Buying a community pharmacy is a major commitment, and the difference between a good purchase and a costly one usually comes down to the financial questions you ask before you sign. Drawing on our experience advising pharmacy clients, here are the ones that matter most.
Is the income sustainable?
Look hard at the dispensing income and NHS reimbursement, prescription volumes and their trend over recent years, and any reliance on a single prescriber or nearby surgery. A dip in a key local relationship can change the picture quickly.
What are the real margins?
Gross profit on dispensing and retail, staffing costs, and the efficiency of buying all feed into profitability. Make sure the figures you’re shown reflect how the business actually runs, not a best-case version.
What exactly are you buying?
Are you acquiring the trade and assets, or the shares in a company? The answer has significant tax and risk implications. Pin down the value of stock, the treatment of goodwill, and whether the premises are leasehold or freehold — and review the lease terms carefully if so.
How will you fund it, and how will it be structured?
Funding a pharmacy purchase usually involves specialist lenders, and how you structure the deal — personally or through a company — affects both your tax and your liability. This is worth planning before you commit, not after.
Don’t forget the people and the rules
Staff usually transfer with the business under TUPE, so understand your obligations there. And factor in the regulatory side, including GPhC requirements, from the outset.
A pharmacy purchase brings the financial, the tax and the regulatory together in one transaction — which is exactly where specialist advice earns its keep. If you’re considering buying (or selling) a pharmacy, talk to us about (our services for the pharmacy sector) and (our corporate finance services), or (get in touch) for a confidential conversation.
*Reminder: confirm all figures against the current tax year before publishing, and update these articles each year so they stay accurate and “fresh” for search engines.*