By 1975 UniChem had come through the years of struggle and of being looked down on by its competitors as an aberration. These competitors had come to realise that this somewhat brash upstart was here to stay. Furthermore, its status as a co-operative, with no shareholders to please, other than its members, seemed to give it an advantage.
The company had overcome the near-bankruptcy problems of 1972, and the poor service problems of the same period. Its sales and net profit figures continued their rapid rise, and the company was now an accepted and valued member of the pharmacy world, at least by the manufacturers. Therefore the years from 1975 to 1980 can now be seen to have been the consolidation years for UniChem.
The two new ordering systems, WOLF & Prosper, had given the company an edge in its marketplace, and the competitors were finding life quite difficult.
The Friendly Society concept was immensely popular with its members, who knew that they had ultimate control of the company, through its board of management, and that there were no other shareholders to worry about.
Under the company’s articles, the Board of Management was limited to a maximum of five executive directors, including the managing director. There were also nine non-executive directors, including the chairman, all active retail pharmacists. Additionally, each of these non-executive positions was to be filled by the election of a member, by his or her fellow members. All of this meant that the members, should they wish to, were able to exercise final control.
In the mid 1970’s, only four executive director posts were filled. They were Peter Dodd (Managing Director), Geoff White (Marketing Director), Ray Monaghan (Director of Finance) and John Thompson (Operations Director). The nine non-executive members were, Michael Frith (Surrey, who was chairman), Norman Sampson (Leicestershire, who was vice-chairman), Ken Seal (South Yorkshire), Frank Jamieson (London), David Mair (Scotland), Victor Hammond (Herts), Ken Rutter (West Yorkshire), Marion Rawlings (Wales) and Bill Rucker (Devon). This group gave a good geographical spread of the United Kingdom. As a result the membership felt that their representation was what was needed.
During the next couple of years two further retail pharmacists were elected to the Board, as replacements. They were David Davidson (Lancashire) and Godfrey Raivid (N.London). Each of them went on to serve more than ten years in office.
During 1976, a new system of “graduated” annual rebate was introduced. Under this scheme the value of a member’s purchases of OTC products, which was to be returned to him in annual rebate, was graded in proportion to his purchases of dispensing items. It meant that, the more a member purchased in medical lines, then the greater would be the percentage rebate returned on his OTC purchases. Naturally, this method of calculation served to greatly encourage an average member to maximize his medical business with UniChem, particularly as he part-owned the company.
From UniChem’s point of view the new scheme was a big success and its market share continued to grow satisfactorily. Unfortunately, the company’s competitors joined together, in an attempt to convince the courts that UniChem’s actions had breached the Resale Price Regulations in force for “medicines”. Unfortunately, the presiding judge would not accept the company’s submission that it was simply returning its profits to the shareholders. In view of this court ruling, the scheme had to be withdrawn, in 1979.
Happily, most of the extra members and trade, which had been generated by this new innovation were retained. One can only assume that, as most of the new members continued to trade with UniChem, they felt that the company was striving on their behalf.
However, a year later the controversy was overtaken by events. Macarthys Ltd, who were under severe pressure from some smaller wholesalers offering discount on medical purchases, made the announcement that they were to join in the practice of such “illegal” discounting. Vestric and UniChem each made an effort to stem the tide, by not following suit for two months, and by publicly pointing out to all retail pharmacists the inevitability of adverse consequences following from such practices, but without success.
The annual rebate scheme, which had served so well, for so long, had to be replaced immediately, with a “monthly discount for 30-day settlement of account”. This was exactly what had been predicted by UniChem and Vestric. The first seeds had been sewn for the Ministry of Health to act. Resale Price Maintenance at wholesale level was very quickly withdrawn, and the way was opened for the Government to reduce the price paid to retail pharmacies for the cost of the ingredients used in dispensing.
This was done by the introduction of the so-called “claw-back” scheme, whereby the pharmacists’ monthly remuneration for dispensing prescriptions, was to be reduced by an amount equal to the notional discount, which was said to be available to him.
Even with the benefit of hindsight, it is difficult to see what else could have been done to stop the switch to discounting. Once the pharmacists had decided that they must have “instant discount” rather than an annual return of monies, the UniChem rebate scheme was finished.
In the autumn of 1977, it was announced that Mike Palmer was to succeed Marketing Director, Geoff White, on his retirement, which was due the following year. His title was to become Commercial Director, which was to reflect his financial background. Unhappily, a further re-arrangement became necessary in this department in 1979, when John Speller left to join one of UniChem’s competitors. This was followed by the appointment of Bill Hart as Assistant Commercial Director with full responsibility for marketing and sales activity.
John Speller’s departure was the first occasion that a senior manager had left the company of his own accord, since the crisis days of 1971. Although it did, naturally, have a somewhat unsettling effect on all working at Head Office, this was, happily, short-lived.
Also in 1979, David Walker was appointed to be UniChem’s first Data Processing Director, and this brought the number of full-time executive directors on the Board up to the full quota of five.
1979 was also to mark the last year of Michael Frith’s five-year tenure as Chairman of UniChem. It had been a period of huge change in the company and in its trading environment, and his boyish charm and obvious complete sincerity had made him a great success at customer gatherings. He had certainly made a very real contribution to the great amount of goodwill that had been generated among the members. He had given his time unstintingly at many of these meetings, and, particularly in the early difficult days, had earned the full respect of many pharmacists, who had not necessarily come to praise. He was succeeded by the vice-chairman, Norman Sampson, and the company was lucky indeed to have a man of his integrity and sound common sense, to succeed to the post.