The proportion of community pharmacies owned by the largest UK corporate multiples saw a decline in the 12 months to March 31 this year, a firm of property advisers has found.

In its annual report on the community pharmacy market, Christie & Co said there had been a two per cent drop in the number of contracts “owned and operated 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 a 12-month period, 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, and held 2,173 and 1,349 stores respectively as of the end of March. Well Pharmacy axed two of its stores, bringing its footprint to 747, according to the Christie & Co analysis.

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 to meet patient needs,” said Christie & Co. 

There is “increased appetite” among the smaller multiples, as well as new entrants to the market, the report finds.

It shows that 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 nine per cent on the prior year.”

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.

The report notes: “With a few key funders withdrawing from the pharmacy finance market in 2022, existing lenders are needed to fill this void.

“With ‘alternative’ and sometimes less experienced lenders, it has been harder for buyers to access the finance they require. However, there is no shortage of demand for pharmacies.

“Year to date, Christie Finance has witnessed a 35 per cent increase in instructions, with keen buyers seeking support and guidance.”

Tony Evans, head of pharmacy at Christie & Co, commented: “As we have emerged from the grips of the pandemic, the sector has continued to deliver its pivotal primary care role.

‘While there have been gains in dispensing volumes, the sector has also had to contend with increasing cost headwinds exemplified in supply and drug pricing issues, as well as staff resourcing issues alongside significant increases in locum costs.

“Nonetheless 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. 

“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.”