Independents fared better than big chains during COVID, brokers say
Independent pharmacies across England “fared far better” than those operating under corporate ownership during the COVID-19 pandemic, property brokers Christie & Co have said.
Independent pharmacies across England saw a 3.6% increase in dispensing activity in the 11 months to February 2021, compared to a 7% decrease seen at pharmacies held in "corporate ownership" – such as Boots, Lloydspharmacy and Rowlands – Christie & Co said in its latest pharmacy market report, published today (June 24).
“Small chains” also saw a 2.9% increase in dispensing activity over the same period, the brokers reported.
Overall dispensing volumes fell slightly over the pandemic compared with previous years, with each pharmacy dispensing on average 7,417 items a month, versus 7,555 over the same period the previous year, according to Christies & Co's Pharmacy Market Review 2021.
Twofold increase in online pharmacies’ activity
“Key online platforms” – including Pharmacy2U and Lloydspharmacy’s Echo – have seen more than a twofold increase in dispensing volumes during the pandemic, from 944,000 items in January 2020 to 2,043,000 in February 2021, Christies & Co said.
However, as a percentage of overall dispensing volumes, online/distance selling pharmacies still only account for around 3% of all items dispensed, Christies & Co stressed.
While the pandemic has not halted the threat of online pharmacies and possible “Amazonisation” to the sector, bricks-and-mortar pharmacies that have been quick to embrace digital offerings, invest in automation or delivery apps, will fare better in the long-run, the brokers added.
Traditional bricks-and-mortar pharmacies are “morphing into ‘bricks-and-clicks’ business formats, to create a ‘stickiness’ to the patient, while offering the same traditional services and value that only [they] can deliver”, Christies & Co said.
“From a wider viewpoint, banks that are lending to the sector are trying to weigh up the potential impact online platforms may have on traditional pharmacies, and in doing so, expect borrowers to demonstrate their ability to futureproof their pharmacy offering,” the brokers added.
Market activity buoyant
Successive lockdowns and tier restrictions reduced the number of pharmacies coming to market in 2020, Christies & Co noted.
However, appetite for the branches that did go up for sale increased, with Scotland performing particularly well, due to “the continued combination of a settled funding landscape and the inevitable scarcity of opportunities”, the brokers said.
“First-time buyers continue to dominate appetite, accounting for circa 80% of all registered applicants on [Christies’] national database,” it said.
“However, of circa 140 pharmacy sales completed by Christie & Co in the 16 months to April 2021, only 35% were completed to first-time buyers, with the majority being acquired by either existing independent or small-to-medium multiple operators.”
The brokers suggested this is a continued trend of “vendors looking for more certainty in selling to experienced operators”.
Tony Evans, head of pharmacy at Christie & Co, said: “While it is clear that operationally the pharmacy sector has seen huge challenges over the course of the last 18 months, its profile has also increased significantly due to its tremendous response to the pandemic, being the only primary care service to have kept its ‘doors open to the public’ throughout.
“This profile has resulted in an increased appetite for opportunities to invest in the sector, something we expect to continue throughout the second half of 2021,” he added.