The pharmacy sector has experienced a decline in average sale prices due to broader economic challenges.
The average sale price as a percentage of pre-tax sales dropped from 87% to 84% for pharmacies with pre-tax sales exceeding €1.2 million. Similarly, pharmacies with sales below this threshold experienced a decrease from 64% to 59%. The average sale price as a multiple of EBITDA also declined, falling from 6.7 to 6.4 times for larger pharmacies and from 5.4 to 5.3 times for smaller pharmacies.
Smaller pharmacies have shown more resilience due to their consistent economic value and are often purchased with profitability in mind. However, some owners are facing dire circumstances, leading to forced sales at minimal prices or closure, raising concerns about the sustainability of the pharmacy network.
Despite these challenges, there are still opportunities for young pharmacists to acquire well-performing pharmacies with growth potential.
The decline in pharmacy transfer prices is not surprising given the current economic landscape. High-cost, low-margin medications have driven slight sales growth in 2023, but inflation, rising personnel costs, and a significant drop in EBITDA have led to a recalibration of market prices. The increase in interest rates has further pressured buyers to negotiate more aggressively, impacting sale prices.
Certain regions have experienced price increases for pharmacies with sales over €1.2 million, indicating that regional dynamics play a crucial role in pharmacy valuations. The overall market remains active, with an increase in transactions recorded in 2023. This suggests that pharmacists are still eager to acquire pharmacies despite the challenges posed by high interest rates. Experts believe that the market will remain dynamic, with expectations of continued activity into 2024, driven by demographic shifts and potential rate cuts.
As the pharmacy market adjusts to economic realities, the focus is shifting towards sustainable profitability rather than inflated valuations. The decline in transfer prices is seen as a necessary correction to align sale prices with actual pharmacy performance. Despite the challenges, there is still robust interest in pharmacy acquisitions, and the sector is poised for further adjustments, creating opportunities for new entrants. The anticipated stabilization of interest rates may encourage more aggressive buying strategies, fostering a vibrant market environment. Stakeholders will need to navigate the complexities of valuation and profitability to ensure the continued viability of pharmacies across the country.