January cashflow dip will prompt spike in pharmacy sales, says broker
A pharmacy broker has predicted an increase in pharmacy sales in January, as contractors feel the effects of the category M clawback and drop in the single activity fee.
The Pharmaceutical Services Negotiating Committee warned last year that contractors in England would feel the effect of the 3p reduction in the single activity fee – on top of the category M clawback of £10 million a month until March 2019 – at the end of January.
Anne Hutchings, managing director of pharmacy brokers Hutchings Consultants, told C+D: “I suspect this will take some pharmacy owners by surprise and prompt more sales.”
A “large number” of pharmacies will come to the market in the first six months of 2019, as contractors have been “battered” by the effects of cuts to pharmacy funding in England, Ms Hutchings said.
“Sharp drop” in second half of 2019
However, Ms Hutchings also predicted a “sharp drop” in the number of pharmacies coming onto the market in the second half of 2019, because “owners whose primary reason for sale was due to funding cuts would have [sold] already”.
Contractors cited funding cuts and the category M clawback as the main reasons they decided to sell in 2018, Ms Hutchings said.
“I expect there will come a point towards the end of year where there is once more a greater shortage of pharmacies for sale compared with demand,” she added.
Larger groups to sell more branches
Larger pharmacy chains will sell off more branches, which “no longer fit their portfolios or are not profitable for them”, Ms Hutchings predicted.
“Generally, in the current market, better prices are being achieved by splitting groups down and selling either single branches or small groups, as there are more buyers for these and they are perceived as less risky,” Ms Hutchings said.
The trend for small to medium-sized chains “strategically acquiring” pharmacies is also set to continue, Ms Hutchings added.
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