Entry barriers in retail pharmacy: a novel model

Abstract

PurposeBarriers to entry and entry deterrent strategies are widely discussed elements of the strategic literature and help define the attractiveness of an industry. The channel structure of the pharmaceutical industry, in part because of the level of regulation applicable to it, has the potential for idiosyncratic strategic behaviour. The purpose of this paper is to explore the applicability of traditional approaches to entry barriers and entry deterrence in the Australian retail pharmacy industry facing the threat of a major entry by examining the perceptions of incumbent retail pharmacists regarding the strength of potential barriers to entry into the industry, and their likely response to entry.Design/methodology/approachThe paper uses both qualitative and quantitative methodology to categorise potential barriers to entry in terms of their perception by incumbent players. More than 20 in‐depth interviews are conducted with a range of stakeholders and 132 retail pharmacists completed questionnaires.FindingsThe paper suggests that this industry is relying on barriers which, while arguably effective, are outside the industry's control, and do not justify the apparent complacency among retail pharmacists.Practical implicationsThis research is of significant managerial relevance since it demonstrates that the incumbents are unprepared for potentially devastating impacts if supermarkets or other new competitors were to enter the market.Originality/valueThe authors propose and utilise a novel framework for entry barrier analysis which includes the perceivedlocusof control for each entry barrier. The contribution of the paper is therefore in its treatment of the traditional arena of entry barriers and deterrence.