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Pharmacy News | April 2023

Modiplus • April 5, 2023

As Easter 2023 is approaching, what does the next quarter have in store for pharmacy?


Challenges for pharmacy in 2023

2023 started with shocking news of large corporate multiples announcing closures to their branch numbers - Lloyds Pharmacy to close all its 237 branches in Sainsbury’s, Asda closing 7 pharmacies and Tesco closing 8 pharmacies. To top this, there was a further leak in the national press in early March that Aurelius, parent company of Lloyds Pharmacy, has put all of its 1,300 branches at risk of closure. 


In addition, a recent RPS survey found that three quarters of pharmacists are so stressed and were thinking about quitting. The Pharmaceutical Services Negotiating Committee (PSNC) met for a full committee meeting early in February 2023 to consider the urgent funding and capacity crisis, as well as proposals from the Department of Health and Social Care (DHSC) and NHS England on price concessions reform and relief measures to ease pressure on pharmacies. 


Surely, this should be a wake-up call for the Government to support the pharmacy sector. The rest of 2023 is likely to be a challenging year for the sector with the UK likely to experience a shallow recession, high interest rates, taxes, inflation, energy costs and rising cost of living which has hit everybody hard. The Government urgently needs to decide whether they want to build community pharmacy into their plans to improve access to primary care or stand by and see the sector continue to dwindle in numbers. 


How will this impact pharmacy sales? 

Pharmacy owners contemplating a sale in the next 6 to 12 months, should bring forward their plans and consider a sale sooner rather than later to maximise the value of the business. With the banking crisis upon us again, there is a fear that the banks will tighten their lending policies even further. They are currently lending 70% for the goodwill of the pharmacy compared to up to 90% in 2021/22. This will have an impact on valuations.


There will be further divestments in the coming months, with more multiples and small turnover pharmacies sold off and despite more stock coming to the market, the pharmacy business remains attractive. It will be a buyer’s market for a while, and they are being more selective in what they purchase. 


It is not all doom and gloom!

On a more positive note, we have had more first-time and independent groups register with us and are looking to acquire a pharmacy or pharmacies. First-time buyers are bridging the funding gap with the assistance of mum and dad. Small and medium sized independent groups with a good track record and funding support, are proactively looking to grow their estate. We have also seen an increase in enquiries from investors and those looking to buy a DSP and / or an online pharmacy, with existing contractors looking to operate it alongside their pharmacy. 


If you are looking to sell, you need to get your ducks in row and initially provide the following for a desktop valuation: 

+ 3 years accounts. 

+ If selling branches, provide turnover figure per branch and a split of NHS and OTC sales. 

+ FP34s for the last 3 months. 

+ VAT returns for the last 3 months.

+ A summary of staffing schedule.

+ Details of the lease and rent. 


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


On the other hand, if you are located within proximity of a Lloyds Pharmacy, you may want to consider acquiring that branch which in return will protect your business, increase your item number, turnover and profit and you will dominate the area. An owner managed pharmacy can offer a far better and more consistent service to their patients rather than a large multiple. We can assist you through our associated company Silver Levene and advise you on a purchase of a Lloyds Pharmacy. We have seen an increase in enquiries from prospective buyers and existing clients looking to acquire those branches and it pays to have an expert advice for guidance on accounts, making an offer etc. 

 

We specialise in community pharmacy sector and have done so for over 30 years helping many pharmacists acquire their first pharmacy or expand their existing portfolio. 


Other news

We also look forward to participating together with our associated company Silver Levene in our annual 10km London Legal Walk through the Royal Parks on 13th June 2023. The money raised is to provide much needed free legal advice to the poorest and most vulnerable people in our community from families living in terrible housing conditions to women and children who have been trafficked to the UK. If you would like to sponsor us and make donations, please go to the following webpage: - https://londonlegalsupporttrust.enthuse.com/pf/silver-levene-2023


Thinking of selling or buying?


If you would like a free valuation or 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 to buy a pharmacy, need accounting, or tax advice through our associated company Silver Levene, please also contact us on the same numbers. Your query will be directed to the right person.


We wish you a happy Easter break and look forward to hearing from you. 


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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