How is COVID-19 affecting the pharmacy sales market? Natalie Sirianni provides an update on the situation
Firstly, I would like to say a big thank you to all pharmacists for the amazing work you are doing on the frontline of the pandemic!
While this article focuses on the financial and economic impact of COVID-19, I do not mean underestimate the huge personal impacts that this pandemic is having for each and everyone of you.
Also, I recognise the enormous social and health impact of pharmacy services to the Australian community. So, I would like to start by saying thanks and also if there’s anything we can do to help, we’re here to assist.
As mentioned, this article will focus on the financial impacts of the pandemic, specifically in relation to the pharmacy business sales market.
The pandemic will obviously have a significant impact on the economy throughout Australia, which may last for many years to come. I’m no economist, so will not try to forecast what will happen there, but I will consider the impact we are seeing so far in community pharmacy and address how these affect the pharmacy business sales market.
Some of the key impacts we are seeing due to COVID-19 include:
- Essential Service – pharmacy has been relatively sheltered from considerable financial impact of COVID-19, (when compared to other industries such as hospitality and events etc), as it is an essential health service that has and will continue to operate throughout the pandemic. These circumstances may have also firmed up the value and role of community pharmacy in primary healthcare. This has been a positive for the pharmacy business sales market as it has confirmed the view for many buyers that community pharmacy is a solid investment with reduced risks compared to other small to medium sized businesses. We are hearing this from a number of buyers, who are now very keen to get into the market. (Also, as a side note, I’m getting more enquiries than I ever have before from non-pharmacists who want to buy into a pharmacy, but of course are not able to).
- Reduced customer traffic flow at certain locations – this is particularly the case for CBD pharmacies, large shopping centre pharmacies and some medical centre pharmacies where the patients of the medical centre have moved to telehealth. While there may be longer term impacts of this, for example, with more corporate offices in the CBD moving to more flexible working arrangements longer term, it is likely that this traffic flow will eventually improve and return to some sort of normalcy (whether that will be the same as before, or a new normal, only time will tell). The pharmacies significantly affected by this reduced traffic flow are likely to be receiving JobKeeper and hopefully rent reductions inline with legislation at this stage. At this stage, pharmacy buyers are still showing interest in these businesses, even though they may have been financially impacted by COVID. Many buyers that we speak to are aware that this will be a short-term impact. However, some buyers are keen to ‘wait and see’ how it all plays out.
- Panic Buying in March – it seems that most (if not all) community pharmacies throughout Australia experienced an increase in sales in March 2020 due to panic buying. This was across the board for both dispensary sales and front of shop sales. Many buyers that are reviewing figures on pharmacies that are for sale are wanting to see YTD2020 figures through to December or February (pre-COVID), as well as more recent figures to see the impact throughout COVID. We are seeing varying results, much of which can be attributed to the variations in customer traffic flow, as mentioned in the point above. Some pharmacies have performed well throughout COVID and others have declined after the panic buying of March.
- New Opportunities – with COVID-19, we have seen the acceleration of ePrescriptions and also seen many pharmacies move to focus on a number of other product sales and pharmacy service programs to meet community needs. This is a positive for pharmacy and the market is likely to respond favourably to this. These will potentially also have a longer-term impact for pharmacy.
Overall, while the economy is going to take a massive hit due to COVID, the data shows that historically, community pharmacy has always done well during periods of economic downturn. This downturn is expected to last for some time.
The data shows this throughout the last 30 years in Australian Community Pharmacy. While there are many reasons behind this, it is a positive for community pharmacy moving forward and likely to be a positive for the pharmacy business sales market.
If there is anything we can assist with at this stage, or you would like to discuss the pharmacy market in your area, please contact me on 1300 ATTAIN (288 246). I look forward to discussing with you further!