Just over two years ago, McKesson Corporation announced the completion of one of the biggest deals in the pharmacy industry with the acquisition of the independent banner and franchise businesses of Katz Group Canada Inc.
By Jane Auster
Only a few months earlier, Nick Loporcaro was appointed to the position of president of McKesson Canada after more than eight years with the company. Loporcaro came to McKesson with a degree in mechanical engineering – an education which is already coming in handy as the company, and the industry it serves, reengineers the way the pharmacy business is being run in Canada.
PHU.ca: How has a degree in mechanical engineering prepared you for a career in distribution and management? Seems like an interesting career path.
NL: I joke about it. I knew I wasn’t going to be a traditional engineer, but I was always interested in business. I started out at Bell in automotive engineering, designing trucks in the telecom sector. I’ve been a self-professed fix and build person all my career — in publishing, in heavy equipment, and for an international trade group. My focus has always been on turnaround or building organizations, helping them grow.
McKesson’s first effort in diversification in Canada was the McKesson APS Group. My mechanical engineering degree ironically was an asset for this job, with pharmacists looking to bring more technology into their businesses. My career in pharmaceutical distribution took an odd entrance. I ran the APS group a little over four years, then I was asked to take over the Eastern Canadian distribution business. On the APS side, we were selling primarily to retail pharmacists, and a lot of our efforts focused on independent pharmacy business. This allowed me to understand their needs, their distribution business and supply chain overall.
PHU.ca: In the rapidly changing world of pharmacy today, the role of the full service distributor is also changing. Do you see new opportunities for distributors to expand their role beyond being logistics providers and evolving into trusted advisers?
NL: Yes. When I look at distribution 10 years ago, if you looked at this company and pharmaceutical companies…99 percent of what we did was wholesale distribution. When you’re dealing with 35,000 products, delivered at 99 percent accuracy, there is a lot of complexity in servicing 8,000 customers a day. We are great at keeping up that level of quality.
We realize that as the landscape continues to change, we touch just about every stakeholder in this industry, getting closer to our customers and understanding their needs.
Naturally our role started to evolve. When we looked south of the border, we saw our US company begin to deal with issues 10 years before us. We were able to see here in Canada what we could emulate, what we could adapt to survive and thrive. How do we get into technology, how do we help our customers who don’t have the financial backing and assets in place to get there? Having those assets, or ability to bring them on board, how do we become the trusted adviser? How do we continue to collaborate to bring all those assets to our customer base to help them to grow? If our customer base continues to thrive and grow, we ultimately succeed.
Initially our automation business was selling machines to pharmacies to help them become more efficient. It became more about not just saving time but freeing up time so pharmacists could do more of those consultative and cognitive services, instead of just counting pills. It became about automation and other technologies to enable pharmacists to deliver services, and building systems to help them respond better to patient needs so they can continue to expand their business.
PHU.ca: In an environment where banners are consolidating and independents are disappearing (closing or affiliating with banners), can the “pure” independents survive?
NL: After the acquisitions we made, we certainly hope so. We firmly believe they can thrive in this environment. We can provide services and solutions to independent pharmacy not just to survive, but to build and grow their businesses. There are challenges: price pressures and government regulations are the obvious, but there are also opportunities.
How do we redefine pharmacy? Pharmacy is an extension of healthcare and should play a greater role. How do we as an industry address that so pharmacists are fairly compensated for that expanded role?
They should be open to understanding that their businesses need to evolve. I always say, never let a good crisis go to waste. This is the time to sit back and consider changes. There are a lot of opportunities for pharmacy and pharmacists to alleviate the pressures on the healthcare system. It’s not just an exercise in how to squeeze another dollar out of a system that’s been compressed.
PHU.ca: What role do you see technology playing in pharmacy’s changing business model?
NL: Technology is an enabler. Pharmacists need to start leveraging technology – from the basics of using equipment to be more efficient to using more technology solutions in the administration and delivery of those other services. Technology is going to help them service their patients better, bring in better outcomes, and keep loyalty by assuring service levels. Technology is not just about cutting costs, it’s an enabler to provide better, more effective, service so that the customer leaving your store feels good about the experience.
PHU.ca: With so many pharmacy options available to consumers where big box, grocery, department stores are all encroaching on traditional pharmacies, how can independent pharmacies continue to compete?
NL: Other retailers could be a threat. They’re very professional, sharp organizations. But at the end of the day I’m going to be more concerned with how I run my business. I can’t count on someone else’s failure for my success. If I’ve equipped myself with the right products and the right partners to provide good service, that’s what going to keep my patient loyal to me. The onus is on me to deliver that application and that service. There’s always some churn in business — that’s natural — but I also believe there’s room in this market to grow, especially if we’re successful in helping take the pressure off the institutional healthcare system. I think there’s room for everybody, in their own niche, to be successful.
PHU.ca: What do you think the pharmacy landscape will look like five years from now?
NL: Pharmacy and our industry as a whole will be a trusted adviser to healthcare, truly partnering on better patient outcomes. The supply chain will ensure the right therapies are delivered at the right time to the right people, no matter where the patient is sitting, at a lower overall cost. Pharmacy is going to play a key role via technology, using more innovative ways to deliver patient care.
If you are in pharmacy today, as much as it seems very daunting because of all the pressures, don’t let this crisis go to waste, because it’s not just your crisis, it’s the entire healthcare system’s. Harness that, and put yourself in the mindset of healthcare solutions and collaboration. If you’re at the forefront of that change, you become a contributor to better outcomes. And you won’t be delivering services for free, you will be compensated and compensated fairly.