The pharmacy sales market is set for a lively 2024, with 46% of pharmacy professionals looking to acquire a pharmacy in the year to come, according to broker Christie & Co’s Business Outlook 2024 report.

The new report, published yesterday (January 11), revealed that a sentiment survey found that 22% of contractors were looking to sell a pharmacy in the year, while 17% would like to both sell and buy a pharmacy in the year.

Just 15% of those surveyed were not looking to buy or to sell.

Read more: How two 23-year-old pharmacists snagged an ex-Lloydspharmacy branch

The broker suggested in its report that many of the contractors buying this year would be making “defensive purchases”.

In July last year, C+D interviewed such a contractor who bought a Lloydspharmacy as “good protection” to keep a “young new contractor” from being their local competition.

 

“A big year”

 

Tony Evans, head of pharmacy at Christie & Co, predicted that it would be “a big year for pharmacy”.

Mr Evans said that the launch of the new Pharmacy First service would provide “much-needed additional income”.

However, he said that the “future viability” of the community pharmacy sector depended on the new core contract that will replace the current five-year community pharmacy contractual framework (CPCF).

 

Selling 2023

 

Last year saw a “surge in pharmacy transactions”, which were “driven” by the mass sell-off of the Lloydspharmacy high street estate, the report said. 

In 2023, offers on pharmacies were accepted at an average of 2.5% above the asking price.

However, the average sale price of pharmacies overall declined by 4.6% compared to 2022, according to the report.

Read more: Lloydspharmacy confirms 'successful sale' of all community pharmacies

First-time buyers of pharmacies accounted for 45% of sales, while the remaining 55% were to independents or “regional multiple operators”.

Christie & Co attributed the “softening” sales prices to the sector’s “inevitable” reduced profits from its core funding arrangement.

The broker highlighted that there had been a “noticeable” rise in sales of pharmacies that were in financial distress. Even so, Christie & Co noted a “strong appetite from buyers”, which it expected to continue into 2024.

Read more: David and Goliath: Small chains now run more pharmacies than large multiples

With the “pressure” of more sales on “lenders, valuers, solicitors and NHS England” (NHSE), this meant that sales faced delays in completion of “up to two months”, the broker said.

It added that it had noted a 15% decrease in “completion volumes” of sales as a result of these delays.

 

“Preferred lending sector”

 

Christie & Co’s report described community pharmacy as “a preferred lending sector”, with a low rate of “bad debts”.

It said that many more pharmacies used so-called alternative lending facilities in 2023 to finance new infrastructure, such as “consultation room expansion”.

Read more: Do corporate disposals offer an opportunity for independents?

And it added that half of the funding provided to pharmacies by its finance broker division Christie Finance was in support of upgrades like “automation, refurbishment and equipment”.

Nevertheless, the sector faced rising debt service costs as the base rate increased multiple times over the course of 2023, according to the report.

 

2024 off to a strong start

 

The broker's predictions for a healthy year for the pharmacy market have been supported by the news of two recent sales announced by Christie & Co at the start of this year.

It announced the sale of J England Pharmacy in Wigan to Stuart Ellis, owner of St Helens’ Millennium Pharmacy, last week (January 3).

The 17,000 monthly item pharmacy, established in the 1960s, was sold for an undisclosed price.

Read more: Independent buyers snap up six southeast pharmacies

And on January 5, Christie & Co announced that D L Ogle pharmacy in Worcester, West Midlands, was sold for an undisclosed price to a group of four buyers.

The 12,000 item-per-month pharmacy had been owned by the Ogle family for more than 30 years, it said.

 

2023: The year Lloydspharmacy left

 

Lloydspharmacy’s November announcement that it had sold off its entire high street pharmacy estate, which was the second-largest in the UK, signalled the climax to the major drama in the community pharmacy sector in 2023.

Read more: What will 2024 hold for community pharmacy?

C+D covered stories of these sales throughout the year, including Kamsons Pharmacy’s purchase of five branches in April 2023, which prompted the now defunct Lloydspharmacy to say that it was “selectively selling some branches”. 

Most recently, C+D last week published a story about two 23-year-old pharmacists, who opened their first pharmacy after buying an ex-Lloydspharmacy branch in Edinburgh.