The market for sale of pharmacy businesses has most certainly been buoyant lately. From what we have experienced and from our discussions with pharmacy brokers, pharmacies are selling quickly. They are also achieving good sale prices, and often with premiums. Which if you are a seller, is great news.
But what if you are a buyer?
Certainly, if you are one that has a good financial backing then you can still see this through. But what about the first-time buyers? What about those young pharmacy managers looking to acquire their first interest in a pharmacy partnership?
Well, there is a real risk here of them being priced out of the market. But there is another risk lurking in the background. One that is yet to rear its head.
Pharmacy has largely been through some good trading times. Covid brought many people into pharmacy for vaccinations, RAT’s, PPE etc. That combined with the inability to travel meant many more people shopped locally. Accordingly, turnover and profitability in pharmacy has generally gone up and pharmacies have been trading well. But we live now in very different times. People don’t need vaccinations, RAT’s and PPE like they did before. They don’t have to visit a pharmacy as often as they did. Granted there will still be an element of vaccination income going forward.
There is also the issue of inflation and interest rates. As these go up, the average family has less money to spend. Consumer spending therefore has a real risk of declining. What does that mean for pharmacy? Perhaps 2023 is a very different world in pharmacy land than 2021 and 2022.
The main point I want to make here is, are these risks being taken into account? Does the current crop of buyers understand what the margin of error is?
Let’s go through a hypothetical scenario.
