PHARMACY business Norchem has started a new company as part of a diversification drive to stay one step ahead in the wake of Government efforts to cut health service costs.
The County Durham firm, which has a turnover of around £30m and employs 250 people, has launched Thrive, an online vitamins business which will see the company perform on a national stage for the first time.
The new spin-off business will package a 28-day vitamin regime, personalised to each online customer.
It will allow the company, which has traded solely within the North East for more than 50 years, to branch out into the wider UK market.
Norchem chief executive Peter Batty said: “This new business is quite unique and will take us out of the North East, helping us generate sales in other areas to a wider marketplace.
“It means that we can grow the business without being reliant on the North East and Government funding. We’re proud of being a North East company but we need to look at other opportunities.”
Last year, the company launched Norchem Services, to provide out-sourced services such as human resources and payroll for independent pharmacies across the North East. The business also has a pharmaceutical wholesale wing and runs 21 of its own pharmacy shops across the region.
Until the launch of Norchem Services, the company received around half of its turnover from wholesale – supplying drugs to independents – and its own chain of pharmacies.
The company, which was founded in 1960 and now has more than 100 customers, has been forced to cope with major changes in the wholesale market. The ‘direct to pharmacy’ policy adopted in recent years by the big drug companies such as Pfizer has hit turnover.
Norchem’s turnover for the year to the end of May 2012 fell by 7% to £30.3m, while pre-tax profits for the year grew from £649,784 to £954,208.
Despite a further year of difficult trading conditions, Norchem’s group of directors were pleased with the company’s performance in 2011/12.
And despite a fall in turnover of 7% decreasing overheads led to an improved group operating margin of 4.5% being achieved.
Batty predicts the trend for reducing turnover to continue within the wholesale operating, but is confident that the group will remain profitable.
He said: “We count a number of NHS hospitals among our customers, so we’re keeping a close eye on Government efforts to cut health service costs again this year.
“However, last year we managed to increase company profitability and our number of employees by 10. This year will be about maintaining that level of profitability.”