Market share of biggest pharmacy multiples continues to fall

Report by Arthur Walsh

In its annual report on the community pharmacy market, Christie & Co said there had been a 2 per cent drop in the number of contracts owned and run by corporate or supermarket operators.

“Supermarket operators maintained their share, with the larger corporate operators seeing the most notable declines as they continued divestment and/or closure programmes to protect their retained estates,” it explained. 

The Christie & Co briefing finds that Rowlands Pharmacy divested more than 10 per cent of its estate in the 12-month period, leaving it with 440 stores as of March 31 compared to 492 in the previous year’s report.

Meanwhile, Boots and LloydsPharmacy shed around 80 branches each, leaving them with 2,173 and 1,349 stores respectively. Well Pharmacy (part of Bestway) axed two of its stores, bringing its footprint to 747. Overall, the number of contracts owned by businesses with over 301 stores fell by 3.7 per cent to 5,653.

“As with previous years…both first-time buyers and independent operators were quick to seize such opportunities, seeking to reinvigorate the pharmacies by offering more localised and adaptable services,” said Christie & Co. 

There is “increased appetite” among the smaller multiples, as well as new entrants to the market, the report finds. First-time buyers accounted for 80 per cent of purchase applications but only 40 per cent of completed sales in 2021.

“For the first six months of 2022 this fell to circa 30 per cent of sales completed as vendors sought security in selling to more experienced and well-funded existing operators.

“Interestingly, we saw an increase in the number of sales completed to multiple operators in the first half of 2022, accounting for some 38 per cent of all sales undertaken, a rise of 9 per cent on the prior year,” said Christie’s.

On average, first-time buyers and single-branch independent contractors paid slightly below asking prices, while small groups and medium to large groups paid slightly above.

“Over the last year, we have witnessed many pharmacy contractors keen to expand their businesses both through acquisition as well as the development of additional services,” said Tony Evans, head of pharmacy at Christie & Co.

“As a result, the market has continued to see positive activity, something we reported in our Business Outlook 2022 publication, which also noted that pharmacy prices bounced back from an almost static level in 2020 to record a 4.3 per cent increase in 2021. 

“We are pleased to report that this trajectory has continued, mirroring that of the previous year, with appetite across all aspects of the market,” concluded Mr Evans.