Andy Harwood, director of Pharmacy Seekers, said: “The big multiples aren’t buying [pharmacies] at the moment.”

Following Lloydspharmacy’s decision to cease trading in around 200 “commercially unviable” pharmacies in England since October 2017, “I’d expect the bigger multiples will be reviewing their portfolios again this year”, he told C+D last week (February 8).

Christie & Co head of pharmacy Tony Evans agreed, stating: “It is widely expected that the churn of smaller, less profitable stores seen in 2018 will continue throughout 2019, whether through closures, disposals or use of the consolidation legislation.”

However, the fact that “a significant number” of Lloydspharmacies were sold (as revealed by an exclusive C+D investigation) rather than closed, shows that “many [branches] remained viable opportunities under ownership in the independent sector”.

Smaller chains and independent contractors are well placed to take on former multiple branches, Mr Evans said, as they have “a more hands-on approach” and “trade under more simplified operating structures”. This means they can mitigate the central operating costs that multiples cannot avoid, he explained.

More pharmacies on the market

Mr Harwood said 2019 has already been busy for Pharmacy Seekers, and judging by this activity, “we will see more pharmacies come to the market in the first half of the year”.

“Category M [clawbacks] and funding [cuts] have put pressure on cashflows. Those who have owned businesses for 30-35 years have probably...come back after Christmas thinking they are going to sell,” he explained.

However, despite the funding pressures, the market is “robust” and “there will always be demand for pharmacies”, Mr Harwood insisted.

“The people that want to buy are prepared to embrace new services and do more than just dispensing,” he said.

More activity expected in Northern Ireland

In 2018, Christie & Co saw “an 11% increase in the number of pharmacy applicant registrations”, and 80% of buyers were either first-time buyers or new entrants to the market, Mr Evans said.

“A more collaborative approach to funding and services in Scotland and Wales has resulted in a lower number of sales” in these countries, Mr Evans said. Just 9% of Christie & Co's sales were outside of England last year.

“With the announcement at the end of last year of additional funding in Northern Ireland, we anticipate there may be additional activity here in the year to come,” he added.

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