Technology in Pharmacy Business with Scott Carpenter

Pharmacy Valuations & Trends: What’s Hot in the Industry?

3 months ago

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In this episode of the Pharmacy View Podcast, Founder Host Scott Carpenter is joined by Natalie Sirianni, Director & Officer in Effective Control of Attain Pty Ltd, Director of Musculoskeletal Australia, and a Board Member of the Australian Institute of Business Brokers (AIBB). As a leading expert in Pharmacy business brokerage, Natalie offers a deep dive into the current trends and transformations within the industry. From navigating the impacts of the 60-day dispensing policy to leveraging the benefits of the 8th Community Pharmacy Agreement (8CPA), Natalie provides a comprehensive analysis of how these changes are reshaping the market. Join us to explore how the enthusiasm of emerging Pharmacists and the resilience of the industry are creating new opportunities and driving growth in the Pharmacy business.

Pharmacy View Podcast · EP 103 – Pharmacy View Podcast – Pharmacy Valuations & Trends: What’s Hot in the Industry?

Natalie outlines their work in Pharmacy valuations and brokerage, including the impact of recent legislative changes such as the 60-day dispensing policy. Natalie explains the cyclical nature of Pharmacy valuations, influenced by economic conditions, community Pharmacy agreements, and interest rates. They highlight the industry’s resilience during downturns and how its performance through events like COVID-19 has showcased its stability. Despite challenges such as the 60-day dispensing legislation, banks remain confident in lending to Pharmacies due to their consistent financial performance.

The discussion turns to the 60-day dispensing policy, which initially caused uncertainty and panic in the market. As the policy was implemented, the industry began to recover as the financial impacts became clearer. Natalie notes that while the new system introduced challenges, it allowed for better quantification and adjustment, showcasing the industry’s ability to navigate changes with resilience and a historical perspective.

Natalie also addresses the broader impacts of the 8th Community Pharmacy Agreement (8CPA) and the new payments related to the 60-day dispensing policy. The 8CPA provides increased funding and stability, contrasting with the initial uncertainty of the transition period. This agreement has bolstered market confidence, leading to increased buyer interest and a resurgence in Pharmacy transactions. Sellers, particularly those nearing retirement who had previously postponed sales, are now re-engaging with the market, and valuations are expected to stabilize as confidence returns.

Natalie further talks about the invaluable role of young Pharmacists entering the industry through mentorship and succession plans. They describe this dynamic as mutually beneficial: younger Pharmacists gain essential knowledge and business acumen from their more experienced counterparts, while seasoned professionals receive fresh energy and enthusiasm. Natalie believes this intergenerational collaboration is crucial for the continued growth and vitality of the Pharmacy sector, fostering a positive transition and ensuring that the industry remains vibrant and forward-looking.

Topics Covered

Pharmacy Industry Revitalization
Pharmacy Valuations
Impact of 60-Day Dispensing Legislation
ATP Payments and 8CPA
Market Trends and Transactions
Pharmacy Location Trends
Succession Planning and Mentoring

Key Quotes (Time Stamps)

“I got into Pharmacy quite young because my father, Frank Sirianni, has been around for over 40 years now in the Pharmacy industry. and I wanted a job straight out of school.” (2:46 – 2:56)

“I moved into a brokerage about 12 years ago now. So, we sell Pharmacies throughout Australia, and, often, the majority of the time, we’re representing the vendor or the owner of the business to sell their business. and we specialise in Pharmacy. So, we do other health practices as well, but the majority of our work is in the Pharmacy space.” (3:04 – 3:24)

“I really enjoy working with Pharmacy owners throughout Australia; helping Pharmacy buyers on their journey to finding the right business.” (3:38 – 3:44)

“We also run events to train, particularly, young Pharmacists, the process of how to go about buying a Pharmacy and also provide market updates and things like that for people within the industry so that everyone can have a really good feel for what’s happening out there in the market.” (3:45 – 4:00)

“On top of those economic conditions, you’ve got this Community Pharmacy Agreement, which has been five-year agreement.” (5:51 – 5:57)

“Particularly since Covid, the appetite for banks has been very strong towards Pharmacy.” (8:00 – 8:05)

“Once you could see what the numbers were, the market regained a bit of confidence because it was quantifiable. We could see the numbers; we could see what the impact was.” (10:46 – 10:58)

“The number of years you’ve been in Pharmacy, I think there’s been no period where there’s been nothing going on, no changes. There’s always something going on, whether it’s specific to Pharmacy or more widely, the economy, but there’s always something happening.” (13:12 – 13:24))

“From a market point of view, what’s great about the 8CPA is it provides certainty for the next five years. And the key thing is that we didn’t have that when we had 60-day dispensing because we didn’t know the impact, we didn’t know how it was going to happen.” (17:59 – 18:12)

“The certainty that comes with an 8CPA is very, very positive from a market point of view.; but also, as I said, banks, accountants, valuers—the whole ecosystem—from a financial point of view, is really, really good. And it provides certainty for Pharmacy owners.” (18:52 – 19:06)

“Historically, strip or smaller community shopping center Pharmacies , there’s more demand for those versus the larger shopping centers because you have to be a lot more specialized and have really good experience in terms of dealing with landlords and things like that, which a lot of Pharmacy owners, don’t have that expertise and not taught at, in Uni or anything like that. So, because of that, we see a real push towards strip and smaller community shopping center Pharmacies . In terms of metro versus rural, what we found is that, over the last, I would say, five years, there’s been a real push to rural locations because there’s a few factors in there, but generally speaking, the returns are a bit better in rural locations in terms of the returns that you’re getting on the business, but also you’re seeing a lot of, people say rural is a great place where they can add value to the community as well.” (28:43 – 29:49)

“I personally think it’s a really great way to work in Pharmacy because what it does is it provides the young incoming junior Partner—they can get knowledge and knowhow and understanding for how the business works, financial side, how to pay taxes, all those things that you don’t know before becoming an owner. They get all that mentorship and knowledge. but then also the senior Pharmacist or the one who’s stepping back, the heritage one, as you mentioned, they get the energy and enthusiasm of the younger Pharmacist coming in.” (33:38 – 34:07)

Social Media Clips (Time Stamps)

Pharmacy’s New Dawn: How Young Pharmacists Are Shaping the Future (1:27 – 4:00)
Why Banks Are Betting Big on Pharmacy: Insights from Natalie Sirianni (4:01 – 8:35)
Pharmacy Market Shifts: Insights into 60-Day Dispensing and Financial Confidence (8:36 – 13:48)
How the 8CPA Is Bringing Financial Confidence Back to Pharmacies (14:48 – 20:12)
Buyers Are Back: The Surge in Pharmacy Market Activity Post-8CPA (20:13 – 24:07)
Back to Business: What the 8CPA Means for Pharmacy Valuations (24:08 – 28:04)
Post-COVID Pharmacy Trends: Why Rural and Community Pharmacies Are Hot (28:05 – 33:09)
Pharmacy Succession Plans: Why Mentorship Matters Now More Than Ever (33:10 – 37:52)