Lloydspharmancy’s pre-tax profits plummeted by 45% from £104.7m to £57.2m in 2012 as sales remained flat at £1.76bn.

The Coventry-based chain attributed the fall in profits and a slowdown in sales growth to a continuing decrease in the NHS drugs tariff, the amount paid to contractors for prescriptions, which has “significantly affected” its margin. The 0.1% rise in like-for-like sales was driven by a rise in prescriptions dispensed, over the counter sales and a fall in pharmacy numbers.

Lloydspharmancy said it is trying to improve margins by working with suppliers to reduce costs and tightly controlling overheads at its pharmacy network and support functions.

Over the year, the company acquired the remaining shareholding in 28 CVR, the parent company of online doctor service Dr Thom.

Celesio AG, the parent company of Lloydspharmacy, announced its intention to reduce the chain’s size and close to warehouses as part of its operational excellence program. This led to expenses of £7.7m over 2011.

This has continued into 2012 under the “One Celesio” strategy, which aims to integrate the wholesale – under its sister company All About Health - and retail divisions. The group revealed it is to make 120 redundancies at its head office last month as part of the integration.

The changes have led to the departure of a number of senior management including former managing director Tony Page, who left in January after just a year in the role, chief commercial officer Steve Gray and supply chain and business efficiency director Philip Streatfield.

Former AAH group managing director Mark James is chief executive of the newly formed Celesio UK country board.