The 'most notable' opportunity for pharmacy owners to capitalise upon in 2024 revealed

Overall, pharmacy goodwill prices are anticipated to remain consistent in the coming months 

Pharmacy sales specialist, Hutchings Consultants has revealed its market predictions for the next 12 months in a new report.

The broker is anticipating that both independent group operators and corporate owners will continue to reassess their existing portfolios in 2024, making strategic disposals of varying sizes.

“This is likely to result in transaction volumes remaining high for the foreseeable future,” stated the report authored by Paul Steet, Associate Director, Hutchings Consultants.

Community Pharmacy Contractual Framework negotiations will be the most notable opportunity for the sector to capitalise upon this year, the broker said, adding that it’s “a belated opportunity for the sector to secure a vital uplift to the contract’s fixed global sum.”

The launch of Pharmacy First Scheme in England is seen as a positive development, as Paul said it offers “a much-needed financial boost” to the sector.

He said that the new scheme and the recent announcement of a 5% funding increase in Wales are “already bringing a renewed degree of confidence from buyers as we move into 2024.”

Additionally, the broker has anticipated some reduction in interest rates by the Bank of England in coming months, relieving the financial pressure felt by existing operators to certain extent and assisting buyers with affordability.

Overall, pharmacy goodwill prices are expected to remain consistent during the year unless “the supply of pharmacies on the market falls further or a more significant uplift in community pharmacy funding is secured.”

Hutchings encourages pharmacy owners to focus on their drug buying and profit margin through 2024 as “this is such a key factor for pharmacy goodwill values.”

A look back at 2023

Hallo Healthcare Group’s decision to divest their portfolio of over 1,054 Lloyds Pharmacies resulted in an unprecedented increase in the number of business opportunities on the UK pharmacy market in initial six months of 2023.

The divestment created a “fever-pitch level” of demand from potential buyers both within the market and outside, according to the Hutchings report.

In Scotland alone, Lloyd’s disposals resulted in a massive 533 per cent increase in completed deals at Hutchings.

Although on a significantly smaller scale, Boots and Well also opted to divest some branches, with the former announcing its plan to axe 300 branches around the UK.

Existing pharmacy owners with single branches completed most corporate acquisitions last year, while first-time buyers acquired the majority of the independent sales, according to the broker.

Hutchings saw a significant increase in the number of enquiries and registrations from both new and existing buyers for pharmacy triggered by large-scale corporate disposals in 2023.

In 2023, the number of new buyer registrations increased over 90 per cent, compared to the previous year.

At 77 per cent, first-time buyers accounted for the majority of the new registrations, followed by existing owners at 15 per cent.

Almost all sales the broker transacted last year involved the buyer obtaining a bank loan.