Have you ever thought about owning your very own pharmacy? Being a business owner can often be a rewarding process; however, this may not necessarily be for everyone, and it’s well worth keeping in mind here that owning your pharmacy can offer a wealth of great benefits. However, there are also plenty of challenges to keep in mind which have appeared in the last number of years, and as a result of this, today, we’re looking into whether owning your own pharmacy business is still worth it, including the benefits, challenges, and opportunities this might present.
What are the Benefits of Owning Your Own Pharmacy?
There are many benefits associated with owning your own pharmacy business, and keeping these in mind could help you ascertain whether this might be an appropriate option for your investment.
High Demand Businesses
In many cases, buying a new business can be compounded by factors such as having a niche market or a small local following. However, this is something that pharmacy businesses don’t have to worry about since the services that they provide are largely universal and needed by many people in a community. In turn, this helps put pharmacies in high demand, reducing the risk of your new business struggling to gain a foothold - especially if you buy in an area that lacks competition.
In addition, with the evolution of pharmacy and its role in the community, many pharmacy businesses do so much more than just offer prescriptions. While that is often a significant part of the business model, many pharmacies also offer a range of other services and products, making them a go-to hub for people looking for health and beauty products.
Strong Customer Loyalty
Following on from the previous point, it’s worth keeping in mind that many customers demonstrate incredibly strong loyalty when it comes to their choice of pharmacy - helping cement your new business model even further. Indeed, once a customer has found a pharmacy that they trust and which is practical for them, there’s a good chance they’ll stick with it; in fact, according to Ipsos[1], almost three-quarters of people tend to use the same community pharmacy rather than switching between providers. As such, once you have developed a strong following and customer base, you know that maintaining this community will often be much easier.
Recession-Proof Model
Recession can have a massive impact on many businesses, and with the Bank of England predicting that the chances of a recession are around 50/50 for 2024, with no growth predicted for the year as a whole, this is imperative to consider when looking at different business opportunities. After all, businesses are often hit incredibly hard by recessions, especially those that rely heavily on consumer spending and surplus income.
During a recession, it’s commonly seen that the public tightens their belts and reduces spending on non-essential items, putting businesses that trade in “luxury” goods and niche environments at much greater risk of lost sales and decreased footfall. In addition, many firms will struggle to secure finance or credit during this worrying time, making it harder to launch a new business during periods of recession and/or economic instability.
Fortunately, launching a new pharmacy business can be an excellent option to consider during these turbulent times from a financial risk management outlook. Indeed, while some of the products offered by pharmacies are considered luxury items - for example, make-up and beauty products - that’s only part of the business model, and the other half is still essential. After all, while people may be less likely to spend on preventative products and the like during times of recession, prescriptions and treatments remain essential.
As a result, with the current financial market looking a little bleak, buying a pharmacy business might just be the ideal solution. Indeed, with the recession-proof nature of pharmacies, you can rest assured that your new business will be less affected by changing financial situations than other firms, lessening the risk your fledgeling brand might consider.
Support Your Community
There are many financial and business benefits to buying a pharmacy business - however, there are also personal benefits that you can derive after launching your pharmacy business. Indeed, as a pharmacy owner, you’ll have a unique opportunity to make a real, genuine, and positive impact on your local community and area. As a result, if you have been looking for ways to support your community and neighbours and ensure that everyone in the local area has the opportunity to feel supported, purchasing a pharmacy business might be the ideal option for you.
Of course, there are several ways that local pharmacies can make a positive difference to your local community. Most obviously, they serve as a vital link between patients and healthcare providers, making them an essential source of information and support for community health - thereby promoting better well-being in the neighbourhood. This can also help reduce the strain on local health services, which is often vitally important. As such, if the thought of being directly involved in making your local community a healthier and happier place, launching a compassionate and caring local pharmacy business could be an excellent option to consider.
It’s also worth noting how valuable a local pharmacy can be for supporting the local economy; as such, you can rest assured that, once you launch a successful local pharmacy, you’ll be able to make a genuine difference in the lives and trading activities of your village or community. Pharmacies help to create new jobs and attract foot traffic from both the local area and further afield (in the case of underserved regions); this can also help generate additional business for nearby stores and services, further promoting local economic strength.
As a result, opening and owning your own pharmacy business is still worth it if making a genuine difference in your community is something that inspires you.
Guaranteed Prescription Medicine Reimbursements
When providing prescription medications, there’s some good news for pharmacy owners: you’ll receive a guaranteed medicine reimbursement price from the NHS based on a combination of the Medicine Margin, fees (e.g., dispensing prescriptions), and allowances. As a result, this can help create a more stable business model for pharmacies, which is worth keeping in mind as a potential benefit.
The government estimates that pharmacy businesses make around £0.89 profit on each prescription medication they supply. This might not sound like much, but when you consider how many prescriptions can be given out in any one day, it certainly adds up. Furthermore, this is alongside the rest of your pharmacy’s activities, making it a welcome boost to income potential even during slow periods. Plus, many patients will make small purchases alongside collecting their prescriptions, making this a good way to encourage more sales for the brand.
In total, figures suggest that reimbursements across the UK pharmacy sector were worth around £9.7 billion for 2021/2022, and over one billion prescription items were dispensed through the EPS. As such, the UK pharmacy industry’s scale is clear.
The Main Challenges and Concerns of Owning a Pharmacy
While owning a pharmacy can offer a wealth of great opportunities, it’s important to keep in mind here that there are some key challenges you’ll need to face with this undertaking. Of course, any business investment offers difficulties that you’ll need to keep in mind before starting your new firm; being aware of these can help you plan accordingly to mitigate these challenges.
Building a Client Base
As we already mentioned, one of the main benefits of operating a pharmacy business (over other models) is customers' strong loyalty. However, while this is a great long-term perk of the business model, it can represent a unique challenge for those just getting started.
Why is this? Well, customers will usually have a chosen pharmacy that they prefer to use, even if this is impractical - and encouraging them to make the switch may not always be easy. As a result of this, it’s critical to start by considering how you will encourage new customers to switch to your pharmacy business once you buy.
Of course, as part of this, it’s important to consider your location carefully. Buying a new pharmacy near a popular, existing site may prove a risky investment. After all, if customers are satisfied with their current local pharmacy, there’s a good chance they’ll be reluctant to change providers; after all, there may be limited motivation to do so.
However, if you can buy a pharmacy in an area with limited competition or where there is strong dissatisfaction with the available pharmacy services, you may stand a much stronger chance of encouraging customers to make the switch. In turn, this can stand your new business in good stead for developing a strong, loyal customer base - provided you offer a high standard of service, of course.
Opportunities for Pharmacy Owners Going Forwards
Thus far, we’ve outlined the main benefits and challenges of owning a pharmacy - but what makes now such a good time to consider making this investment? Well, there are several key reasons that the current moment might be a good time to look into the benefits of investing in a pharmacy business. Considering these could help you determine whether this might be a viable opportunity for your new business project, too.
New Room in the Market
One of the biggest names in the pharmacy world, Lloyds Pharmacy, recently entered into liquidation in 2023, and this has triggered a huge wave of interest in the pharmaceutical field.
Of course, there are natural concerns about this from some individuals; after all, this indicates that the company itself was struggling to make a profit, and for new investors in the community pharmacy field, that can be a major source of worry. However, this presents a significant opportunity for individuals with a viable business plan to succeed in their new pharmacy.
Many of the previous Lloyds Pharmacy branches have been taken over by private investors and independent pharmacy owners, and this has helped lessen the competition in the market significantly - while presenting amazing new opportunities for individuals to kickstart their new investment easily and quickly. As such, if you’ve been thinking of starting your own pharmacy business but have been unsure about how to do so, considering the opportunities that the Lloyds liquidation has offered is worthwhile.
The Number of Community Pharmacies is at a Low
According to data from the NHS Business Services Authority,[2] the number of community pharmacies has fallen. Based on data from 2022/2023, there were only 11,414 active community pharmacies, which represented the lowest number since the 2015/16 year. In addition, during this year, around 50% more pharmacies closed than opened - representing a continual decline in the number of pharmacy businesses providing services for residents.
Naturally, this can offer an excellent opportunity if you have been looking to buy a pharmacy business. With less competition, attracting and retaining customers becomes easier - however, be sure to do local market research first to make sure that you aren’t planning to start a pharmacy in an already well-served
and satisfied community.
Growing Awareness of Pharmacy Services
Another worthwhile factor to keep in mind regarding opportunities is the growing public awareness of pharmacy services. Indeed, for a long time, people have simply considered pharmacies to be a source of prescription medications and health and beauty products; however, this is changing, and people are beginning to recognise that pharmacies can offer a wider array of services and support, too, such as offering health advice, vaccinations, and the like.
Because of this, the demand for pharmacy services is growing. From the perspective of someone looking to buy a new pharmacy business, this also offers a good opportunity to help encourage greater footfall through your new business. New incentives and schemes are further supporting this change.
Independent Prescribing
Pharmacists as medical healthcare professionals can receive training to enable them to assess and prescribe medications. This can allow your new pharmacy to serve an even more pivotal and
influential role in the local community and could represent lucrative opportunities.
Pharmacy First
The brand-new Pharmacy First scheme, which launched on the 31st of January 2024, enables pharmacists to supply prescription-only medications as appropriate for the treatment of seven common health conditions (UTIs in women without further complications, infected bites from insects, impetigo, sore throats, sinusitis, ear aches, and shingles).
This not only provides a much more practical solution for patients, who can receive support for their health condition more rapidly, but it also helps increase the demand for pharmacy services, thus ensuring that local pharmacy businesses have even greater opportunities for growth going forward. All the while, this can enable local pharmacies to make an even greater difference to GP waiting times and the pressure on the NHS, making it an excellent opportunity if you have dreamed of making a genuinely impactful difference in your community.
Room for Improvement With Privacy
According to data from Ipsos[3], only 53% of pharmacy users feel that their privacy was adequately maintained during pharmacy discussions. This represents a unique opportunity if you have been looking to buy a pharmacy business. Indeed, if your new brand can focus on privacy and patient confidentiality more closely, customers may well be willing to change to your service.
There are plenty of ways you could potentially achieve this to help tailor your services to the almost 50% of the population who feel dissatisfied with pharmacy privacy, such as investing in private rooms where customers can discuss their requirements with the pharmacist in a quieter environment.
Small and Independent Pharmacies Have Become the Most Popular Options
Did you know that 41% of people use small chain or independent pharmacies, which represents a higher proportion than large and medium-sized pharmacy chains (which are used by just over ⅓ of people)? As a result, this offers an excellent opportunity if you’ve been hoping to buy your own small pharmacy business, indicating that many people have a good level of trust and confidence in these businesses.
Final Thoughts
Owning your own pharmacy is a huge investment, but the benefits and opportunities can undoubtedly be worth the cost. Indeed, when you find the most appropriate business plan, developing a viable and profitable pharmacy business becomes much more feasible, making this a valuable and potentially very worthwhile opportunity to consider for individuals looking to go down the self-employed or business owner route.