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Pharmacy News | February 2025

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: -

However, every pharmacy is unique and has its own selling points, which can push the price higher than the current benchmark. It’s all about skilfully marketing the business for sale. 


Bank interest rates and lending requirements 

The Bank of England reduced the base rate to 4.5% this month (February 2025) to support economic growth. We have regular catchups with several primary and secondary lenders, and the consensus is that interest rates will go down further by a quarter percent by May 2025. Lower interest rates should make borrowing more affordable, which in return will boost confidence and attract more buyers. The new government funding will also improve pharmacy valuations, which is imminent. 


Six steps to selling your pharmacy 

Selling a pharmacy requires planning, attention to detail, and professional guidance. If you are thinking of selling your pharmacy, experience tells us that you should have your house in order for a smooth sale.


1. Financial Records

Please ensure that your financial records are up to date and accurate. The prospective buyer will review your financial statements and other documents such as FP34s, VAT returns, staff schedules etc. to ascertain the profitability of the pharmacy. Therefore, it is crucial to provide the buyer with a clear picture of your pharmacy’s financial history.


2. Valuation of your pharmacy 

Before you decide to sell your pharmacy, ensure a professional valuation is completed by a pharmacy expert so that you have an estimated sale price. This is important as your pharmacy will also be valued by the buyer, their advisor, and the bank. We would be happy to help you with the valuation and come and meet with you in the evening or on the weekend when the pharmacy is closed. For a FREE valuation of your pharmacy, without any obligation, contact us on 020 7380 3446. 


3. Contract and agreements 

Please review all contracts and agreements that are in place relating to your pharmacy, such as supplier agreements, standard operating procedures, employment contracts, etc. This will form part of the due diligence process by the buyer.


4. Staff cost 

High locum and staff costs will reduce the value of your pharmacy, which is reflected in your net profits. Therefore, ensure the pharmacy is not overstaffed and vice versa; it is not running on the skeleton staff either, which will deter prospective buyers. Your staff cost should be between 8% and 15% of your total turnover, depending on the size and level of other services provided. 


5. Lease and rent

Please ensure there is an existing lease in place that is protected under the Landlord and Tenant Act 1954. Further, please ensure there is at least 10 years left on the lease, which can be renewed at the end of its term. The buyer’s bank will not facilitate a loan if there is an issue with the lease. From our experience, assigning a lease with the council takes longer in comparison to the private landlord. If you own a freehold and wish to retain ownership, then a new lease will need to be created. 


6. Premises 

You will need to obtain an Energy Performance Certificate (EPC) and an asbestos and fire risk assessment report, which will be part of the buyer’s bank requirement. You can do a Google search for a local company to perform all three checks. 


Legal and financial advisors 

Please engage a pharmacy specialist legal and financial advisor who will guide you through the process and assist you with any complex issues such as tax, legal contracts, etc. We work with a panel of pharmacy specialist solicitors and our associated company, Silver Levene LLP, Chartered Certified Accountants. They have been providing specialist accounting and tax advisory services to community pharmacy for over 35 years. 


If you would like to sell/buy a pharmacy, need accounting, or need tax advice through our associated company Silver Levene LLP, please contact us on 020 7383 3200. Your query will be directed to the right person. Silver Levene LLP offers fixed price packages for accounting and tax services as well as valuations, cashflow and profit forecasts, raising loan finance, due diligence, and accountancy work for asset and company sale transactions. 


Other exciting news

As we continue to grow, we are pleased to let you know that we have now settled in our new modern office premises located at Maple House on Tottenham Court Road in central London. If you are in the area, we would be delighted to welcome you and talk about any burning issues over a cup of coffee. 


Looking further ahead, we will be at The Pharmacy Show at NEC Birmingham on 12 and 13 October 2025. If you are thinking of selling or buying a pharmacy, or looking for specialist pharmacy accountancy and tax advice, our team will be happy to discuss options with you at stand number M20 located next to the business theatre. 


Thinking of selling or buying?

If you would like a free valuation or to talk about how you could achieve a fantastic price for your pharmacy, please do contact us on our direct dial numbers: 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.



We 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 | 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:

Pharmacy News | December 2023

By Modiplus • December 4, 2023
Welcome to the winter edition of our quarterly newsletter The future of community pharmacy Nobody knows the future of community pharmacy and the right time to sell. As always, you should consider selling when there is no threat to your business that will affect its goodwill. You might decide to sell due to retirement, ill health or you are going into a new venture. We have seen goodwill values drop in the last 12 months or so due to corporate disposals and other distressed sales flooding the market. But it’s not all gloom and doom as equally, we have been extremely busy completing many deals over the last quarter. Most of the transactions have been to first time buyers, independents, small and medium size groups with a forward-looking plan to grow while the large multiples downsize. We believe next year will present a good opportunity to exit, if you are looking to sell the business, as interest rates start to fall, cost of living crisis abate, and the banks start to lend proactively again. Pharmacy First service This service will launch on 31 January 2024 which will be a new advanced service and will replace the Community Pharmacist Consultation Service (CPCS). The pharmacies will receive a first initial fixed payment of £2,000 that can be claimed from December 2023 and a monthly fixed payment of £1,000 from February 2024 for pharmacy contractors who reach a minimum number of monthly clinical pathway consultations (from 1 consultation in February 2024 to 30 consultations from October 2024). Community pharmacists should seize the opportunity and provide maximum amount of services that they possibly can, to increase sales and profits to mitigate the cost increases of the last couple of years. This will also increase the value of the business. The Pharmacy Show 2023 The Pharmacy Show returned to the NEC Birmingham on 15th and 16th October 2023. Over the course of two days, there were over 8,500 pharmacy professionals attending the show and over 300 exhibitors. A highlight of the show, an automation system (robotic) whereby even a small pharmacy can invest into one model for hub and spoke which was previously only an option for larger groups. There is a whole host of affordable options that will allow you to automate those everyday tasks such as dispensing medication and managing stock levels etc. Our joint stand with Silver Levene was located next to the Business Theatre where some excellent speakers with thought provoking ideas commented on the future of the pharmacy and new funding. Whilst exhibiting, we had numerous enquiries on selling and buying a pharmacy as well as pharmacists looking for an accountancy and tax advice. The show was a success, and we look forward to exhibiting again next year, our 17th year bar the covid years. Pharmacy Valuations If you are thinking of selling your pharmacy, we advise that you seek professional advice and valuation from a pharmacy expert or pharmacy sales agent. The valuation is determined by several factors to name but a few as a reminder: - EBITDA (Earnings before interest, tax, depreciation, and amortisation) profits – this is a preferred measure to value pharmacies and bank’s valuer will do the same. Financial information – Accounts, FP34s, VAT returns should be up to date. Location – pharmacies located in a health centre or next door to a surgery will still fetch abetter price, if there is more footfall too. Lease and rent – ensure there is at least 10 years left on the lease and is renewable. A very high rent will be a detriment to sale, buyers will account for any future rent and increases. Staff costs – high staff and locum costs will reduce the value of the pharmacy. NHS/OTC/services/wholesale/online/export sales – please ensure that these are analysed separately in the accounts. Growth potential – for example if you are not doing many of the services, the buyer will see this as an opportunity to enhance business and this is an attractive proposition for the buyer. Interest rates and buyers’ appetite The banks have maintained the level of lending appetite despite the rise in interest rates and economic pressures. We are pleased to report that most of our recent completion were to first time buyers which leads us to believe that they have a strong desire to acquire good, solid and profitable businesses. To facilitate their lending, many of the banks that are active in the pharmacy market are seeking increased due diligence, business plans, personal guarantee etc. The table below shows interest rates at their peak, and the prediction for 2024 through to 2027 (source Bank of England ).
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