April Cover – Niels Bowen

NIELS BOWEN’S STORY of how he established and grew one of Australia’s most

recognised, trusted and successful discount pharmacy chains, Chemist Outlet is a true Central Coast business success story. But where this story becomes truly remarkable is when you learn that Bowen was broke and jobless when he opened his very first pharmacy at Wyoming, a thriving pharmacy to this day in an industry that cops more than its fair share of challenges.

The son of well-known Gosford pharmacist, the late John Bowen, Niels Bowen was born and raised around the pharmaceutical industry. It seemed only natural then that he would complete a Bachelor of Pharmacy once out of school. But even after graduating, Bowen still wasn’t sure if he wanted to follow in the footsteps of his father. Returning to the Central Coast with no money and no job, Bowen was hit with the news that his father had passed away. So while most of his university friends were off travelling the world, Bowen, who couldn’t even afford a train fair to Sydney, had other ideas. Approaching the general manager of Fauldings, the drug company he had worked for part-time while studying, Bowen asked him if he would be prepared to go Bank Guarantor for a loan to establish his own pharmacy. Bowen must have made an impression when working at Fauldings as the general manager agreed, paving the way for Bowen to open the doors of his very first pharmacy. He then approached the Wyoming Shopping Centre property developers and managed to convince them that he was a better choice than Soul Pattinsons. It was 1972 and Bowen was just 22.

Still searching for more, Bowen enrolled in a second degree course at the University of Sydney, an SAB Law degree, which he completed part-time while working in his business. This qualification became very useful in later years as Bowen’s business interests grew and diversified. 45 years on, Bowens Pharmacy at Wyoming continues to perform well and Bowen has built, bought and sold over 40 pharmacies around the country under the banner of his Erina-based company, Bowens Heath Services. The

Pharmacy Group is the employer of up to 500 staff nationally (about half of which are on the Central Coast). The pharmacies are a strategic mix of medical centre pharmacies, privately branded pharmacies and discount pharmacies (Chemist Outlet), the latter being the brand for which Bowen is best known.

Chemist Outlet was essentially born from the key learnings of an unsuccessful business venture. Not long after Bowen opened his second pharmacy at Niagara Park, he founded ‘Pharmacy by Mail’, the second company in Australia to distribute pharmaceutical products direct to customers by mail. “As a retail business, pharmacy was lagging behind other retail businesses,” said Bowen.

“I like to see myself as both a pharmacist and a retailer so ‘Pharmacy by Mail’ was about creating something that focused on what consumers want –value for money and quality service.” The problem with mail order retailing at that time however was that it was all catalogue driven. “There was no customer loyalty and the cost of designing, printing and distributing the catalogues combined with the cost of postage was impossible,” said Bowen. “What’s more, if you’ve got a sick child, you want the medication right now.

We were getting all our customers from regional Australia so I thought; why don’t we simply create a discount pharmacy there? So that’s how we created the brand, ‘Chemist Outlet’.” Today there’s a discount pharmacy on almost every corner. And Chemist Outlet was Australia’s first and continues to be one of the most successful, despite stiff competition from others that followed in its wake.

The Niagara Park pharmacy was subsequently relocated to Lisarow Shopping Plaza to become the group’s first Chemist Outlet.

Since then, Chemist Outlet has experienced rapid expansion. Bowen said the biggest factor in the growth of the business was the change in attitude by the banks. They have bought, sold and developed pharmacies in every state except the Northern Territory.

“The way we’ve sustained our growth over the years is to sell our worst performers and buy underperforming pharmacies to turn them around,” he said. Bowen is very strategic about the way he targets areas in which to open a Chemist Outlet. Regional outlets in particular are of interest due to the size of their shopping population, which could be double the actual population. Bowen also avoids shopping centres. “We work on percentages,” said Bowen. “Our rent has to be a certain percentage of turnover – 2%, no more. You can’t do that if you’re in a big centre.

Pharmacies in these centres are doing it tough. We are starting to see some major groups that have been around for a long time fall over. The survivors are the ones that have their costs under control,” he said.

Today there are nine Chemist Outlets on the Central Coast, the latest to open being Erina Plaza just before Christmas and there are plans to open more in the future. The brand has a strong presence in our region, not only in-store, but also in the local press, on the radio, on television, on six local buses and on the beach via a Little Nippers sponsorship.

Bowen is proud to employ around 250 Central Coast locals and only wishes he could employ more if it weren’t for one of his industry’s greatest challenges.

Challenges

It’s no secret that the pharmaceutical industry has been fraught with challenges and Bowen said, “We’ve dodged a bullet for a very long time.” The key to his company’s survival has been adaptability (through not having all their eggs in one basket), an outstanding culture across the board and an excellent management team in Bowen, who runs the retail side of the operations; junior partner, Jayne Cannon, who is responsible for professional services; and joint General Managers, Ken Gatheru, who manages the internal operations; and Adam Church, who is responsible for the stores and staffing. Ken and Adam are married to Bowen’s daughters.

When price disclosure was introduced as part of the PBS in 2007, the profits went out of selling prescription medications. To add salt to the wound, the government then reduced the dispensing fee. This has led to negative flow on affects in the drug manufacturing industry. “We’re now seeing manufacturers saying it’s not worth us manufacturing drugs anymore in Australia, this will mean more and more drugs will become unavailable,” said Bowen.

Competition from retail giants Woolworth and Coles has been another major challenge to pharmacies, including discount chains like Chemist Outlet. “Woolworths and Coles control 90c the retail dollar,” said Bowen. “In the centres they have a ‘sweetheart rent deal’, they’re allowed to employ casuals, and they don’t have the high penalty rates that other industries have due to their industry agreement with the unions.” This leads to another challenge – high overheads, due to the fact that in the pharmaceutical industry, it is illegal to employ casuals and yet they are still required to pay penalty rates, which eventually forced them to stop opening on public holidays in most locations. “If we were allowed to employ casuals, we would employ more people,” said Bowen. “What country in the world makes it illegal to employ people?”

Opportunity

Bowen recently had the opportunity to speak to new Federal Health Minister, Greg Hunt when he was invited to attend a forum at Parliament House, representing the pharmaceutical industry. He found him to be knowledgeable on the key issues, asking the right questions and showing genuine interest in Bowen’s responses. “Hopefully more common sense will prevail for the future of our industry,” said Bowen

By Phaedra Pym

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