An end-of-financial year overview of the factors impacting the pharmacy business sales market
As we reach the end of the 2016 financial year, it is an ideal time to provide an update of the pharmacy industry, and business sales in particular, writes Natalie Sirianni of Attain Business Brokers.
The 2016 financial year was a busy and exciting year for pharmacy which saw the introduction of the Sixth Community Pharmacy Agreement (6CPA) as well as the optional $1 co-pay discount.
While the market has varied quite significantly between different states and locations, pharmacy business sales in all locations have been affected by these changes and a number of other macro changes to pharmacy.
Here are some of the factors currently affecting the pharmacy business sales market:
- 6CPA – Since the signing of the 6CPA we have experienced increased activity in the market from both buyers and sellers. The increased confidence associated with the Agreement has led to increased activity and more transactions.
- Expert Pharmacy Remuneration Panel Review – The Panel Review that is currently being completed is analysing a number of key elements in Australian pharmacy including pharmacy remuneration and the location rules. It is important to keep in mind that the Pharmacy Ownership Rules are state based legislation and are not part of the review currently being completed. We have had many reviews completed of pharmacy over the years and this has not yet impacted the market for pharmacy sales. No doubt the draft report will be designed to stimulate further discussion on this topic!
- Deregulation Threats – This is fact of life for any regulated market. While not part of the Expert Panel Review mentioned above or the Community Pharmacy Agreements, the perceived threat of deregulation did seem to impact on the pharmacy market leading up to the signing of the 6CPA.
- Access to Finance – The 6CPA has also brought renewed confidence to the banks allowing for good access to finance for pharmacy buyers. This is particularly important for the larger pharmacy transactions. Also, with interest rates at record lows, it means that profit after interest is now much higher than it has been historically. These are positive points for the pharmacy industry.
- Supply and Demand – has definitely picked up in the last few months with a number of businesses coming to market. We expect this to continue in the new financial year or even increase as financial year results become available. Demand is also very strong. It does vary by location and type of pharmacy.
As you can see, there are a number of factors influencing the pharmacy market at the moment. We will aim to keep you updated with any changes to these factors and the market in general.
If you are considering selling your pharmacy or looking to buy a pharmacy, please feel free to call one of our brokers on 1300 ATTAIN (288 246) to discuss the market in your area.
We look forward to assisting you through the important process of buying or selling a pharmacy!