Distressed pharmacy sales to increase in 2024, property adviser Christie & Co predicts

Last year, 45 per cent of pharmacies were sold to first-time buyers and 55 per cent to independent contractors and regional multiple operators through the broker 

Specialist business property adviser, Christie & Co has predicted that 2024 will be a big year for pharmacy sector in the UK, thanks to the introduction of the £645 million investment and the Pharmacy First scheme.

However, an increase in distressed pharmacy sales is also expected this year, the broker stated in its Business Outlook 2024 report, published on Thursday (12 January).

The report reflects on the transactional activity and challenges of 2023 and forecasts what this year might bring across the industries in which the broker operates in, including the pharmacy sector.

Christie & Co said they saw a strong transactional activity across the pharmacy sector in 2023, despite ongoing operational challenges, and offers were accepted, on average, at 2.5 per cent above asking price.

They made more sales agreement over the year, but completion volumes declined by 15 per cent, largely due to ongoing delays in the change of ownership process, the report revealed.

Last year, 45 per cent of pharmacies were sold to first-time buyers and 55 per cent to independent contractors and regional multiple operators through the broker.

A noticeable rise in the number of distressed pharmacy sales was seen in the second half of the year, driven by the continued pressures faced by contractors, and this trend is expected to continue throughout 2024, according to the property adviser.

Tony Evans, Head of Pharmacy at Christie & Co, commented: “2024 will no doubt be a big year for pharmacy. The introduction of the £645 million additional services funding and the successful rollout of the Pharmacy First style minor ailments scheme will no doubt provide much-needed additional income in offering some respite to contractors.

“However, the key driver to the future viability of the sector will be the successful outcome of the wider funding agreement to replace that previously agreed as part of the Community Pharmacy Contractual Framework’s 5-year deal in 2019.”

Also, it is predicted that there will be continued interest from existing operators, particularly for defensive purchases, and opportunities for investors and those with finance who are looking to enter the pharmacy market.

Pharmacies remained a preferred lending sector, with significant borrowing opportunities, according to Christie & Co’s Business Outlook 2024 report.

LloydsPharmacy disposals led to a surge in pharmacy transactions in 2023, putting pressure on lenders, valuers, solicitors, and NHS England, causing inevitable delays in the sales process, it stated.

Furthermore, the company’s annual sentiment survey revealed that while 46 per cent of pharmacy professionals are positive about 2024, It’s either neutral or negative about what’s to come for the rest 55 per cent.

About 85 per cent of the respondents (pharmacy professionals across the country) said they are planning to either buy or sell this year.