By Neil Trainis

One of the UK’s leading pharmacy brokers has today released a report that claims there will be further corporate divestments of pharmacies this year and continued demand for “quality businesses” in the independent sector.

Christie and Co said that despite increasing pressures in community pharmacy, marked by a “rapid increase” in locum costs and a “drain” of pharmacists to general practice coupled with pressures in the wider economy, the UK pharmacy market remains attractive.

It predicts that in 2023, more branches belonging to big chains will be sold off, giving potential buyers more choice. LloydsPharmacy decided to divest 76 stores in 2020-21 and Boots appointed Christie and Co to manage the sale of 44 branches.

However, Christie and Co said it expects those buyers to be “more selective in what they purchase and more defensive in their strategy.”

It also warned the cost of borrowing to help fund acquisitions will rise but the increasing number of pharmacies for sale “creates a strong opportunity for acquisitive, experienced operators with good track records and funding support.”

“A number of corporate operators have implemented disposal strategies, offloading significant volumes of pharmacies in certain areas. Inevitably, this additional supply of pharmacies to the marketplace will lead to a perception of more choice for purchasers,” Christie and Co said.

“However, the sale conditions and liabilities that may accompany some such sales will mean that those prospective purchasers who are either new to the market or are reliant on funding to support acquisitions may find acquiring such opportunities challenging.”

David Ward, senior director of Christie Finance, said lenders were happy to support first-time buyers and those looking to expand their portfolios last year but “various elements” including the withdrawal of Wesleyan Bank and “to a lesser extent” Recognise Bank from pharmacy increased pressure on other lenders.

“This, together with rising interest rates and increasing locum costs, caused lenders to adopt a more cautious approach with their lending policies,” he said, warning lenders will “scrutinise applications” more severely this year.

The report also said pharmacy operators will continue to experience difficulties recruiting and retaining staff and profits will fall as staff shortages, rising energy costs and high borrowing take their toll.

Christie and Co claimed its business last year was “brisk,” marked by a 12.5 per cent increase in agreed deals compared with 2021 and three offers for each pharmacy on average. In 2022, it said it sold 105 pharmacies at a combined value of more than £90 million, with “strong activity” in Scotland, the North-East of England and South-East of England.

According to figures from its database, 80 per cent of first-time buyers, 10 per cent of independent contractors looking to expand and 10 per cent of small, medium and national multiple operators were interested in buying a pharmacy business. Christie and Co, though, said that “continued appetite did not directly correlate with sales activity, with only 23 per cent of sales undertaken in 2022 having been to first-time buyers.”

It also said it anonymously surveyed pharmacy professionals about their sale and acquisition plans for this year; 35 per cent said they are looking to buy, 27 per cent are looking to sell, 26 per cent said neither and 12 per cent said they were looking to do both.

A spokesperson for the broker told Independent Community Pharmacist the responses "reflect a wide and varied cross-section of the different sectors" it operates in "from large organisations with multiple assets to individual single proprietors." When asked how many people in total it surveyed, Christie and Co said it "generally" does not publish its sample numbers.