LloydsPharmacy plans to close nearly 200 of its UK stores as government funding, business rates and the apprenticeship levy have made “market conditions challenging”.

The specialist retailer’s planned store closures have been attributed in large part to the government cuts on the level of reimbursement given to pharmacies for fulfilling customer prescriptions.

In a leaked memo to staff Cormac Tobin, the managing director of LloydsPharmacy’s parent company Celesio, said: “Changes to government policy on reimbursement and retrospective clawbacks over the past two years have gradually made operations at many LloydsPharmacy stores commercially unviable.”

Tobin also attributed the retailer’s decision to reduce its number of stores to the cost impacts of the apprenticeship levy and business rates.

LloydsPharmacy, which operates 1,500 outlets and employs 17,000 staff, has not confirmed which stores will be closed or the number of staff that will be impacted by closures, but has said that affected staff will be redeployed where possible.

“Community pharmacy needs to adapt to the changing requirements of patients and the NHS, indeed it should be part of the solution to an overstretched health service,” Tobin continued in the memo.

“To achieve this, we need a new operational framework that creates a thriving pharmacy network that continues to offer essential integrated healthcare and is rooted in local communities.”