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 multiple...off 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.