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The smart money's on... community pharmacies

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With pharmaceutical product sales growing at pace year-on-year, there is a great demand for investment in this sector.

Yet it is the community pharmacy, catering to local customers, that is proving a successful niche industry.
Pharmacies are able to cash in on the growing public demand for health and beauty products, as well as dispensing prescribed medicines. 

Therefore business owners looking to make money as well as assisting their local community will see this as an intelligent investment.

Pharmaceutical retail

Pharmacies are small businesses that sit firmly within the primary care sector with a focus on providing healthcare advice and/or treatment to local communities.

Those considering entering this sector can expect lucrative returns. Both the number and value of medicinal products sold via primacy care prescription has been on an upwards trajectory since 2008. The prescription industry grew by a huge £373million between 2008 and 2011 alone.

Even with the encroachment of supermarkets on traditional pharmacy territory - supermarkets are now permitted to sell low-dosage aspirin and analgesics (some even run their own pharmacies) - pharmacy services are extremely important to the NHS, and continue to provide a specialist service to local communities. 

For example, only pharmacies are permitted to provide Simvastatin, a drug which assists with cardiovascular issues. Simvastatin was the most popular medicine sold in the UK in 2010, outselling aspirin by more than 7,000 units nationwide.

Health management

Pharmacies are busier than ever due to medical technologies changing the management of previously fatal diseases. Customers are now able to lead longer and healthier lives by using regular over-the-counter medicines.

This phenomenon is further reflected in statistics charting the public demand for medicines: UK prescription numbers have doubled in the last seventeen years. Furthermore, the number of prescriptions per person has also increased in number from 10 to 20 between 1996 and 2012.

Pharmacies currently advertised on turn over anything from £400k to more than £1m annually, so it is clear that there is potential for high returns in this sector . The role of pharmacies is entrenched in our society and the need for them has never been greater.

Community Focus

As well as servicing customers’ medical needs, pharmacies that deliver more local, personal care continue to be successful. Community pharmacies are able to improve upon the service delivered by multinational pharmacy chains by providing a personalised and quicker service. 

With the average customer working longer hours and having less time to visit their GP, community pharmacists have taken on the provision of healthcare advice. From advising on medication to reviewing and monitoring patient treatments, this practice establishes customer loyalty, leading to repeat business.

Entrepreneurs considering owning a pharmacy do not need specialist knowledge to run the business, although their staff will need to be appropriately qualified. Staff pharmacists require a Masters in Pharmacy, one years’ training and must have passed the registration exam.

Product and store growth

Pharmacies have great potential for success as they can sell a huge number of products other than those related to primary care. From hair care to beauty products, health food to dental care, this brand segmentation allows smart investors to own a business that generates multiple streams of revenue.

Community pharmacies can even provide white label products for customers if requested, and can make use of special promotions on non-medical products to capitalise on the beahviour of impulse buyers.

Finally, a sure sign that investors should target this industry comes from Alliance Boots. The multinational pharmacy brand is establishing a specialised investment fund, focused on growing small businesses within the health and beauty sectors. Executive Chairman, Stefano Pessina said that the fund will, “… provide talented entrepreneurs with financial, strategic and specialist commercial support to help them unlock the growth potential of their businesses.”

It seems that that the smart money from larger and smaller investors is on the profitable pharmacy sector. Maybe your money should follow suit?

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