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Independent buys pharmacy for 'few million' in push for 50 stores

Approximately 85% of the annual turnover comes from dispensing (credit: Local Data Company)
Approximately 85% of the annual turnover comes from dispensing (credit: Local Data Company)

An independent pharmacy group has purchased one store for a “few million” as part of its strategy to reach 50 branches.

The acquisition of RS McPherson Pharmacy in Broughty Ferry in Dundee by Davidsons Chemists last month (June 1) brought the group’s total number of branches up to 37, managing director Allan Gordon told C+D.

“We’ve grown from 10 in 1997 – [and] are slowly but surely getting towards 50,” Mr Gordon said last week (June 27).

The company is now looking to purchase a group of up to 15 pharmacies, he revealed.

Davidsons can afford to expand by pulling together its resources and taking out loans, which Mr Gordon estimates could total “up to £25 million”.

The company projects its annual turnover for 2018-19 will be £40m. This includes RS McPherson Pharmacy, where the annual turnover is £3m annually – with approximately 85% coming from dispensing.

“The pharmacy of choice”

Mr Gordon told C+D he was “born and raised” in Broughty Ferry. “McPherson Pharmacy is the pharmacy of choice [for the area] due to the quality of service that Ken [McPherson] and his supporting staff used to give,” he explained.

“It fits our ideals – the patient always comes first. There’s a nice synergy to how we do things.”

“There’s no silver bullet that it offers [but] it is well laid-out, bright and airy. Its average spend is high, and it gives a good retail experience.”

Commenting on the situation faced by community pharmacies in Scotland compared with England, Mr Gordon said devolution had been a “game-changer” as it had allowed his country to form its own pharmacy policy.

Read how an independent group bought a coastal pharmacy in Scotland for over £1.4m last month.

4 Comments
Question: 
What do you think about the Scotland's community pharmacy situation?

R A, Community pharmacist

When the goodwill of a business is predicated to 85% on the reimbursement scheme set by the government, it makes no business sense to invest in such business. Especially when the government aims to reduce its expenditure whilst the cost of operating a pharmacy will go up with inflation. 

According to companies house, the parent company generated an operating profit of £2.5 million against a turnover of £37 million. This gives the company an operating margin of 6.7%.  If the reimbursement falls or the cost of operating the business increase. It will lead to a further fall in the operating margin of the business.  

I hope it works out because otherwise peoples livelihood will be ruined. 

 

Mike Hewitson, Superintendent Pharmacist

I really wish C&D would stop running these stories. It sends completely the wrong impression, that pharmacy is awash with cash. 

It just shows the theory of The Greater Fool at work.

The greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants. A price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price.

CAPT FX, Locum pharmacist

You are so wrong, and it is attitudes like yours which is killing Pharmacy. Community Pharmacy is not awash with cash, but with creativity and hard work, it is a viable business.
However, when you have the kind of Management structures we have, there is no creativity. Community Pharmacy is managed at most levels by Managers who don't even know what GCSE is. These are the same Managers gleefully egged on by equally poorly equipped Superintendent Pharmacist, convert infrastructure payments into profit. I see these managers fiddling figures and paperwork to make targets, yet they spend more time on fag breaks and gossiping.
Why would anyone borrow £25 million? Because they know they have the structures and the business acumen to do good business. They also know Community Pharmacy is viable. They also know they have the proper skills mix and well-motivated staff to sustain the business.
It's high time people stop mourning, roll their sleeves up and work hard. With Brexit and hysterical and xenophobic immigration policies, I suppose for once a palpable change in work ethic is necessary. Good old hard work , creativity, innovation and embracing new technology are the answers.

Peter Sainsburys, Community pharmacist

*This comment has been deleted for breaching C+D's community principles*

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