PHARMACY DIRECT, CURASANA AND ACTIVO HEALTH
Pharmacy Direct is the retail arm of AfroCentric’s vertically integrated pharmaceutical operations. These include Curasana, a medicines wholesaler owned 100% by AfroCentric and Activo Health, a drug importer and rights-holder for the South African market, in which AfroCentric has a 26% stake with a further option to buy additional equity.
OVERVIEW
Pharmacy Direct is a premier courier pharmacy in South Africa, supplying chronic medication to patients across the country, including those in remote rural areas.
Regular delivery of medication is a critical enabler of patient adherence to therapeutic regimes, often the single biggest factor in a patient’s response to treatment. This is particularly true in rural areas, where 75% of Pharmacy Direct’s patients reside, and where the nearest pharmacy may be out of reach.
Pharmacy Direct does not carry the overhead of a large network of properties and employees and is able to offer medicines more cost-effectively than conventional retail pharmacies through lower dispensing fees and no administration or delivery cost. The cost of medicine is effectively managed though formulary compliance to reference pricing agreed with Medical Schemes.
Medical Aid Schemes recognise the value that a courier pharmacy can add, and Pharmacy Direct is currently a designated or preferred service provider to most Medical Schemes in the private market, including Bonitas, Polmed, Massmart, Liberty, Fedhealth, Medshield and Hosmed.
Pharmacy Direct is a designated service provider to the National Department of Health in the distribution of medication to patients on the CCMDD Programme. This internationally funded project aims to:
| • | Improve access to chronic medicines |
| • | Improve service delivery |
| • | Improve patient experience |
| • | Develop a business model for private sector involvement in the provision of healthcare services in the public sector |
| • | Pilot the project for NHI implementation |
Pharmacy Direct has also recently been appointed as the Designated Service Provider for managing, distributing and dispensing chronic medication to Compensation of Occupational Injuries and Disease (COID) patients which will add a potential additional 50 000+ patients.
STRATEGY
Pharmacy Direct is a patient-centered business, with a strategic focus on making healthcare accessible to all. Accessibility is primarily equated with affordability and convenience. Pharmacy Direct operationalises this commitment by charging lower dispensing fees, no administration and delivery fees, while delivering medicine at a patient selected address.
The following strategic objectives reflect this strategy:
| Strategic objectives | Why this is important | Link to Group strategy |
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| Adding value to AfroCentric as an integrated part of the Group’s health value chain | Pharmacy Direct’s ‘backward integration’ into the pharmaceutical supply chain adds to the diversification of AfroCentric’s revenue sources. The Company’s proposition is embedded throughout the value chain of the Group via partnerships with Allegra and Medscheme. |
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| Adding value to clients through understanding the operations and strategic priorities of each Scheme and successfully aligning the business in support | Having a clear understanding of the individual client’s priorities and operational functions enables Pharmacy Direct to provide a tailored service to each Medical Scheme and to translate these through communication, actions and interventions to the patient, thus delivering end-to-end customer care. The Company’s operating procedures keep abreast with client process enhancements, contributing to the longevity of the client relationship and yielding opportunities for growth, as interaction with schemes can provide access to the cohort of patients not currently obtaining medication from Pharmacy Direct. |
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| Timeous use of innovative resourcing methodologies, processes and tools | Effective use of innovation in business processes can yield diverse benefits, including cost efficiencies, new business development and enhanced customer service. |
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| Developing a performance-driven culture through empowerment and the creation of exciting career challenges for all employees | Pharmacy Direct intends to be successful in the medium and long term, ensuring the sustainability of the Company and contributing to that of the Group. To achieve this, the Company recognises the importance of building a diverse team, including capacity-building of a heterogeneous young workforce, while always mindful of developing future leaders. |
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| Flexibility and adaptability to rapidly changing market and technology conditions | An inculcated culture of adaptability and flexibility allows the Company to grow the business in new directions to address emerging market needs and provide added value to clients and patients, thereby growing revenues and enhancing the customer experience |
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OPPORTUNITIES AND CHALLENGES
OPPORTUNITIES
Pharmacy Direct has been in the forefront of a private partnership to NHI, with the contract to dispense and deliver medicines to public sector patients in five provinces. The Company is motivated and looks forward to supporting government in future endeavours.
Pharmacy Direct is committed to capitalise on the vertical integration taking place within the Group by taking advantage of the relationship with Medscheme to grow its patient base, and collaborating with other partners in the group to pursue efficiencies and best practice. Pharmacy Direct has and existing, collaborative relationship with Allegra to manage scheduling and stock control of drugs, claims and co-payments. The relationship with Allegra assists Pharmacy Direct in remaining highly competitive with reference to new patient registration procedures, interrogation of dispensing data and claims history.
Flexibility in pricing strategies allows Pharmacy Direct to attract business through our sustained levels of customer service and compliance management to patients. The Company’s patient-centered ethos means that value is added not only through keen pricing, but also through a personalised approach to service delivery.
CHALLENGES
One of the biggest challenges to growth and sustainability is a shift in the legislative environment that may have a material impact on business operations. Adapting to regulatory change often has severe short term cost implications and can affect the longer-term direction of the business. For example, the prohibition of certain products or services. Another risk is the financial and reputational cost of breaching regulation and incurring penalties, even if non-compliance is unintentional. To mitigate these risks, Pharmacy Direct is diligent in adherence to Good Pharmacy Practice (“GPP”) and maintains a healthy relationship with regulators to ensure that impending changes to regulation can be anticipated and can be provided for.
Pharmacy Direct is dependent on service providers such as the Post Office and long haulage companies and disruption in these industries can have a detrimental effect on the Company’s ability to adhere to distribution schedules. The business has engaged and partnered with a number of trusted suppliers, reducing the risk of catastrophic interruption to operations in the event of a problem with one service provider. High volume of business transacted by Pharmacy Direct has resulted in Pharmacy Direct being a premier Client and which allows for the negotiation of attractive pricing agreements.
Internal industrial action could be a potential risk with recent unionisation of the Pharmacy Direct workforce. To date, the relationships between management, trade unions and employees are harmonious and do not pose any threat to productivity.
PERFORMANCE OVERVIEW AND OUTLOOK
Pharmacy Direct adopted a strategy of organic growth, allowing for a focus on exceptional customer care and meeting or exceeding the expectations of clients in terms of service delivery. This approach proved successful as the Company has grown from a base of 278 patients in 2004 to the current caseload of between 200 000 and 220 000 prescriptions processed per month. The total capacity with the current infrastructure is approximately 500 000 prescriptions per month, which supports Pharmacy Directs committed approach to the Company’s strategy of growth. The values embedded in Pharmacy Direct’s staff in addition underpins a culture of customer centricity.
In line with the Company’s value proposition, Pharmacy Direct demonstrated excellent performance in service delivery. Currently, in excess of 99.9% deliveries are on time and regularly updated monitoring and evaluation systems ensure that this standard is maintained or improved on.
90% of deliveries are door-to-door, with the remaining 10% being collected from alternative pick-up points such as postal parcel counters. Pharmacy Direct delivers medication nationally and internationally. To date no patient has yet been denied a delivery due to an inaccessible address.