Pharmacy News | April 2023
As Easter 2023 is approaching, what does the next quarter have in store for pharmacy?
Challenges for pharmacy in 2023
2023 started with shocking news of large corporate multiples announcing closures to their branch numbers - Lloyds Pharmacy to close all its 237 branches in Sainsbury’s, Asda closing 7 pharmacies and Tesco closing 8 pharmacies. To top this, there was a further leak in the national press in early March that Aurelius, parent company of Lloyds Pharmacy, has put all of its 1,300 branches at risk of closure.
In addition, a recent RPS survey found that three quarters of pharmacists are so stressed and were thinking about quitting. The Pharmaceutical Services Negotiating Committee (PSNC) met for a full committee meeting early in February 2023 to consider the urgent funding and capacity crisis, as well as proposals from the Department of Health and Social Care (DHSC) and NHS England on price concessions reform and relief measures to ease pressure on pharmacies.
Surely, this should be a wake-up call for the Government to support the pharmacy sector. The rest of 2023 is likely to be a challenging year for the sector with the UK likely to experience a shallow recession, high interest rates, taxes, inflation, energy costs and rising cost of living which has hit everybody hard. The Government urgently needs to decide whether they want to build community pharmacy into their plans to improve access to primary care or stand by and see the sector continue to dwindle in numbers.
How will this impact pharmacy sales?
Pharmacy owners contemplating a sale in the next 6 to 12 months, should bring forward their plans and consider a sale sooner rather than later to maximise the value of the business. With the banking crisis upon us again, there is a fear that the banks will tighten their lending policies even further. They are currently lending 70% for the goodwill of the pharmacy compared to up to 90% in 2021/22. This will have an impact on valuations.
There will be further divestments in the coming months, with more multiples and small turnover pharmacies sold off and despite more stock coming to the market, the pharmacy business remains attractive. It will be a buyer’s market for a while, and they are being more selective in what they purchase.
It is not all doom and gloom!
On a more positive note, we have had more first-time and independent groups register with us and are looking to acquire a pharmacy or pharmacies. First-time buyers are bridging the funding gap with the assistance of mum and dad. Small and medium sized independent groups with a good track record and funding support, are proactively looking to grow their estate. We have also seen an increase in enquiries from investors and those looking to buy a DSP and / or an online pharmacy, with existing contractors looking to operate it alongside their pharmacy.
If you are looking to sell, you need to get your ducks in row and initially provide the following for a desktop valuation:
+ 3 years accounts.
+ If selling branches, provide turnover figure per branch and a split of NHS and OTC sales.
+ FP34s for the last 3 months.
+ VAT returns for the last 3 months.
+ A summary of staffing schedule.
+ Details of the lease and rent.
Selling your pharmacy is one of the most important decisions you will have to make, it pays to have experience on your side.
On the other hand, if you are located within proximity of a Lloyds Pharmacy, you may want to consider acquiring that branch which in return will protect your business, increase your item number, turnover and profit and you will dominate the area. An owner managed pharmacy can offer a far better and more consistent service to their patients rather than a large multiple. We can assist you through our associated company Silver Levene and advise you on a purchase of a Lloyds Pharmacy. We have seen an increase in enquiries from prospective buyers and existing clients looking to acquire those branches and it pays to have an expert advice for guidance on accounts, making an offer etc.
We specialise in community pharmacy sector and have done so for over 30 years helping many pharmacists acquire their first pharmacy or expand their existing portfolio.
Other news
We also look forward to participating together with our associated company Silver Levene in our annual 10km London Legal Walk through the Royal Parks on 13th June 2023. The money raised is to provide much needed free legal advice to the poorest and most vulnerable people in our community from families living in terrible housing conditions to women and children who have been trafficked to the UK. If you would like to sponsor us and make donations, please go to the following webpage: - https://londonlegalsupporttrust.enthuse.com/pf/silver-levene-2023
Thinking of selling or buying?
If you would like a free valuation or talk about how you could achieve a fantastic price for your pharmacy, please do contact us on 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.
Alternatively, if you would like to buy a pharmacy, need accounting, or tax advice through our associated company Silver Levene, please also contact us on the same numbers. Your query will be directed to the right person.
We wish you a happy Easter break and look forward to hearing from you.
This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here. Should you require any advice please do not hesitate to contact us.
