2020 CEO Survey: Richard Vincent, Australian Pharmaceutical Industries

COVID-19, bushfires and floods put Australia’s medicine supply chain under intense and unprecedented pressure, says API chief Richard Vincent.

What are the three enduring lessons or changes to flow from COVID-19?

COVID-19 brought our political leaders together to find solutions to the unprecedented economic and health challenges of the pandemic.

Our leaders, both federal and state, acted quickly and the formation of the National Cabinet was a demonstration of the kind of bipartisan leadership I think Australians would like to see more of. It is a crying shame that unity unwound as the crisis deepened.

From our industry’s perspective, it wasn’t just COVID-19, but also the bushfires and floods that put our medicine supply chain under intense and unprecedented pressure. I am proud to say we worked together as an industry throughout these emergencies to ensure all Australians continued to have access to vital medicines. Our teams worked round the clock with defence force personnel, government authorities and pharmacists to overcome all the obstacles we faced. During the bushfire emergency, our people met military helicopters and naval barges to reach some of the worst affected towns including Eden, Mallacoota and Merimbula and our drivers mapped out diversions of up to 500km to keep supplies going. And we re-engineered our distribution systems and team structures to ensure complete continuity during the height of COVID-19 infections.

So, the biggest lesson for me was how great team work can overcome almost any adversity. Not once did our team leaders report of complaints about the huge additional workload our people faced. Rather, the overwhelming attitude was: “Tell me what I can do to help?”

When Australia went into lockdown in March it shifted the balance between our CBDs and suburbs, perhaps forever.

Almost overnight, entire workforces were suddenly working from home and busy city precincts, all over the country, fell silent.

Meanwhile in the suburbs, as lockdowns were lifted commercial hubs were increasingly humming with remote workers and travel restrictions forged new, local shopping habits. Most businesses will never return to a model where all staff are in the office all the time and this is going to have flow-on consequences for the balance of CBD versus suburban retail and we’re reflecting that in the current and future mix of our retail network.

There’s no doubt that COVID-19 has accelerated buying online and it is not just with your typical adopters. We have seen older Australians embrace the concept of ordering their scripts online and other OTC needs, then popping into their local pharmacy or having them home-delivered.

How would you rate the shape of our economy as we head into the new year?

Consumer confidence was fragile well before COVID-19. The lockdowns have had a significant short-term impact on our economy and while there are some positive signs and optimism about the possibility of a V-shaped recovery, it’s too early to for a long-term assessment.

The true test of our economy’s bounce-back will be its performance once the federal government’s emergency support measures, JobKeeper and JobSeeker end in March.

De-risking our supply chains is also a key priority for us.

One thing about which I am confident, we’ll weather the storm better than many of our OECD peers.

What three reforms are needed to substantially grow the economy?

The COVID-19 crisis put Australia on a survival footing but as we emerge from this health and economic emergency, the focus must return to tax reform.

The pandemic hurt already weak confidence, which should be bolstered by the personal tax cuts that the federal government has committed to and it’s essential government uses every lever to reinvigorate business. Doing more about the corporate tax rate is an obvious target.

Fostering innovation is another vital plank to re-energise Australia’s economy.

It’s encouraging to see the federal government’s $1.5bn investment in the manufacturing sector and it’s vital that these funds are invested in modernising our key industries.

Investment in research and development in Australia is still behind many other countries and at this crucial juncture for our economy, we must ensure Australia is positioned to take full advantage of emerging technologies.

Both state and federal governments have taken appropriate steps to provide stimulus.

However, it’s difficult to understand why state governments are only temporarily suspending payroll tax.

This decision will have the biggest impact on small to medium-sized businesses, which are also the companies that were hardest hit by the pandemic.

It’s a perverse tax and states and territories should ditch it permanently.

What are the three best growth opportunities for your company in 2021?

COVID-19 shifted spending patterns among our customers. We saw significant growth in products that enhance people’s physical and mental wellbeing.

Our customers want to feel and look good. Demand for home treatments such as skin peel products surged. In every state, after we reopened our Clear Skincare clinics, demand for treatments such as injectables has been very high. In short, looking and feeling good is proving not to be a discretionary spend for many women.

We will continue to develop our Priceline network and invest in the beneficial health products and services that we know our customers want.

We have installed health stations in the majority of our Priceline stores for customers to check key health measures such as blood pressure, body mass, diabetes risk and stress levels.

The range of these tests will be expanded over time and linked to these stations and we have developed an online tele-doctoring service called Scripts Now for customers who can’t get to their GP for a repeat script.

We believe these services, which differentiate Priceline Pharmacy and provide important health services to our customers are a key element of our growth strategy.

What impact will digital transformation have on your company?

The data we collect through our loyalty program, Sister Club, provides a unique opportunity for Priceline Pharmacy to deepen its engagement with these customers.

Sister Club is the biggest health and beauty loyalty program in Australia and we are focused on leveraging its powerful customer data to ensure we are keeping pace with new trends and shifts in buying patterns and that we offer truly personalised offers to our top-tier members.

We also continue to invest in our vital online channel.

In the course of COVID-19 our online sales surged by 69 per cent, triggering the rapid rollout of our Click & Deliver service to complement our pre-existing Click & Collect channel.

The strong growth of online sales has sharpened our focus and we will continue to develop new services in this channel.

How would you rate business, state and federal government performance this year?

Overall good, in the face of considerable adversity. The war of words with China is weighing on too many sectors and needs fixed. Ongoing issues such as weak wages growth have been eclipsed by the pandemic but, as we emerge from this period, the focus must return to this challenge – how to couple productivity improvements with real wages’ growth. All tiers of government have a role to play in reducing red tape. And unions and employers need to reach agreements that are fit and fair for our future, particularly in the gig economies so many already work in and where many more jobs are likely to be created.