Despite the lack of extra funding, it is still a good time to sell a pharmacy in England, real estate experts have said.
Christie & Co and Hutchings Consultants told The Pharmacist yesterday (24 October) that pharmacy is still a ‘sellers’ market’, with ‘demand continuing to outstrip supply’.
On Monday (22 October), the Pharmaceutical Services Negotiating Committee (PSNC) announced that pharmacy funding will be maintained at £2.692bn, with £800m allocated to the retained margin and £1.3bn to the single activity fee (SAF).
Hutchings Consultants director Scott Hayton said that while there has been a ‘slight shift in power’, with the market for sellers being better in recent years, it is ‘still a sellers’ market.
He added: ‘Despite the disappointing position with pharmacy funding in England, the market here remains surprisingly buoyant. This is still an excellent position for a seller to be in and it allows for a competitive bidding process, good prices and attractive terms of sale.
‘Higher-quality pharmacy businesses are still likely to attain premium prices through their desirability at market and multiple parties vying to secure the business.’
Although it now takes an additional two to four weeks to complete a sale, which is likely to a ‘result of the extra pressure on the sector, deals are still crossing the line at good prices’, Mr Hayton said.
Echoing Mr Hayton’s comments, Christie & Co head of pharmacy Tony Evans said: ‘Vendors are continuing to bring their assets to the market and we continue to see competitive bidding on quality, appropriately priced pharmacies.
‘Appetite continues to be strong and we foresee consistent deal activity for the rest of year to come.’
‘Little impact on pharmacy prices’
Mr Evans argued that the funding deal, especially the reduction in category M prices, will have ‘little impact on pharmacy prices’.
PSNC announced that there will be a £10m decline in category M prices every month between November and March 2019, which could equate to a 11-12 pence drop per item depending on the pharmacy dispensing mix.
‘From a purchaser’s point of view, with the average transaction taking around six months to complete, much of the pressure the clawback exerts will have already been taken by the incumbent owner,’ Mr Evans said.
‘In addition, most purchasers will be looking at the result of a 2019/20 settlement ahead of these sales, with hope that the end of the clawback will leave them in a more positive position.’