Mon, 30 Dec 2024 | BUSINESS NEWS
Nearly 10 per cent of UK pharmacies were bought in M&A deals over the last 12 months as the sector suffered from financial woes.
According to data from accounting group UHY Hacker Young the number of UK pharmacies bought out by rivals rose by 50 per cent from 809 to 1,212 over the year to June 30, 2024. The trend, said UHY, is expected to continue in 2025.
The uplift in mergers accounted for 9 per cent of the nation’s 13,280 pharmacies as profits in the sector took a hit of about £500 million, the accountants found.
This was as a result of a squeeze on profits from the NHS and higher costs.
UHY’s research found gross profits per pharmacy fell by 10 per cent from £419,598 a year to £382,468 a year over the period.
John Lerston, a pharmacy services and tax planning adviser at UHY, said independent pharmacies were finding trading “increasingly difficult”.
“It has been an increasingly tough year for retail pharmacies and their patients as profits fall and sites are forced to close. It looks likely that the consolidation that the sector has seen over recent years will continue,” Lerston said. “Lower gross margins under the NHS contract, rising wage costs due to the cost-of-living crisis, and changes in the minimum wage and national insurance rates are squeezing margins.”
Examples include Lloyds Pharmacy, the national chain, which sold off part of its 1,054 store estate in a divestment plan arranged during its ownership by Aurelius, the German private equity firm.
Another came in December when two pharmacies in Derbyshire with a century of history between them were bought out of administration by a regional pharmacy chain.
Dents of Chesterfield and Dents Pharmacy, trading under the John Dent (Chemist) name, fell into administration in late 2023. Together, the pharmacies with over 100 years of trading history dispensed an average of 16,000 items per month.
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