What impact have the pandemic, lockdowns and changing work patterns had on pharmacy market values? How different is the new generation of pharmacists? Frank Sirianni gives his views
Pharmacy market expert Frank Sirianni spoke to AJP editor Chris Brooker at APP2021 at the end of May to give his expert view, based on years of analysis, on the state of play with the community pharmacy market.
Here’s a summation of some of Frank’s key messages (please watch the video for more detail and more insght)
The market situation
Despite the pandemic, the market has remained extra positive for a couple of reasons:
- The pharmacy sector has proved sustainable and robust during COVID
- Interest rates are still extraordinarily low
The market is still paying very good returns for those looking to sell their pharmacy, and there are still more buyers than sellers out there.
Demographic differences in pharmacy performance
The reality is, in a macro sense, Australia wide pharmacy is doing reasonably well. There are certainly pockets that have been disastrous
- Pharmacies in medical centre locations where the medical centre has focused on telehealth
- Shopping centre and CBD pharmacies where the workforce has been absent and/or reduced for long periods
On the flipside there have been suburban pharmacies that have benefitted from people working from home.
There is a complete change of mindset where a lot of people have discovered the working from home caper is pretty good and they’d like to keep it as part of their weekly program.
Those things are going to change the fabric of pharmacies and owners are going to have to make some strategic decisions about what business they’re in and how they pivot their business to suit the new reality.
Some market predictions
Interest rates are going to remain low for quite some time, I suspect that because of that, and the increase in demand from buyers coming back into pharmacy, because its so robust
What we’re finding is vendors are reluctant to sell, because they can’t get the return elsewhere, and we’re seeing more interest in young pharmacists becoming partners and having a transition in ownership.
This is a real win-win because older senior partner benefits from the enthusiasm of the junior.
Younger pharmacists entering ownership
The issue is getting young pharmacists prepared for ownership. The transition from being a good clinical pharmacist to being a good owner is a big step. They’re not trained and they need to train themselves to become decision makers and leaders, and it won’t appeal to everybody.
The training of this cluster of young pharmacists is very important for the sustainability of community pharmacy. And if we are going to maintain a valid community pharmacy network we really do need to secede ownership to the next generation.
The next generation is not the same. Their attitude is more balanced and they want an ownership structure that gives them flexibility, to ‘have a life’. We need to address this in our approach.
I think the counterforce to this is the groups and the other stakeholders within pharmacy who are actively seeking to consolidate ownership is a risk for the sector, and we need to address this.
What should a younger pharmacist do?
First thing is to make sure you’re ready to buy. Make sure you have the emotional skills and the support structures. Make sure you understand what sort of business you’re going to be best suited for? Do you want to go into retail or services? There’s lots of areas to consider.
Then make sure you do your analysis. People sometimes get carried away with peo0ple who are not necessarily independent and taking too much of their advice.
What should existing owners do?
What does challenge a lot of older pharmacy owners is that they’re not ready to let go. This is a big issue for a sole proprietor. Are you ready to let go? They feel the pharmacy is their life and their family. Think about what you’re letting go. It can take two or three years to go through this journey.
Frank Sirianni is the founder of Medici Capital, the Australian leader in the provision of business valuations to the health industry.