King cat amongst the pharmacy pigeons

Welcome to PD’s weekly comment feature. This week’s contributor is Greg Aspeling, Owner, gaps. solutions.

FRED Raven opened the first pharmacy brokerage house over 30 years ago. He was my mentor. Sadly, no longer with us, he would become extremely frustrated by the lack of vision by buyers. Pharmacy was a forever changing landscape. He believed, no matter what, pharmacies would always make money. And he was right. Certainly, the bottom line has been eroded substantially over the years, but there are still many very profitable businesses.

Demand for pharmacy businesses remains strong, despite the myriad of ongoing challenges. 2017 was pharmacy’s own annus horribilis - the contentious King Review, Price Disclosure still eroding profits, and the up scheduling of codeine. One bright spot was the passing of a new law providing long term survival of Location Rules, despite stiff opposition with some doctors calling for the axing the rules.

Buyers need to be aware, though, they may face challenges with funding. Lenders are taking a tougher stance. Buyer’s now need a 25% - 30% deposit. Valuations, on the instruction of lenders, are tougher when it comes to high priced low value drugs and nursing homes business.

I am sure 2017 events are beyond anything Fred would have imagined. But, he was right, pharmacy businesses still make money.