The pharmacy sector is becoming increasingly competitive with a growing number of entrants, despite it not having been very lucrative for some of the big retailers. Corporate pharmacies had not been hugely profitable because the retail margin was capped through single exit pricing, said Jean Pierre Verster, a portfolio manager at Fairtree Capital. "So just being a retailer doesn't help them — you need to own the wholesaler as well." However, big pharmacy chains such as Clicks and Dis-Chem, have leveraged off dispensaries. Placed at the back of stores, customers have to wend their way through the shop to buy medicine, a strategy to get them to fill their baskets along the way. "What the retailers do is look at Clicks and Dis-Chem and see the great results," said Verster. "[But] it's not about the pharmacy — it's about the front shop. Whereas the pharmacy fee is capped in the dispensary, it's drawing feet through the front shop and they can make unregulated margins." Nevertheless, one...

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