Pharmacy Daily | Pharmacy resilient despite 60DD

IT'S still too early to say what effect the introduction of 60-day dispensing will have on pharmacy valuations in Australia, but the overall sector remains "very robust and resilient", according to Natalie and Frank Sirianni from Attain Business Brokers.

During a session on "The Journey to Pharmacy Ownership" in last Fri's Pharmacy Careers Summit (PD 07 Jul), the pair confirmed that although many vendors have held off selling due to the uncertainty, Attain still has several pharmacy transactions in play at the moment and progressing, adding that "only time will tell how that will impact".

Frank Sirianni acknowledged "a lot of fear and uncertainty" around the new dispensing rules, "and it's understandable that many first-time buyers would be looking at that and wondering whether there's a future".

"But the reality is that we've been through these cycles before," he said, noting industry fundamentals such as the need at the community and patient level, and the certainty for financiers provided by the ongoing Community Pharmacy Agreements compared to other business sectors.

"Clearly pharmacy will remain critical to the primary healthcare network for some years to come," the Siriannis noted, highlighting the key role that COVID-19 had played in showcasing what community pharmacy can do.

Notwithstanding the pandemic pressure on pharmacists and pharmacy staff, the financial results during the pandemic were quite good, they added.

"What we also saw is that COVID confirmed the strength of pharmacy versus other small- to medium-sized businesses...and it also showed that community pharmacy, in general, does very well in times of economic hardship."

Banks will lend around 70-80% of the value of a pharmacy business, and while rising interest rates are also a factor for people wanting to get into pharmacy ownership, the Siriannis noted that the figures are still lower than historical levels.

"For a long time (pre-GFC) many pharmacy owners were buying at 8 or 9%, maybe as high as 10...so if you can buy at the moment you're probably going to be paying somewhere around 5-6%, and when you consider the sort of yield that you get on a pharmacy purchase, there's a fairly good margin to cover the risks and uncertainty."

The most recent Attain pharmacy market sentiment survey, compiled in Feb prior to the 60-DD announcement, indicated huge demand from purchasers wanting to buy pharmacies, and while the supply side has been relatively low over the last few years, an increasing number of owners indicated they are looking to sell.