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Fear of funding cuts drives locums to buy pharmacies

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Tony Evans: Locums are reacting to the threat of reduced hours

More locums are looking to buy their own pharmacies ahead of cuts to the sector's funding, property advisor Christie & Co has said.

“A number of operators” are reducing the amount of hours they employ locum pharmacists in order to mitigate the anticipated effects of the 12% cut to pharmacy funding in England from December, Christie & Co head of pharmacy Tony Evans told C+D last Friday (November 18).

As a result, more locums are considering acquiring their own pharmacy to  “buy themselves an income”, Mr Evans added.

Christie & Co has seen a 5% increase in the number of first-time pharmacy buyers since the cuts were first proposed in December 2015.

“A lot of that is down to locum pharmacists and pharmacy managers feeling they may [suffer] the brunt of the cuts…spurring them on to try and own [a pharmacy] themselves,” he said.

While pharmacists are looking at the market with caution since the drop in funding was confirmed in October, Mr Evans said Christie & Co “continues to receive multiple offers, including above asking price” for pharmacies listed with the firm.

“We have circa 5,000 applicants and about 81% of those are first-time buyers or new entrants to the market,” Mr Evans said. “Many pharmacies may exit the market as a result of the funding cuts, but a number of people are seeing this as an opportunity to acquire.”

Average cost of pharmacy

The property firm completed 61 sales up until October this year, with an average of seven offers received per pharmacy, Mr Evans said.

“Interestingly, the average sale price was 110-111% of the listed guide price,” he said.

Mr Evans calculates that the average pharmacy sold for £860,000 in 2016. But he warned this figure might be “skewed” by “very small” and “very large” pharmacies included in the sales figures.

“The appetite is still there. There is certainly still demand in the marketplace and there is funding for those people looking to acquire,” he added.

Read more about some of the most significant pharmacy acquisitions of 2016 here

9 Comments
Question: 
Are you considering owning your own pharmacy?

Olukunmi Popoola, Community pharmacist

Why buy a chemist now? We are right at the high and there is a lot of uncertainty in the pipeline

Valentine Trodd, Community pharmacist

Or the big boys will just hoover it all up, as previously reported on these pages...

http://www.chemistanddruggist.co.uk/gallery/three-2016%E2%80%99s-biggest-pharmacy-acquisitions-0

S Pessina, Pharmacist Director

What good news, if it is genuine.

Pharmacy moving back to its roots hopefully rather than the multiples vacuuming the money out the country .

Brian Austen, Senior Management

The quoted Christie figures will be for sales before the DoH confirmed the funding cuts will definitely go ahead. The situation will probably change in the last quarter of the financial year Jan-Mar 17. The smaller pharmacies that may or may not be affordable will be the ones most affected by the cuts. I am suprised there has not been an increase in NHS Distance Selling 'Internet' Pharmacy contract applications because it is a cost-effective route to pharmacy ownsership and it is highly likely that it will not be long before the exemption that exists allowing these applications without reference to a PNA (because they must provide a national service) will be removed in the near future.

Bruce Goldin, Senior Management

Just free advertising for Christie & Co..

Valentine Trodd, Community pharmacist

Really? Must be some pretty well-off locums out there...

Bal Singh, Locum pharmacist

Actually some locums buddy together to buy and split 3 ways. 

M Yang, Community pharmacist

If you can find people who you can trust, then go for it. Personally, I'd wait until the dust settles before committing to buying a pharmacy but if you find a profitable location and can see there being enough income for you and your business partners post cuts then you should take the opportunity. There aren't enough partnerships out there. However, prospective buyers need to keep in mind that "buying themselves an income" requires you to have enough savings to survive for at least a good few years, but I suppose splitting it 2 or 3 way mitigates this a little.

Lucky Ex-Locum, Superintendent Pharmacist

Couldn't afford it even split ten ways. 

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