Impact of competition on profit and revenue of pharmacies in Norway

Abstract

<p>Introduction: Since 2001, due to the change in the Pharmacy Act, the accessibility of pharmacies to the public has considerably increased due to the increase in the number of pharmacies owned by chain wholesalers. In terms of pharmaceutical brands, competition serves as a driving force that compels brands to make new, effective, and enhanced medicines while encouraging generic companies to provide more cost-effective alternatives (2). In Norway, 5,200 inhabitants per pharmacy were getting services from the pharmacies, irrespective of their brands, in 2022. <p>Methodology: This thesis followed a cross-sectional study design and utilized the statistical database related to revenue and profit from Norway. Whereas, total population residing in the respective municipalities from Statens Legemiddelverk. Analyses consist of descriptive statistics for baseline characteristics. A one-way ANOVA was calculated for the p-value. Similarly, the main results went through linear regression analysis. <p>Results: Among all pharmacies in Norway, most made (2.3±2.9) percent of their total revenue as profit. “Competition of pharmacy” was a significant predictor variable [Bcrude = -0.395, 95% C.I. = (-0.752) - (-0.038)] at the 5% level, suggesting a negative relationship with “profit percentage." After nullifying the confounders, the result showed that there was still a significant relationship between “profit percentage” and “competition of pharmacy” [badjusted = -1.650, 95% C.I. = (-2.611) - (-0.690)] at the 5% level. Similarly, “competition of pharmacy” was a significant predictor variable [Bcrude = 1,931, 95% C.I. = 1.591–2.271] at the 5% level, suggesting a positive relationship with “total revenue per capita." After adjusting other variables, the result showed that there was still a significant relationship between “total revenue of pharmacy” and “competition of pharmacy” [Badjusted = 2.027, 95% C.I. = 1.690–2.364] at the 5% level. <p>Conclusion: From this thesis it can be concluded that with the increase in competition among the pharmacies there will be less profit gained by the pharmacies. On the contrary, the positive association was observed between competition among the pharmacies and revenue per capita of pharmacies in Norway, which showed that with the increase in competition, revenue per capita will also increase.