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Pharmacy News | December 2022

Modiplus • December 12, 2022

As we wind down 2022, what does 2023 have in store for businesses and pharmacies in particular?


2022 was expected to be a year where growth would accelerate coming out of Covid lockdowns. People were looking to go out more, shop in retail malls (rather than online), travel, catch up with family & friends and do everything else they missed since the start of Covid. How different has it turned out! Government in chaos, war in Ukraine, high energy prices, high inflation, cost-of-living crisis, and high interest rate. 


Community pharmacists were also extremely optimistic as incomes had gone up due to all the Covid services. Those who sold in late 2020, 2021 and to September 2022 enjoyed the best prices for their pharmacies. However, since then, the market has turned slightly especially after the “mini” budget which was disastrous for many would be sellers & buyers. The banks got cautious and started pulling their lower interest rate offers. To add insult to injury The Bank of England has forecast that the current recession is likely to last to the end of 2023. The constant drip feed of negative news makes people nervous.


Pharmacists fear a lack of access to walk-in healthcare on the high street will drive patients to NHS services such as A&E, adding to pressure there. The trend also jeopardises government plans to shift more work from GPs to pharmacists. NHS data shows 34.1 per cent of pharmacies in England reported at least one unplanned closure since October 2021. The most common reason was staff shortages.


PSNC reported they are discussing a series of measures with the Department for Health and NHS England and seeking additional funding for pharmacies who are facing staff shortages while other costs continue to rise. Rising costs of medicines and supply issues without commensurate funding adds to ever mounting workload for contractors. Nurses planning to go on strike this month will no doubt add to workload pressures. 


Nevertheless, despite all the turmoil, the demand for pharmacies remains buoyant.


What we have noticed is that since the appointment of the new Prime Minster and the Chancellor, the market has settled down and interest rate expectations have anchored at around 4% rather than 5 or 6. New enquiries have picked up and demand for good pharmacies is remarkably high. There are many first-time buyers, small and medium sized groups with healthy appetite and are looking to grow their estate. Pharmacies with turnover of more than £750,000, 5,000 or more items, in the community or high street, with sensible rent and other overheads are sought after. The first-time buyers are looking for bigger shop fronts giving them an opportunity to provide services too. We have many buyers on our database looking to buy throughout the UK. 


With the recent acquisitions by Well and Avicenna, there is an appetite for larger group opportunities. We have also witnessed an increase in enquiries looking to sell their pharmacy by 29% this year compared to last year. Our findings show the reasons for sale apart from retirement is also due to the staff shortages, leading to additional stress and delays in hundreds of thousands of prescriptions. 


At Modiplus, we have had an extremely busy year. These are samples of pharmacies that we sold this year: 

We specialise in community pharmacy sector and have done so for over 30 years helping many pharmacists acquire their first pharmacy. With large multiples disposing and many smaller pharmacies coming on the market, we foresee this trend to continue into 2023. In 2022 we saw an increase in first time buyers’ registration on our books as well as existing owners looking to expand their portfolio. We have also registered several investors. 


We exhibited at the Pharmacy Show 2022 at NEC Birmingham in October and would like to thank those that visited our stand. It is always nice to see you and have a chat face to face!


We would also like to thank those that completed our client satisfaction survey earlier this year. We are pleased to inform you that we have donated £1,000 to Save the Children charity which has been posted on our social media platforms and we are immensely proud to support such a worthy cause. 


Selling your pharmacy is one of the most important decisions your will have to make, it pays to have experience on your side. 


If you would like to talk about how you could achieve a fantastic price for your pharmacy, please do contact us on 020 7380 3446 or 020 7380 3424 and ask for Sanja or Diana in the first instance. We would welcome the opportunity to have a chat with you.


Alternatively, if you would like a free valuation of your pharmacy, accounting, or tax advice through our associated company, please also contact us on the same numbers. Your query will be directed to the right person.


Season’s Greetings and wishing you a happy, healthy, and a peaceful new year.


This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here. Should you require any advice please do not hesitate to contact us.

Pharmacy News | February 2025

By Modiplus • February 26, 2025
Welcome to our Winter Newsletter! Pharmacy market trend and buyers’ appetite If you are thinking of selling your pharmacy, there is still a demand for pharmacies across the country as the market remains buoyant. The pharmacy market has seen an increase in the number of pharmacies entering the market and completed sales. This is driven by economic pressures, fiscal policies, lack of funding, and exit of larger multiples from the market, such as Lloyds Pharmacy and Boots, which has led to the rise of independents and consolidations. The appetite remains strong from the first-time buyers, with independent and smaller chains the most active in the pharmacy acquisitions. Valuation calculations We have also seen the valuation of pharmacies improving, and on average we are achieving a goodwill price of 85p to 90p in £1 of turnover for standard hour contracts. Demand for pharmacies with a turnover of more than £750k to £1.5m with healthy profits is particularly attractive for the first-time acquisitions or an existing independent operator looking to expand. Below is a range of estimated valuations, if you are looking to sell: -

Pharmacy News | August 2024

By Modiplus • August 29, 2024
Welcome to our Summer Newsletter and we trust that you are enjoying the late summer weather! This summer has been extraordinary so far, full of sporting events such as football, tennis, cricket and the Olympic games! We have been very busy in the last quarter, whereby we have seen the first-time buyer appetite remain strong. Similarly, we have seen an increase in the number of sales enquiries of smaller pharmacies while others are holding off awaiting the outcome of the new funding and success of Pharmacy First scheme. On average we are achieving goodwill price of between 85p to 90p in £1 of turnover at present. The average profit margin has shown an improvement to 32% despite medicine shortages. Data from Pharmacy First (NHSBSA) The launch of the Pharmacy First has gone off with a positive start, it has been very encouraging to see so many patients benefiting from this scheme, and your exceptional efforts in delivering these services have been commendable. However, we note that monthly payments are still critical, and concur that it is completely unreasonable for pharmacy to be penalised financially for the NHS’ failure to drive public and GP referrals. The NHS Business Services Authority (NHSBSA) has released figures for the Pharmacy First Service covering the period of February to April 2024 as follows: -

Pharmacy News | April 2024

By Modiplus • April 16, 2024
Welcome to the spring edition of our quarterly newsletter Initial reaction to Pharmacy First Recent research conducted by AIMp found that 70.8% of the pharmacy owners do not think there is sufficient funding allocated for the scheme, 20.8% say it is too early to say and just 8.3% responded saying it was adequate. Their #Fight4Pharmacies campaign was also launched on 20 March 2024 outside Parliament which created an extensive amount of interest with the media and politicians. The success of the Pharmacy First scheme will vary and depending on factors such as local implementation, public awareness, pharmacist training etc. To address funding shortfalls, pharmacy owners need to explore other options such as reallocating resources, securing additional funding and enhancing relationships with GPs. Pharmacy contract and funding The old contract has expired, however, there is no news regarding the pharmacy funding negotiations. The negotiations are taking place between Community Pharmacy England (CPE) and the Department of Health and Social Care (DHSC) , supported by NHS England (NHSE) . The reasons for the sale of community pharmacies The sale of community pharmacies can occur for various reasons and under different circumstances as follows: - Retirement - You may choose to sell your business when you reach a retirement age or decide to exit the profession for personal reasons. Selling the pharmacy allows you to liquidate your assets and transition into retirement. Relocation - Changes in your personal circumstances or opportunities in a different location may prompt you to sell and move elsewhere. Relocation could be due to family reasons, lifestyle preferences, or professional opportunities. Financial reasons - Financial challenges or the desire to capitalise on the value of the pharmacy may lead you to consider selling. This could include factors such as declining profitability, changes in reimbursement rates, or the need for additional capital investment. Expansion or consolidation - A multiple may acquire as part of their expansion or consolidation strategies. Selling to a larger entity can provide you with higher value in some cases. Launch of Pharmacy First and providing new services - The running of pharmacies has undergone several changes over the years, particularly with increased automation, digitalisation, and expansion of online services. The model has gone through a complete overhaul. We are seeing lots of our clients for whom we provide accountancy services at Silver Levene who are struggling with Pharmacy First services due to staffing issues which is resulting in decline of their profit margins. Market dynamics - Changes in the healthcare landscape, regulatory environment, or consumer behaviour may influence your decision to sell. Adapting to evolving market conditions or responding to competitive pressures may involve selling the pharmacy to a buyer better positioned to navigate these challenges. Following large corporate disposals, we are now seeing the goodwill value increase compared to last quarter, which makes it an ideal time to exit, if you are looking to sell. With bank interest rates likely to go down from June, affordability becomes easier too. Succession planning - You may sell your pharmacy as part of succession planning efforts, either transferring ownership to family members or grooming internal staff to take over management. Selling the pharmacy ensures a smooth transition of ownership and management responsibilities. The sale of community pharmacy is typically a complex process that involves legal, financial, and regulatory considerations. You as pharmacy owners may work with sales agents, financial advisors, or legal professionals to facilitate the sale and ensure compliance with relevant laws and regulations governing pharmacy ownership and operation. If you are thinking of selling, it is paramount to get your house in order and speak to your accountant well in advance and prior to putting the pharmacy on the market. We can provide accountancy and taxation services through our associated company Silver Levene with a proven track record of over 30 years. Changes in ownership With last year’s corporate disposals, the tide has turned, and more pharmacies are now run by independents compared to corporates. The recent Sigma conference in South Africa highlighted this issue, as shown in the table below courtesy of RWA Pharmacy:
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