The average selling price for pharmacies dropped 3.6% between 2018 and 2019, real estate experts have announced.

According to data from Christie and Co published yesterday (16 January), the price drop marks a shift in the pharmacy market in recent years, with 2017 and 2018 seeing year-on-year price rises of 8.1% and 2.8% respectively.

While the Category M clawback and medicines shortages made 2019 a ‘challenging year’ for the sector, large deals were still made, the real estate company said.

‘We were instructed [to sell] 70 Rowlands pharmacies in February and after a short marketing period, sales were agreed on the majority which continue to progress to exchange and completion as we enter 2020,’ it said.

The ‘more settled…funding climate’ in Scotland meant that there were ‘significant’ value increases in the pharmacy market there in 2019, Christie and Co said, with some businesses selling for up to 12 times their overall profitability.

Indies on the up

In England, the impact of the five-year community pharmacy contract, which will see pharmacies receiving one £2.592bn funding package per year until the end of 2023/24, is ‘difficult to measure’, the company said.

The contract's focus on clinical services will mean that the sector's profitability will ‘be dependent on the roll out of new services over the course of the deal, it added.

Christie and Co predicted that in England the multiples would continue the trend of selling off non-performing or marginal pharmacies, giving independents the chance to acquire them.

There could also be an increase in the number of pharmacies being sold due to retirement due to some contractors not adapting to the new service-led contract, it added.

There will also be an increase in the number of first-time buyers, Christie and Co predicted, ‘driven by a continued optimism and keenness to run/own their own businesses’.