Gross Profit Margins in London & Greater London have remained fairly consistent since 2018 at around 37%. However, as evidenced in the graph below the margin has reduced to 33.8% in the sales that have completed or been agreed so far in 2020 .The most recent data includes a fairly small percentage of pharmacy sales with a significantly lower margin which if excluded suggests a more accurate figure of 35.9%.The main reason cited for this reduction has been significant drug pricing and supply issues encountered over the last 12 months, together with a number of incidents of loss making dispensing on specific items, overall placing financial pressure on contractors. The COVID 19 pandemic has exacerbated this situation further due to increased demand and subsequent wholesale prices which have created well-publicised cash flow issues for many pharmacies. This has been alleviated to an extent by the Advance Payments, Is the most recent Advance Payment still the £20m paid at the start of July?This payment has increased the overall sum of wider COVID-19 related Advance Payments to £370m which, unless there is a change in the current policy, will ultimately be clawed back at some point in the near future. As a result of this many contractors have decided to place a greater emphasis going forwards on researching and securing more favourable purchasing arrangements from existing or new suppliers wherever possible.
The table below shows the consistency seen in average yearly figures since 2017.