Buying a Pharmacy: Pharmacies for Sale and How to Fund the Purchase

How do you buy a pharmacy in the UK?

To buy a pharmacy in the UK, you find one through specialist agents or privately, test its dispensing figures and NHS position, line up finance, agree heads of terms, apply to NHS England for a change of ownership (in England), notify the GPhC and complete with stock valued on the day. Professional Practice Loans, a specialist whole-of-market broker for professional practices, arranges the purchase finance.

1. Find the pharmacy. Register with specialist pharmacy sales agents, watch the pharmacy press and tell accountants and solicitors with pharmacy clients what you want. See pharmacies for sale.
2. Judge it as a lender would. Monthly NHS items over several years, the split between dispensing, services and retail, the team, the latest GPhC inspection and the lease.
3. Get an early view on finance. Instant Quotes shows indicative options without a credit search, so you know what is likely to be supported before you offer.
4. Agree heads of terms. Price, the basis for valuing stock at completion, any freehold, deferred consideration, and whether the purchase is conditional on the change of ownership being granted.
5. Apply for the change of ownership. Community Pharmacy England’s guidance on change of ownership says the incoming contractor applies to NHS England before the change takes place, and a decision is due within 30 days of NHS England having all the information it needs. It also notes that buying the shares of a company that carries on trading is generally not a change of ownership.
6. Run due diligence and apply for finance. Lenders usually want the accounts, dispensing figures, the valuation, the lease, your CV and forecasts.
7. Complete and notify the GPhC. The new owner notifies the General Pharmaceutical Council within 28 days, and a company that does not already own registered premises nominates a superintendent pharmacist.

It suits pharmacists buying their first pharmacy, managers buying from their employer and groups adding branches. What to watch: falling item numbers, income that depends on a single service, a short lease, heavy reliance on locums, and stock and reimbursement timing in the first months, which is why working capital is best arranged with the purchase. Wales, Scotland and Northern Ireland have their own NHS pharmaceutical services arrangements, which your solicitor will confirm.

A pharmacy purchase is usually funded with a term loan for the goodwill through practice acquisition finance, with premises finance for a freehold and equipment finance for dispensing automation. See pharmacy loans and our guide to every cost in a practice purchase.

Pharmacies for sale: where to find them

If you are looking at pharmacies for sale, it helps to know that many are not advertised widely. Some are offered only to buyers registered with an agent, some are sold privately, and some change hands between pharmacy groups. Buyers in the UK usually find a pharmacy business for sale through a mix of channels:

• Specialist pharmacy sales agents: firms that value and market pharmacies for sellers and keep registers of buyers. Registering with more than one gives a wider view of the market, and you will usually be asked to sign a confidentiality agreement before you see the pharmacy’s name or its figures.
• The pharmacy press: pharmacy trade publications and their websites carry pharmacy for sale and pharmacy wanted adverts.
• Accountants and solicitors with pharmacy clients: they often hear early when an owner is planning to sell or retire.
• Your own network: if you manage or work in a pharmacy, the owner may be open to selling to you, either outright or in stages.

Whether the pharmacy for sale is in London, Birmingham or a smaller town, lenders that fund pharmacy purchases work across the UK, and the finance process is broadly the same. What differs is the NHS position: this guide describes the arrangements in England, and Wales, Scotland and Northern Ireland have their own NHS pharmaceutical services arrangements, which your solicitor will confirm.

How to judge a pharmacy for sale

Look past the asking price and ask for the information a lender will also want to see:

• Dispensing figures: monthly NHS items over several years, and whether volumes are rising, steady or falling.
• The income split: NHS dispensing, NHS services, private services and retail sales, and how each has moved.
• The NHS position: the pharmacy’s inclusion in the pharmaceutical list, its opening hours and the NHS services it provides.
• The team: who acts as responsible pharmacist, how much the pharmacy relies on locums, and whether key staff are staying.
• Compliance: the pharmacy’s registration and its most recent GPhC inspection outcome.
• The premises: freehold or lease, the remaining term, the rent and whether the landlord’s consent is needed.
• Stock: typical stock levels and how stock will be counted and valued at completion.
• The basis of the price: how the asking price was arrived at, whether it is an asset or a share sale, and whether any of the price is deferred.

A pharmacy whose income is spread across dispensing, services and retail, with a settled team and a secure lease, is usually easier to fund than one that depends heavily on a single source of income or on the seller personally.

Valuing a pharmacy and its goodwill

A pharmacy valuation is usually prepared by a specialist pharmacy valuer or agent. Most of the price is normally goodwill: the value of the NHS contract position, the dispensing and services income and the pharmacy’s place in its community. Fixtures, equipment and stock are valued separately, and the freehold too where it is included.

Valuers look at sustainable profits, dispensing volumes and trends, the mix of income, the location and local competition, staffing costs and the lease. The price also has to work for the buyer’s lender, which makes its own assessment of how the goodwill will hold up under new ownership and how much of the price it will fund. Our page on goodwill finance explains how lenders approach it.

The NHS change of ownership application

In England, the right to provide NHS pharmaceutical services does not simply pass with the sale. Community Pharmacy England’s guidance on change of ownership explains that the proposed incoming pharmacy contractor must apply under regulation 26 of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 before the change takes place, and that NHS England must determine the application as soon as it is practicable to do so.

• Timing: the guidance says a decision is due within 30 days of NHS England receiving all the information it needs, which includes fitness to practise information, unless there is good cause for delay.
• Lapse: if the sale does not go ahead, the grant of a change of ownership application lapses after six months from notice of the decision.
• Conditional purchase: the guidance notes that a purchase can be made conditional on the change of ownership application being granted.

Lenders usually want to see the change of ownership application progressing before they release funds, so start it early and run it alongside the finance application.

GPhC registration and the superintendent pharmacist

Pharmacy premises must be registered with the General Pharmaceutical Council. The GPhC’s guidance on change of ownership of a registered pharmacy says it is a legal requirement to notify the GPhC of an ownership change. The new owner sends the notification within 28 days, after the change is complete, and shows how the pharmacy will meet the standards from its first day under new ownership. If the GPhC is not notified in time, it will remove the pharmacy premises from the register.

If you are buying through a company that does not already own registered premises, the GPhC says the company must nominate a superintendent pharmacist. Owners taking over more than ten pharmacies are asked to contact the GPhC before applying. Your solicitor will confirm the ownership structure that suits you.

Freehold pharmacy for sale: buying the property too

Some pharmacies are sold with the freehold of the building. Buying the property gives you control of the premises and removes rent, but it increases the amount you need to fund and brings a separate valuation and legal process.

The property is usually funded with secured lending through practice premises finance, alongside the loan for the goodwill. Some buyers acquire the business first and the freehold later, or agree a new lease from the seller. Where the pharmacy is leasehold, check the remaining term carefully: the goodwill depends on trading from those premises, and a short lease can reduce what a lender will support.

Stock, working capital and the reimbursement cycle

Stock is usually counted and valued at completion, so the final figure is not known until the day. Agree the valuation basis in advance and make sure your funding can flex.

After completion, stock is paid for before NHS reimbursement arrives, and payments to a new owner can take time to settle. A working capital facility arranged alongside the purchase is usually easier than trying to add one later. Dispensing robots and other equipment can be funded separately with equipment finance.

How pharmacy purchases are usually funded

Most pharmacy purchases combine several types of finance, each matched to part of the deal:

• A term loan for the goodwill, repaid from the pharmacy’s profits. See practice acquisition finance.
• Property lending where a freehold is included.
• Working capital for stock and the reimbursement cycle.
• Asset finance for dispensing automation, refits and equipment.
• Deferred consideration, where the seller agrees to receive part of the price after completion.

Most lenders expect the buyer to contribute some of their own money, and a stronger case can reduce what is required. Lenders look at the dispensing figures, the NHS position, the lease, the buyer’s experience and the forecast under new ownership. Our guide to buying a professional practice covers every cost you need to fund, and preparing a practice finance application sets out what lenders usually ask for.

Selling a pharmacy

If you are thinking of selling your pharmacy, the buyer’s finance is part of your sale. Most buyers borrow, and their lender will want the accounts, dispensing figures, the NHS position, details of the team, the lease and the GPhC position before it releases funds. Having that information ready, and asking each buyer how they intend to fund the purchase, helps the sale complete.

A pharmacy valuation from a specialist will usually start from sustainable profits and the dispensing and services income. Employees usually transfer to the buyer on their existing terms under TUPE, and Business Asset Disposal Relief may reduce the tax on a sale if you meet the conditions. Take advice from a solicitor and an accountant with pharmacy experience before you agree the structure.

How we can help

We do not sell pharmacies, but we arrange the finance that lets buyers buy them. We search the market across the whole of the market, with access to 300+ lenders including specialist professions lenders, high-street and challenger banks, and present each case to the lenders most likely to suit it. Finance is subject to status, lender criteria and approval.

Talk to us before you offer and we will search the market for lenders that fund pharmacy purchases, so you know what is likely to be supported for that pharmacy given your experience, your contribution and its figures. An early indication is not a formal offer of finance, which follows a full application and the lender’s own assessment. See pharmacy loans or get instant quotes.

Common questions

This guide is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.