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Independents exploit reduced 'appetite' of multiples to buy pharmacies

Tony Evans: We expect some significant pharmacy deals to come to fruition by end of 2018
Tony Evans: We expect some significant pharmacy deals to come to fruition by end of 2018

Smaller multiples and independent contractors are taking advantage of larger operators' reduced "appetite" for acquisitions, a property adviser has said.

Despite going through "some of the toughest times in recent years", the UK pharmacy market has remained buoyant, with a "strong appetite" for acquisitions, Christie & Co said in its half-year review of the market.

"There has undoubtedly been a shift in appetite towards smaller multiples, independent contractors [and] first-time buyers all looking to take advantage of the lull in appetite by the larger multiple and corporate operators," it said last week (July 27).

The broker has also seen an increase in the number of "higher dispensing pharmacies" up for sale, as "long-serving operators have accelerated their plans to exit the market", it added.

Despite the funding cuts and a category M clawback in England, along with generics supply and pricing issues across the UK, potential pharmacy buyers have not been discouraged, with Christie & Co seeing a 7% increase in the number of pharmacy applicants registered on its national database, it said.

First-time buyers and locums

"Despite the issues facing contractors, there remains a healthy number of people still wanting to invest in the sector," the company's head of pharmacy Tony Evans told C+D.

"First-time buyers still account for [around] 80% of applicants, consisting of pharmacy managers and locums looking for the opportunity to generate more consistent income/employment," he added. 

“Premium prices”

As a result of funding support from the Welsh and Scottish governments, "significant demand for pharmacies" in both countries remains, Christie & Co said.

"The fact that the number of community pharmacies in both countries has remained stable year-on-year, with relatively low numbers changing hands, continues to support and drive the premium prices being achieved," it explained.

Earlier this year, the adviser told C+D it had seen a 20% rise in the average price of pharmacies in the four months up to May, compared with the same period in 2017.

One of the "key transactions" in the first half of this year was the sale of John Kennedy Pharmacy in Dunoon, Scotland, which was bought by the Right Medicine Pharmacy Group for "in excess of £1,450,000".

Other pharmacy sales it highlighted in its review include Alchem Pharmacy in Gloucestershire – sold to a "regional an asking price of £1,800,000" and Old School Pharmacy in Bristol, with a guide price of £1,300,000.

"With buyer confidence remaining such a theme of the market, this has resulted in competitive bidding...with an average of over three offers per pharmacy sale agreed," Christie & Co said.

"Significant deals" to come

Christie & Co predicts this trend to continue in the second half of 2018, it said.

It also expects to see some "some significant deals" by the end of the year, with sales of "multiple sites", it told C+D.

Have you bought or sold a pharmacy this year?

A.S. Singh, Community pharmacist

80% of first time buyers I'm sure are very naive and have a huge helping hand from mum and dad because back in the day they knew some rich pharmacists with their own business. Despite the harpings of a Mr butt and hobbs and Imam pharmacy if these small pharmacies are doing less than 5K items they will struggle to make a profit unless the only staff member is the pharmacist themselves.

There will always be a need for a modern personalised independent pharmacy business but the profits are dwindling for those vertically integrated multiples. You'll find the most profitable ones are busy footfall pharmacies with more than 9K items run by family member pharmacists. 

Aryan Butt,

Mr Singh 

I tend not to comment on here as often it merely encourages trolls who in my opinion often lack the education and or intellect to hold meaningful discussion. 

The pharmacies purchased by Butt & Hobbs Limited were purchased on the basis of two of them doing an average of 6000 items and one doing 7000 items. In the last 4 months since purchase two are averaging 6000 and one 8000 items. All 3 shops are in health centres and the dispensing level is relatively stable. This information is available in the public domain.

You state that despite our harping these small pharmacies will struggle. 

Harping is defined as "talk or write persistently and tediously" I have not done neither and you have insufficient information to come to any serious conclusion and are merely pontificatingspeculating. I wonder why you even bother with your post. 

Peter Sainsburys, Community pharmacist

If the big multiples are struggling to make a profit with their low wages, bulk purchasing power, and incessant thirst for every penny they can get from services, I can't see how the independents will hold up. Obviously they can provide better customer service and hopefully retain their staff but that isn't going to bring in any more money.

R A, Community pharmacist

It's insane how so many pharmacists refused to accept the universal truth that the contract introduced in 2005 (around that time) was a bad deal and that government was unlikely to introduce healthcare services in pharmacy to replace the loss of fees for dispensing due to the reduction in reimbursement.

In 2011 when I qualified as a pharmacist so many pharmacists harped on about services, services! As the future of pharmacy. Internally I had huge reservations about this but was too meek to challenge this opinion. 

Now as a seasoned pharmacist of 7 years I can see the vast majority of buyers sticking their head in the sand and refusing to accept the fact that current model of pharmacy is on the verge of collapse!  All I can say is that all the smart contractors are gone because they know the music has stopped and have cashed in their chips.  It will be an absolute debacle when the remaining contractors realise this too.  

Peter Sainsburys, Community pharmacist

Correct. Smart contractors have been on their yachts in the Bahamas for a few years now. 

Dave Downham, Manager

Estate agents in "market is buoyant" statement shock!

If the big boys aren't buying - and, indeed, are selling - doesn't that tell you something?

Sue Per, Locum pharmacist


The underdog employee, realised that they were getting a much smaller slice of the cake than that, the gangmasters retained for themselves for doing nothing.

Therefore refused to be exploted any more, and decided to be their own boss, and retail all the profits accrued with their skills and efforts!!!

The goodwill values clearly indicate that the pharmacy model funded by the taxpayer is still very profitable!! 

Dave Downham, Manager

No - goodwill values indicate how much people are able to pay. Why would a bank lend £250,000 when it would earn twice as much lending £500,000?

Peter Sainsburys, Community pharmacist

Erm... because half the money is half the risk?

Dave Downham, Manager

Not with the various charges in place

Leon The Apothecary, Student

Also, showing that 80% are first-time buyers also shows a naivety from inexperienced. If experienced entities are not buying, then there is a reason that should be listened to.

S Morein, Pharmacy Area manager/ Operations Manager

And if the independents are buying and banks are lending that also tell something too. Same old mantra Mr Downham from you about pharmacy demise. Yet for over a decade the goodwill values of pharmacies rise. The DH are not silly enough to believe your fiction of financial ruin. Maybe a nice trip to an expensive foreign location for a conference to discuss this would be just the thing for all those cash strapped contractors. Business Class flights all around.



Dave Downham, Manager

Yes - independents are making bad decisions, banks have no grasp of reality (see financial crises passim), DH not silly - Ha! How many independents on these frankly ridiculous conferences other than on bribes from suppliers?

You've no grasp at all, have you, Mrs Morein?

(Btw, any of our suppliers looking to sponsor a jolly for my colleagues or me, you know my number. I'll get Lady Morein to serve the nuts.)

S Morein, Pharmacy Area manager/ Operations Manager

I will be delighted to join you at one of the pharmacy jamboree luxury "conferences". Are you willing to pay? And as for wholesalers or suppliers paying I draw your attention to the ABPI code of practice and the invoices raised by suppliers or  trading groups for such conferences.

Dave Downham, Manager

Next time you're in Leeds, let me know, and I'll buy you half a bitter shandy and we'll discuss. I might even go to a packet of pork scratchings. 

S Morein, Pharmacy Area manager/ Operations Manager

Would prefer a ticket to see LUFC play. Though unlike pharmacy they really are in a disaterous state.

R A, Community pharmacist

In July 2007 RBS, Fortis and Banco Santander made a bid for ABN AMRO for the princely sum of US$98.3billion which was accepted. In January 2009 RBS lost £20 billion due to that acquisition. 

The moral of the story is just because you can buy doesn't mean you should! The buyers of these pharmacies will have to resort to unorthodox methods to remain solvent. Or most likely get burnt and claim they have been hard done in the pharmacy media!

Peter Sainsburys, Community pharmacist

Well said. Buying a pharmacy in the UK in the current environment either means decades of misery, or working 80 hour weeks just to stay afloat, possibly both. If you don't mind dedicating your entire waking life to your pharmacy, you might just be ok.

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