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‘Unexpected influx' of pharmacies for sale could rock market, broker warns

Pharmacy prices could come under “slight pressure” this year if an “unexpected influx” of pharmacy properties enter the market, a brokerage has said.

Prices should remain “stable” in 2022 as buyers’ confidence is expected to remain high and “support for pharmacy acquisitions remains positive”. However, this stability could be rocked by any unexpected sales, the broker suggested in its market report published today (February 7).

 

A Hutchings Consultants spokesperson told C+D that it is not aware of any “intended large sell-off” when asked by C+D if this prediction followed news of Lloydspharmacy being sold to a new owner and rumours that Boots UK pharmacies might follow suit.

 

“If there was a large-scale disposal on the open market, this might potentially place downward pressure on prices due to the effect of supply and demand,” the spokesperson added.

 

However, branches sold off by the multiples “have not been particularly desirable” in previous years due to “many…[having] either unattractive leases and/or low turnover and items”, they added.

 

Increasing sales in 2022

 

Hutchings expects there to be an overall increase in pharmacy instructions in comparison to 2021 due to the fact that some contractors delayed their plans for sale due to the pandemic and might decide to “take advantage of their improved financial position” to exit the market.

 

The broker expects this increase to be “largely driven by independents and small group owners”, the spokesperson told C+D.

 

Meanwhile, pharmacies will continue to be in low supply in Scotland over the coming year, Hutchings predicted.

 

In Wales, the push towards independent prescriber-led services might encourage some contractors to sell up, allowing a new owner “to make the necessary adjustments to the business”, the brokers added.

 

The broker cautioned that short- and long-term pressures – including a reported nationwide shortage of pharmacists and an increase on workload coming from “displaced” GP patients – mean it is “very difficult to forecast the market over the coming year”.

 

Buyer activity back to pre-pandemic levels

 

While registrations for buyers nearly doubled in 2020, they returned to 2019 levels last year, Hutchings Consultants wrote in the report.

 

“Of the overall registrations in 2021, 77% were first time buyers, which was an increase of 2% on the previous year, demonstrating the continuing fervent desire for many to acquire their own pharmacy business,” the brokers wrote. 

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