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Regulation Sets The Stage For Independent Pharmacies To Unite
Strategy to obtain lower prices when purchasing greater quantities of inventory is expected to help them compete with large pharmacy chains
BY TAINA ROSA
January 17, 2002
A group of affiliated independent pharmacies is being formed by the United Retailers Association (CUD by its Spanish acronym) to purchase inventory as a group.
The strategy is aimed at helping them obtain lower prices by uniting and forming "voluntary chains", which allows them to purchase larger volumes of inventory and compete more effectively with large pharmacy chains.
CUD President Ricardo Calero said that the effort originated in September, after the Commercial Development Administration promulgated a new regulation that set forth the parameters to be followed when independent businesses purchase supplies as a voluntary chain to obtain better prices. This regulation is based on Article 18 of Law No. 256 of Aug. 15, 1999, also known as the law that prohibits monopolistic (antitrust) practices.
The regulation describes voluntary chains as entities integrated by independent businesses of a similar nature. These businesses should not have more than five stores or establishments under a same owner or name. In a voluntary chain the businesses remain independent from each other and maintain their individuality, but buy supplies as a group to lower costs and pass the savings to consumers.
"Why should Walgreens be allowed to purchase supplies for all of its stores in Puerto Rico while 10 independent pharmacies cant?" Calero said. "We expect to begin purchasing as a group in a month, and this is not only for medicine, we will purchase all the merchandise you usually see at a pharmacy."
Once the group of pharmacies is formed, CUD will begin negotiations with pharmaceuticals and other suppliers to obtain discounts. The strategy includes uniting some 60 independent pharmacies and integrating them with 60 others that are CUD-affiliated. According to Calero, there are about 500 independent pharmacies on the island.
A group of about 25 pharmacies on the islands west coast implemented this type of strategy two months ago, said Ana Rivera, president of the Community Pharmacy Association.
"We had been talking about setting this up for about three years," Rivera said, adding that as a member of CUD, she will be helping the associations project.
This Caribbean Business article appears courtesy of Casiano Communications.