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Independents outbidding multiples in 'buoyant' sales market

Broker Hutchings director Scott Hayton says the market is currently "extremely buoyant" 

Brokerage experts, including Hutchings director Scott Hayton, tell C+D that pharmacy purchase opportunities are scarce but banks are keen to support them


Independent contractors are outbidding multiples for pharmacies amid increasing demand, brokers have told C+D.

Tony Townsend, director of Townsend's Business Sales, said independent buyers formed the "backbone" of the market. Experienced independents were "very well supported" by banks, who were confident in contractors' ability to "trade at a profitable level".

Although buyers from the multiples were not "invisible", they had been "extremely selective" in their purchases over the past seven years, he told C+D. "Quite surprisingly they have been outbid by independent buyers, even for health centre pharmacies," he added.

Andrew Calder, director of Alliance Valuers, said independents and regional multiples were "extremely keen" to acquire new pharmacies, while activity from the national multiples was "minor".

There was "undoubtedly growing demand" for pharmacies, fuelled by the removal of the 100-hour exemption in September 2012, Mr Calder said. "We are seeing in excess of a dozen offers for some businesses and asking prices are invariably being exceeded," he said.

The acquisition of the Co-operative Pharmacy by UK-based food wholesaler Bestway in July had not influenced other purchasers, but it was a "strong signal" about the health of the market, he added.

Scarce opportunities 

Scott Hayton, director of Hutchings Consultants, said the market was "currently extremely buoyant". "Active in the market are everyone from private equity groups, newly qualified pharmacists and managers looking for their first buy, all the way up to independently owned groups and multiples," he said.

Brokerage group Christie+Co said "increasing demand" for pharmacies was fuelled by the "relative scarcity" of purchase opportunities.

Head of pharmacy Tony Evans said Christie + Co had almost 3,500 applications for pharmacy businesses on its database. "With many banks keen to lend to the sector, we see demand continuing for the foreseeable future," he told C+D.

Have you tried to buy a pharmacy in the last year?

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N O, Pharmaceutical Adviser

Just another article to inflate the prices, which are already over the roof. The reasons given, like scarcity of pharmacies, existed for a long time now. The only new thing, but predictable, is the new Pharmacists. Managers wanting for their first buy always existed, they never got a chance and even now they hardly stand a chance compared to smaller independents.

This is just like the London housing bubble, only difference is it may stay for a longer than the housing bubble or may just POP considering the funding situation and the policies of the new Govt. These agents want to push as hard as possible to generate a panic buying.

Andy Harwood, Other healthcare professional

Its not panic buying, unfortunately at the lower end people are buying jobs as rates and salaries are being squeezed and the upper end people want to buy decent cash generative businesses.

Pharmacy is a great model and can offer decent returns for the right proposition. Its no surprise that so many people want to purchase pharmacy businesses.

Sue Per, Locum pharmacist

not good news, for the employees and he locums, who cannot bid up their wages and fees in a "ring fenced" NHS contract marketplace

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