Goodwill values rise in buoyant pharmacy sales market

Latest

Goodwill values rise in buoyant pharmacy sales market

In Latest

Pharmacy goodwill prices have increased in 2021 after three years of steep decline, according to the latest update on the pharmacy sales market from Hutchings Consultants.

The large-scale disposal of pharmacies by multiples appears to have run its course, which has led to fewer pharmacies coming onto the market during a period when demand has increased rapidly, says Hutchings.

The imbalance in supply and demand has led to an improvement in average goodwill prices which are put at 83 pence in the pound on sales completed or agreed so far in 2021. This compares to 77p in 2020, 90p in 2019 and 115p in 2018.

Average gross profit margins at 8.57 per cent on sales completed or agreed in 2021 are down on 2020 (11.52 per cent) and 2019 (11.43 per cent).

The market has remained active in 2020/21 with demand outstripping the supply of pharmacies for sale. With the large multiples having completed the disposal of lower item volume pharmacies, a number of groups are now focused on acquisitions once more, says Hutchings.

Avicenna’s purchase of the 57 shop Dudley Taylor Group, Well’s acquisition of the six Pharma Z pharmacies and PCT Healthcare’s merger with Murrays Pharmacies to create a 150-branch group have all taken place in recent months.

“However, there may be further significant pharmacy disposals to come as both Lloyds and Pharmacy 2U are reported to have appointed bankers to explore sale options due to a change in respective fortunes during the pandemic,” notes Hutchings.

A large increase in demand is reported across all buyer categories. In the 12 months to March 2021 Hutchings saw a 57 per cent increase in new buyer registrations compared to the same period the previous year, with 75 per cent of new registrations coming from first time buyers and 15 per cent from existing pharmacy owners.

“For many new buyers a combination of stability offered in the CPCF and the pharmacy sector’s crucial role in providing healthcare during the pandemic has bolstered confidence in acquiring suitable opportunities as they arise,” says Hutchings.

The majority of buyers continue to rely on bank lending to fund their purchase, but banks are now generally demanding higher levels of deposit as well as greater financial insight on the purchase. Buyers are also required to undertake more in-depth due diligence and produce sound business plans to support their funding applications.

For those sellers operating on a leasehold basis another consideration which has been cropping up more recently among lenders is the requirement for a longer remaining term on the length of the lease.

Record my learning outcomes

Latest

Inspiring stories related to health, fitness and the pursuit of wellbeing

Share:

More like this

bookmark_icon_off
Latest

KY Jelly rebrand ‘an opportunity for independent pharmacies’

Personal lubricant brand KY Jelly is changing its name to Kynect as part of a phased rebrand.

1 Min Article

bookmark_icon_off
Latest

Boots rolls out training resources to swamped care homes

Boots has rolled out its online learning and training resource for carers and nurses to all care homes in the UK.

1 Min Article

bookmark_icon_off
Latest

DHSC: Covid-19 could increase flu jab demand

Pharmacies should prepare for what may be a busier than normal flu season and order sufficient vaccine supplies, the Government has said.

1 Min Article

bookmark_icon_off
Latest

Covid-19: Remote IP smoking service launched in Kent

A digital remote smoking cessation service involving independent prescribers has been launched in Kent.

2 Min Article

bookmark_icon_off
Latest

1 in 8 in England tested for coronavirus

One in eight people in England have now been tested for coronavirus “at least once” since the Government testing service was launched.

1 Min Article

bookmark_icon_off
Latest

Government PPE portal open to pharmacies for first time

A Government PPE ordering facility is now accepting orders from community pharmacy teams for the first time.

1 Min Article

Recommended Learning

bookmark_icon_off
Sponsored Education

Managing hay fever: help meet your customers' needs

This module will improve your hay fever knowledge, helping you to understand its impact on sufferers and recommend the right products to ease symptoms

35 Min Module

bookmark_icon_off
Sponsored Education

Advising on back pain

This module highlights topical therapy options and 5 simple S.T.E.P.S. to help customers manage and prevent back pain

43 Min Module

bookmark_icon_off
Sponsored Education

Update your knowledge of erection problems with key learning updates from recent research

4 Min Module

bookmark_icon_off
Sponsored Education

Biological medicines and biosimilars

This module explores biological and biosimilar medicines, and will increase your understanding of the guidelines surrounding the brand prescribing of these drugs and your role in their supply

56 Min Module

bookmark_icon_off
Sponsored Education

Understanding the impact of dry skin conditions

Learn about the emotional impact of dry and eczema-prone skin, and confidently recommend products for skin treatment and maintenance.

31 Min Module

bookmark_icon_off
Sponsored Education

How to advise on head lice

Despite them being so common, many people still don't know how to get rid of head lice. This training will arm you with the facts so that you can help customers choose the best treatments and answer their questions with confidence.

7 Min Module