The number of mergers and acquisitions (M&A) deals in the UK pharmacy has risen 26 per cent to 408 in the last year from 325 in the corresponding period, a report by UHY Hacker Young revealed.
The national accountancy group stated that pharmacies were one of few sectors to benefit from increased customer demand during the pandemic, as one of the few designated “essential retailers” remained open throughout lockdown.
It added that sales of PPE and Covid-19 testing has opened up a whole new business avenue for pharmacies, increasing their appetite to acquire smaller operators.
The new trend also made pharmacies an attractive target for buyers from outside the sector.
The report noted that both regional and national pharmacy groups are making acquisitions, including first time buyers that have not previously made acquisitions.
Moreover, private equity buyers have also shown increased interest in the sector.
It was recently reported that the owner of Lloyds Pharmacy, McKesson Corporation, has been in talks with three prospective bidders for the sale of its UK business, including Aurelius Group, Epiris and HIG Europe.
John Ierston, partner at UHY Hacker Young said the majority of pharmacies are still focusing expansion on buying additional sites, rather than investing in ecommerce.
The benefits associated with merging include economies of scale, particularly in back office functions, greater expertise, expansion of workforce and increase in services provision, allowing them to serve a wider customer base.
Ierston said: “Mergers and acquisitions remain the quickest way for pharmacies to expand their portfolio of both high street and health-centre locations.”
UHY Hacker Young has advised pharmacy owners, who consider merging, to plan in advance to prevent any immediate tax liability from arising.