Buy a pharmacy

How to buy a pharmacy buy-pharmacy

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If you are looking at buying a pharmacy business then there are more factors to consider than when buying any other type of business. Dealing with the NHS and being licensed to provide NHS services is one of the main obstacles in running a pharmacy business; under the NHS Pharmaceutical Services Regulations (2005) all pharmacies require a fitness to practice check before they can provide full NHS services, and they must be registered to dispense NHS prescriptions. As this is the backbone of a dispensing pharmacy business it is very important to check that there will be no problems satisfying these requirements before committing to buying a pharmacy.


The first thing anyone should do when purchasing a pharmacy is to engage an agent specialising in the buying and selling of pharmacies. Their advice and experience will be invaluable, whether you are a first time buyer, or someone with prior experience of buying a pharmacy business. If you can find an agent with knowledge of the location you are looking to buy in, all the better. Some agents operate nationwide, others are more local, so make sure you engage the right one for your needs.

Do your research – funding

The sources of funding available to people wanting to buy a pharmacy are banks (loans) and wholesalers. Pharmaceutical wholesalers have a vested interest in helping people buy pharmacies, as without an outlet for their products they cannot sell them. Wholesalers are often willing to lend money and support to anyone wanting to buy a pharmacy in order to keep their sales outlet in business. Because of this support, first time buyers are now often able to afford businesses which would have been out of their price range years ago.

Banks tend to undervalue pharmacies, so be aware that if you are relying on a bank loan to fund your purchase you may not be able to afford the business you really want. Be prepared to put in at least 20 per cent of the capital; more if you want to work with a bank loan and still purchase a business you have your heart set on. You will also need to prepare a full business plan to secure bank funding, and it is a good idea to have this done by an accountant or other qualified person with experience in the pharmacy business if you not used to creating them.

Always have your prospective purchase valued independently. This is the best way to determine whether the asking price of the business is accurate and realistic. If you are looking to make an offer on a pharmacy which is not on the market it is imperative you get a valuation of the business so you can judge how much to offer. Of course, the existing owner will get their business valued if an offer is made on it, so consider offering above the valuation to facilitate an easy sale.

It is a good idea to understand how pharmacies are valued as there is a lot more to valuing a pharmacy than any other type of business. If you can arrive at your own figure, this will back up an independent valuation, but also influence how much you want the business; you may see potential in the business that an independent valuer may not, and you can then make a more informed decision about how much you are willing to offer. More information about the pharmacy valuation process is available here <link to valuation article>.

Do your research – the business

If you have carried out your own valuation, the chances are you will know quite a bit about the nature of the business, the turnover and cash flow, the future prospects and past performance. If you have not done your own valuation then the next step is to research the business itself thoroughly. A good seller will have an information pack available to all prospective buyers detailing the history of the business, historical turnover and cash flow figures, VAT returns, NHS documentation and anything else they want to make known about the business. All these resources will help you reach a decision about the future prospects of the business and whether you want to buy it.

If you are looking at making an offer on a business that is not on the market, you will need to find out this information for yourself. Companies House is a good place to start for financial information (if the business is of a large enough size to be filing accounts with them) and local knowledge is invaluable. This is where an experience agent with local knowledge comes in very useful.

In both cases, visit the pharmacy during opening hours on different days of the week and at different times to see how the business runs normally. You will also see what state the premises is in, where it is situated, all the while getting a feeling for your prospective new business.

If the pharmacy is located within, or very near to a health centre, it is likely that this business will be bought up by a local or national chain, as they have more purchasing power and are very keen to buy up this very profitable type of pharmacy. ESPs (Essential Small Pharmacies; at least 1 kilometre from another NHS pharmacy) receive an allowance on top of their NHS dispensing agreement, and are often seen as undesirable by buyers due to their (often) rural locations and lack of footfall. However, for a first time buyer they can be a very attractive prospect. The guaranteed higher NHS income coupled with sometimes cheaper overheads and nice locations are good for first time buyers, especially those wanting to run a community-focused enterprise.

As you will inherit the existing staff from the business, make sure you are aware of their employment contracts, and if necessary, engage an employment solicitor to explain anything you are unsure of. You may also inherit other liabilities with the business so ask your agent or solicitor to check over all the documentation for anything that may become problematic in the future, such as tenancy running out.

If you can find out about the plans of the local health authority for their pharmacy services in the future this can inform you whether there is a profitable future in your prospective purchase. Your agent can also help you find out this information and should make you aware of any benefits of negatives associated with the business and the future plans for the area.

Get creative

You may see that there are simple, cheap improvements that can be made which will quickly increase sales, such as refurbishing the shop fittings, providing better access and offering a delivery service. Weigh the costs of these against the valuation the business already has and think about whether some simple changes could generate more trade.

If you know that the existing owner has reservations about selling, find out what these are and offer to put clauses into the sales contracts so they can be assured that their concerns will be addressed. They may be worried about what will happen to their staff, whether any special agreements with customers will be honoured and so on. Make sure the vendor knows you intend to carry on with business in a similar fashion to assuage any doubts they may have about selling to you.

During the bidding and sales process

You may be asked to put down a returnable deposit with the vendor’s agent as a show of good faith that you will go through with the sale. It is a good idea to do this if you are serious about buying the business.

Have a stock take done independently and look out for overstock of unsaleable items, or under stock of essential items. These are things that can be addressed with the seller. Keep your agent informed of any and all developments and changes you come across as they may have advice for you.

It is common for the seller’s solicitors to draw up all the sales and handover contracts and documentation, so ensure that your solicitor checks everything thoroughly before the sale is completed.

Once the sale has gone through, your agent will advise you of the next steps including notifying the Royal Pharmacy Society, local health authority and others. Running the business and turning a profit is now up to you; if you have done your research properly you should be well placed to make a success of your new venture.