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Sainsbury's got 'good deal' for pharmacies, says broker

Scott Hayton: Sainsbury's "wins on every count"

Pharmacy broker Scott Hayton says the deal will put the supermarket chain in a "more competitive" position

EXCLUSIVE

Sainsbury’s got a “really good deal” out of the sale of its pharmacy business to Lloydspharmacy, a pharmacy broker has said.

The supermarket sold its 281 pharmacies to Lloydspharmacy for £125 million last week, and Hutchings Consultants director Scott Hayton told C+D that Sainsbury’s “wins on every count” from the buyout.

Lloydspharmacy will pay annual rent for each pharmacy, and although the amount has not been disclosed this money will allow Sainsbury's to be “more competitive” with "cut-price" supermarkets such as Lidl and Aldi, he said.

The supermarket acquired "a significant proportion of" its pharmacies through the 100-hour loophole for no upfront cost, which meant it had built the pharmacy business "from nothing" and could now enjoy its financial value, Mr Hayton said.

“From a customer perspective [there is] still everything under one roof. They’ve probably got a better service offering with Lloyds in there,” he told C+D.

"Significantly below" typical market rate

Tony Townsend, owner of Townsend business sales, said the deal will allow the supermarket to concentrate on the “part they play best” – selling food and cosmetics – while investing money in marketing.

Lloydspharmacy paid just under £450,000 per pharmacy, which was “significantly below” the typical market rate because of the large number of branches bought at once, Mr Townsend told C+D.

“Not many potential buyers have the wherewithal financially to complete that sort of transaction. Perhaps Sainsbury’s see it as giving more independence to their pharmacy holding; [the branches] are now in the hands of the professionals who have run successfully pharmacies for a great number of years,” he added.

Last week, an economic analyst told C+D it is only "a matter of time" before other supermarkets follow Sainsbury’s lead and sell off their pharmacies.

 

Do you think Sainsbury's got a good deal?

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13 Comments

Amal England, Public Relations

Lloyds got an excellent deal. Sainsburys have lost out. Sainsburys pharmacy division is performing well, in the process building a reputation that Lloyds envy. This will lead to the closure of pharmacy on both sides.

Mung Kee Majiq, Community pharmacist

We must not forget that Lloyds got a great deal too. The only people who have not benefitted are the Sainsbury's staff who will lose their 10 percent staff discount on their food shopping and other benefits too. Sainsbury's employed staff benefits far exceeds that of lloyds. Also Sainsbury as a company care more about their workforce than Lloyds - this is the conclusion base on my experience working for both companies in the past and talking to staff from both companies.

Pauline Wells, Dispenser Manager/ Dispensing Assistant

I agree, the staff at sainsburys have had a bad deal, we have lost out financially, and really have no choice but to transfer to Lloyds, but we have not had a lot of information as to what to expect from Lloyds, we seem to have been forgotten. 

Mr Smith, Pharmaceutical Adviser

Great deal for Sainsbury's - I'd expect other supermarkets to follow suit. Goodwill values have been consistent for years and now arguable experiencing the dizzy heights of pre-"new contract" back in 2003, this isn't likely to change anytime soon. The demand is unprecedented.

Francis Andrews, Non Pharmacist Branch Manager

I think it will lead to closures of the many 'non-performing' Pharmacies that Sainsburys are running, who knows what the future holds, but every little helps as they say :)

R A, Community pharmacist

I don't think they will close any of the stores, its most likely they will fit in the hub and spokes model that the company is slowly moving towards. The pharmacies in the supermarket will act as ideal collection point given the ease of parking and longer opening hours something high street pharmacies don't offer.

BL E, Primary care pharmacist

This is one of the concerns of Sainsbury's colleagues. I suspect that whatever TUPE agreements are in place will prevent this for X amount of time but after that who knows. Quite possible that Lloyds might transfer homes and dosettes from their existing stores to the quieter supermarket pharmacies - would help ease the pressure in the busy stores and potentially work favourably for the (currently) quieter stores.

N O, Pharmaceutical Adviser

Is there a possibility that, when these non-performing shops DO CLOSE, the nearby Independents get back their customers lost to these 100hr shops ??? Or will they be signed up to an electronic service by a nearby Lloyds Pharmacy ?? Let the debate begin ;-)

Brian Austen, Senior Management

On checking NHSBA website I discovered by checking data for 30 Sainsbury Pharmacies that the average number of items dispensed is 4424 per pharmacy. These are 100 hour pharmacies and therefore have substantial running costs and premium rents for being inside large stores. That is the evidence for why Sainsbury has off-loaded these pharmacies. Big error Celesio/Lloyds; great deal for Sainsbury. Unless of course they have a turnaround plan that changes the business model and slashes costs. I wonder what the shareholders will think of this?

John Randell, Non Pharmacist Branch Manager

not only will they gain in rent...they also dont have to deal with the legal implications of clinical errors...they are nolonger liable...soon as something is wrong...the customer will be told...they are not part of us.....clever move sainsbury

Gerry Diamond, Primary care pharmacist

Well if its not a core service . lost out on P med sales and its just as important as the fag counter selling lottery tickets and sandwiches. Sorry we only take aspirin on this till....do you take pizza and bog roll.???

James Hesp, Pharmacy owner/ Proprietor

Sainsbury's laughing all the way to the bank with this one to dispose of all those 100 hour head aches. No doubt the rents will be good too.

London Locum, Locum pharmacist

I think eventually values will tumble for a lot of these independent shops. Goodwill values almost intrinsically linked to Rx volume yet margins and Government payments for this are falling. Services as everybody knows are patchy and renumeration poor. If I'm off the mark I'm all ears.

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