Pharmacy News | July 2023
In our Summer 2023 newsletter, we report on important matters relating to the pharmacy sector
NHS is 75!
We celebrated the 75th birthday of the NHS on 5th July 2023, this milestone makes a perfect opportunity to recognise dedicated staff who make the NHS what it is today. Treating over a million people a day, the NHS touches all our lives. Community pharmacies are an integral part of the NHS, recognised for their hard work, dedication and making a key contribution most recently by administrating new record of 5 million flu jabs.
Government investment for community pharmacy
The government has promised a £645m investment in community pharmacies over two years which will help community pharmacies. However, there are still questions that need answering and it is not clear if this is a one-off cash injection or new long-term commitment. This is a significant investment in community pharmacy set out to improve access to primary care. It is a step in the right direction for pharmacy however more investment is required to address the funding crisis, staff shortages and medicine supply issues.
Continuing corporate closures and disposals
After months of speculation, LloydsPharmacy permanently closed 237 of its stores in Sainsburys on 13 June 2023. Only a few weeks later, Boots made a shocking announcement that it is set to close 300 branches within the next 12 months. Several of the big pharmacy multiples such as Rowlands Pharmacy are also considering taking similar tough decisions of closure and/or disposal. These changes mean that pharmacies that are being off-loaded by the larger multiples are being acquired by medium, smaller and other independent groups, including many of the first-time buyers and investors, which is a positive for community pharmacy.
New NHS Pharmaceutical and Local Pharmaceutical Services (PLPS) Regulations
With new regulations, 100-hour pharmacies can opt to reduce their core contractual hours from 100 to 72. Some of our clients have already taken advantage of this and submitted application to reduce the hours. With reduced opening hours, the overheads such as staffing costs will be lower, and in return the profits will be higher. Therefore, if you are looking to dispose a 100-hour pharmacy, a higher price can potentially be achieved.
Pharmacy locum rates
On another note, the locum rates have increased to record highs for the second year in a row according to the C+D salary survey. The average locum rate has risen by a fifth to nearly £39 per hour, the main factor being shortage of pharmacists, the cost-of-living crisis and inflation. The recent Lloyds Bank webinar suggested that locum costs could potentially go down in the coming months following the large corporate disposals.
Interest rate woes
Banks are still keen to lend money to support acquisitions of pharmacies, however, with current interest rates of 5% which will likely increase to 5.5% in early August (Bank of England), makes it very difficult for first-time buyers to enter the market. In our most recent transactions, we have seen banks requesting additional security and increased deposit from 20% to 30%. First-time buyers are having to borrow additional funds from family and friends or going into partnerships to secure the deal.
Preparing your pharmacy for a sale
There will always be a market for good pharmacies that come up for sale. So, what should you do to make your pharmacy attractive to a potential buyer and get the best price possible?
- Signage – ensure there is a proper signage to the pharmacy. We visit pharmacies regularly and note that many do not have a proper sign to direct patients into the pharmacy. You want to aim for a higher football and therefore business.
- Shop window – an attractive shop window will always attract customers. Ensure that your windows are cleaned on regular basis and display offers / promotions to boost sales.
- Pharmacy shop floor – your pharmacy layout plays a significant role in patient perception which will have a positive impact on sales. Ensure it flows and is free of clutter and boxes. A clinical feel and look of the pharmacy inspire confidence in the patients.
- Online presence – having a good website will attract new customers. From our experience when we get instructed to sell the pharmacy, usually there is no or very limited online presence. Potential new customers do tend to check the website and read reviews prior to their visit so having a good professional looking website is important.
- Competition – be mindful of your competition and what are they offering. This is very useful information to attract more customers and offer better products at competitive prices. You can also monitor your competitors and how they are preforming by subscribing to PharmData for a small monthly fee of £3.59.
It is not only the aesthetics of the business but also financials; you should also engage a pharmacy specialist accountant at least few years prior to selling to get your financials in order which will also help maximise the goodwill of your pharmacy.
Other news
We will be at The Pharmacy Show at NEC Birmingham on 15 and 16 October 2023. If you are thinking of selling or buying a pharmacy, or looking for specialist pharmacy accountancy and tax advice, our team will be happy to discuss options with you at stand number N20 located next to the business theatre.
Last month we participated with our associated company Silver Levene LLP in the annual 10km London Legal Walk. We thank you for all your donations to support such a good cause and we were pleased to have been featured in The Law Society Gazette who announced this year’s charity walk as biggest ever with a record 16,000 participants raising a total of £910,000.
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 our direct dial numbers 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 LLP, please also contact us on the same numbers. Your query will be directed to the right person.
Silver Levene LLP offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence, accountancy work for asset and company sale transactions. Contact us for more details.
We trust you will all have a good Summer 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.
