacy, or brand of pharmacy, across their purchase occasions.

In the patient survey, 50% of people surveyed said they used a single pharmacy for dispensed medicines, over the counter (OTC) and front of house products and services, and an additional 15% used multiple pharmacies but only one pharmacy within a category.

For dispensed medicines specifically, 62% of patients reported using one pharmacy only in the last 12 months.

One quarter used multiple pharmacies within categories.

Although this behavioural profile suggests a high degree of pharmacy loyalty within the general population, for many patients this apparent 'loyalty' is superficially and potentially vulnerable because it is based primarily on convenience rather than service relationships. While tempting to think of this consistent patient choice of a pharmacy as loyalty, in practice it is often more of a pragmatic choice than an emotive connection.

Patient loyalty in pharmacy choice is based primarily on convenience rather than service relationships.

Patients are typically very satisfied with their experiences within pharmacies. Especially positive aspects for focus group participants included:

• Personalised customer service
• Services such as vaccinations and being able to get an out of work certificate
• Addressing side effects of medicines before them even being experienced
• Saving money with generic drugs
• Having relevant other products in the same place (e.g. animal medicines)
• Being able to replace expired medicines at no cost
• Being able to get in-language advice and interpretation
• Flexible payment plans for people on multiple scripts
• Sending script renewal reminders via text message
• Extended opening hours

It is notable that many of these satisfaction drivers were associated with services.

The nationwide patient survey found that over half (53%) described themselves as 'entirely satisfied' with pharmacies overall in the last 12 months, and 93% said they were at least satisfied. Almost nine-in-ten (87%) rated pharmacists and the services they offer as 'good' (51%) or 'excellent' (36%).

While these very high levels of satisfaction across community pharmacy are a strong endorsement of the service and experience the sector offers the community, there is an important corollary for individual pharmacies. Because satisfaction is so high, and consistently high, to some extent it is commoditised - with patients confident that they can get a high level of service from any pharmacy.

High levels of patient satisfaction and trust in the sector overall means that pharmacy advice and service has become, to some extent, commoditised.

Patients were classified into one of four segments based on their answer to the question "which is the single most important consideration for you when deciding where to purchase prescription and OTC medicines?" The four segments can be thought of as a Cost segment (36%), a Convenience segment (33%), an Expertise segment (13%), and a Personalised service segment (13%).

Owner perceptions of the motivations behind patient choice area poorly aligned with patient self-classification.

In particular, where 36% of patients say they are primarily driven by lower cost, only 4% of owners believe their patients are primarily driven by cost. Students estimate 17% -midway between the two - and employees estimate 11%.

While patients and owners estimate the importance of convenience and staff expertise about equally, many owners and employees (47% and 43% respectively) think their patients are primarily driven by personalised service (e.g. staff knowing patients and their medical history) compared to only 13% of patients.

Pharmacy owners and employees tend to over-estimate the degree to which personalised service matters to patients, under-estimate the degree to which cost matters.

When asked why they chose a particular pharmacy during their last visit, location in terms of proximity ('convenience') was the main reason for those who filled a prescription or bought an OTC medicine, followed by cost.  Cost was the main reason for those who bought a non-medication product.

Owner and staff perceptions of patient motivations is reflected in business models. When asked to describe their business model across a range of characteristics, community pharmacy owners describe a relatively homogenous offering that leans towards one-on-one, personalised service and advice. Pharmacy employees reinforce this relatively homogenous description.

Pharmacy owners and employees tend to describe an homogenous, personalised service-oriented offer. However, patients describe a more diverse range of drivers and preferences they would like community pharmacy to offer.

However, the fragmented consumer marketplace is more diverse in its wants and expectations, with lower prices, a large range of products and speed and efficiency considered important by many patients and customers.

The varying perceptions of owners and employees about patients' primary drivers and the level of fragmentation in the marketplace suggests they may be poorly prepared for disruptions to the community pharmacy sector which is being caused by new and attractive formats and channels that emphasise convenience and low cost above, or in addition to, high levels of service.

In focus groups, most participants indicated a preference for buying over-the-counter (OTC) vitamins and other healthcare products at a supermarket (if stocked), as this channel was typically perceived as less expensive than pharmacies. Patients felt they generally do not need advice on such purchases and it is also more convenient to buy these items at the same store as their other groceries.

Supermarkets, convenience stores, discount pharmacies and online channels were perceived to be the main competitors to community pharmacy for OTC and other products.

In the patient survey, purchasers of OTC medications were asked where they had purchased these medicines. Despite the preference expressed in focus groups for purchasing OTC products in supermarkets, the patient survey suggests that - at this time at least - most OTC purchases still occur in pharmacies. This may reflect the lack of availability of the products in supermarkets, which was a point specifically made by focus group participants.

In focus groups, patients perceived that they and other patients will be using pharmacies more for dispensed medicines in 2025, due to their own ageing and a generally ageing population. They also perceive that pharmacies will be used more if they provide new services, in accessible and appealing formats.

In the patient survey, most people survey, most people predicted that in ten years' time they will be using a pharmacy equally (51%) to now, or more frequently (41%). By category, increased product usage of a pharmacy is the most likely for filling a prescription (39%), and least likely for buying general retail products (15%). Over one-quarter (28%) think they will be using a pharmacy more in future for receiving tests, procedures or other services. For general retail, the majority believe their pharmacy usage will remain the same as now (71%0, although 14% predict they will be using pharmacies less for this purpose.

Patients expect to be using pharmacies more in 2025 than in 2018.

The market research explored patient reaction to an expansion of medication management services by pharmacists and pharmacies. The majority of patients supported expanded medication management services (7.6/10), consistent with perceptions of pharmacists' expertise in medicine. The highest support was for emergency dispensing of medicines (8.0/10), and prescription renewals for stable conditions (7.9/10). Lowest levels of support were for pharmacists making changes to prescriptions (7.1/10), but even here 51% were strongly supportive  (8-10/10) and only 9% were strongly opposed.

The overall level of support for an expansion of medication management services was 7.5/10, or 59% strongly supportive (8-10/10) and only 3% strongly opposed (0-2/10).

Overall support was greatest among:

• Middle aged persons (those aged 40-59 years had an average score of 8.0/10 compared to 7.5/10 among those aged less than 40 years and 7.3/10 among those aged 60+ years).
• Those who shop in national banner pharmacies (7.0/10)
• Heavy pharmacy shoppers
• Support for an expansion of medication management services is related to general perceptions of the sector. The more positive a person is towards the community pharmacy sector, the more likely they are to support an expansion of services.

Survey respondents were exposed to 30-38 different ideas for new business models, services and products in the community pharmacy sector (depending on the particular audience). It is important to note that respondents' thoughts about the future are inevitably bound, to a certain extent, by their existing experiences and knowledge - in other words, the current paradigm of community pharmacy.

Major themes in patient preferences included:

• In line with the strong emphasis on convenience in pharmacy choice, there was strong support for any ideas which suggested greater physical integration of pharmacies with other allied health providers and services - delivering services in pharmacies.
• In general, there was strong relative support for concepts related to holistic health care and expanded health services (e.g. GP sends a prescription direct to pharmacy followed by home delivery of medicines, pharmacies open 24/7, pharmacies as 'one stop health shops', and pharmacies as preventative health hubs). However, support was more moderate regarding pharmacies playing a greater role in the diagnosis and treatment of ailments, and in sharing patient records.
• Overall, patients expressed the least interest in expanding the product range in pharmacies to non-health products. This is consistent with focus groups, where there was also no strong desire to take community pharmacy into a more retail-oriented space.
• There was also some dislike of/resistance to the notion of de-regulating who may sell prescription medicines (e.g. supermarkets, large corporates and online vendors). Although patients' understanding of the detail or implications of regulation was limited in focus groups, high levels of regulation were valued because they were perceived to lead to higher quality ethical healthcare. This is balanced against the greater convenience or cost savings that greater drug access may offer, and if patients can be confident about quality and appropriateness, then these dimensions will likely prove attractive.

Patients were asked how much they would support or oppose pharmacies charging a fee for certain services that pharmacies currently provide for free.  Overall, only one-in-three people actively oppose pharmacies covering their costs for these services by charging fees.

In general, owners under-estimate patients' willingness to pay for services they receive, and employees are even more likely to under-estimate willingness.

Among patients there was a general acceptance of fees for many potential future service concepts (although the majority did oppose the concept of fees for some, such as pathology, 24/7 opening hours and phone apps).

Five scenarios, representing five of nine potential community pharmacy growth pathways, were presented to respondents in July 2018. These pathways were chosen because of their patient-facing visibility and were framed in such a way as to be meaningful to ordinary consumers.

Scenario 1 - In-home services

Scenario 2 - Health hub

Scenario 3 - Pharmacist services

Scenario 4 - Digital services

Scenario 5 - Automated processes

Patient scenario:

"A pharmacy offers in-home services to assist people who want to remain in their homes for longer. You would access services from your local pharmacy who would send a community pharmacist to visit you in your home".

The in-home scenario had the most positive response overall (6.3/10).

50% strongly supported the idea (8-10/10), including 21% who gave a 10), and very few strongly opposed it (4% gave a 0-2/10). Most people (53%) said they 'probably' or 'definitely' would use pharmacies in this way, and 43% said this would make them use pharmacies more frequently (including 7% 'a lot more' frequently). Over half (54% said this made them feel more positively about community pharmacies.

Support for pharmacies charging a fee for these services was, on balance, positive, with 29% strongly supportive (8-10) and only 15% strongly opposed (0-2).

The component that was most attractive to patients was home delivery of medicines and other health-related products. NESB people, those with a disability or chronic illness, and heavy shoppers were the most supportive of this scenario.

Patient scenario:

"Create community health hubs - facilities in pharmacies for allied health professionals. A pharmacy has private consulting rooms for a range of health services from external specialists. You would book with and pay the health specialist directly, and then use the consulting rooms in the pharmacy. The health specialist will work with your pharmacy to make recommendations about your health needs".

The health hub scenario was quite positively received. Over one-third of people strongly supported the idea (34% gave an 8-10/10, including 13% who gave a 10), and just one-in-ten were strongly opposed to it (10% gave a 0-2/10).

Almost half (47%) said they 'probably' or 'definitely' would use pharmacies in this way and - similar to the in-home services scenario - 42% said this would make them use pharmacies more frequently (including 6% 'a lot more' frequently). 44% said this made them feel more positively about community pharmacies.

The component that was most attractive to patients was the idea of GPs in pharmacy health hubs, followed closely by allied health professionals such as physiotherapists, podiatrists, etc.

The health hub scenario was most supported by people aged 30-49 years, NESB people, and users of banner and discount pharmacies.

Patient scenario:

"Expand the range f health services provided in pharmacies by a pharmacist. You would book with and pay for these services directly to the pharmacy".

The expanded pharmacist services scenario had the second most positive response overall (6.0/10). 42% strongly supported the idea (8-10/10 including 15% who gave a 10). and just 8% strongly opposed it (0-2/10).

Most people (58%) said they would 'probably' or 'definitely' would use pharmacies in this way (the highest across all scenarios), and 49% said it would make them use pharmacies more frequently (including 7% 'a lot more' frequently). Almost half (48%) said this made them feel more positively about community pharmacies.

Support for pharmacies charging a fee for these services, was on balance, slightly positive, with 26% strongly supportive (8-10/10), and 20% strongly opposed (0-2/10).

The component that was most attractive to patients was pharmacies providing tests (e.g. blood tests) and monitoring (e.g. blood pressure) vaccinations, and pharmacies helping patients manage conditions.

People aged 30-49 years and NESB people particularly were the most supportive of this scenario.

Patient scenario:

"Develop online retailing, fulfilment and management for medicines and front-of-shop products. Your local community pharmacy offers some of their services in a digital way."

Development of digital services was also well received by patients (5.7/10), but support for pricing was lower, resulting in a lower composite score.

Over one-third of people strongly supported the idea (39% gave an 8-10/10, including 13% who gave a 10), and very few strongly opposed it (only 7% gave a 0-2/10).  Most people (57%) said they 'probably' or 'definitely' use pharmacies in this way, and 40% said this would make them use pharmacies more frequently (including 6% 'a lot more' frequently). Almost half (46%) said this made them feel more positively about community pharmacies.

Only 18% strongly supported pharmacies charging a fee for these services (8-10/10), and 29% strongly opposed fees (0-2/10). In short, many patients liked the concept but did not perceive it t be a value-add that pharmacies were justified in charging a fee for.

The component that was most attractive to patients was electronic delivery of prescriptions from doctors to pharmacies, followed by online shopping and pharmacist advice via online chat. Younger people, NESB people and discount pharmacy users were the most supportive of the digital services scenario. Among people younger than 30 years, the overall scenario rating was 6.3/10.

Patient scenario:

"Support an increased use of automation technology to reduce cost and increase time serving and caring for patients. A pharmacy automates some of its products and services".

The automated services scenario was relatively the least enthusiastically received by patients (5.2/10), but was still moderately supported. One-quarter of people strongly supported the idea (27% gave an 8-10/10, including 10% who gave a 10), and just 11% strongly opposed it (0-2/10).

Almost half (45%) said they would 'probably' or 'definitely' use pharmacies in this way, and 33% said this would make them use pharmacies more frequently (including 5% 'a lot more frequently). 38% said it made them feel more positive about pharmacies, but 18% felt more negative.

As with digital services, fewer strongly supported pharmacies charging a fee for automated services (15% and 8-10/10) than the 33% who strongly opposed fees (0-2/10, including 20% a 0).

The component that was most attractive to patients was notifications to smartphone or device about the availability of a script for collection, followed by health monitoring and advice via smartphone apps. Younger people, NESB people, discount pharmacy users and those who are primarily driven by 'expertise' in their pharmacy choice were the most supportive of the automated processes scenario. Among people aged younger than 30 years, the overall scenario rating was 6.0/10 (compared to 4.3/10 among 60+ year olds).