Buying a pharmacy is not just like buying a house; there are certain requirements that a buyer will have to fulfil before being permitted to proceed with the sale. This will particularly be the case if there is an NHS contract attached to the pharmacy. As part of the process an application will need to be made to NHS England.

It is becoming common for the seller to request a deposit. This is to ensure that the buyer is serious about the potential sale and isn’t just enquiring for a speculative purpose. In some cases the deposit may be used to cover the seller’s fees if the buyer pulls out.

Pharmacies have access to sensitive information so extreme care must be taken with data protection. It is a requirement for the business to be registered with the Information Commissioner’s Office, the body who is responsible for data protection in England.

How long does it take to sell a pharmacy?

On average, a sale can take about six months from the beginning to the end providing no important or unexpected issues arise to cause a delay. Delays can depend on whether the buyer is obtaining funding from a lender, whether the due diligence process is complete and whether any consents are needed for example if the property is a leasehold the landlord’s consent to the assignment to the lease is required.

How do you value a pharmacy?

A valuation can be either carried out by a reputable surveyor or a bank can carry out the valuation. You can also ask an agent to assist you with valuing the pharmacy and they can help you with marketing the pharmacy on sale.

What is pharmacy goodwill?

Business goodwill is an intangible asset that adds value to a company. It is built up over time and is the value given to its good name and reputation. This can include for example intellectual property and brand recognition which is reflected in the goodwill. The price of the pharmacy is calculated by applying the EBITDA profits, this stands for earnings before interest, tax, depreciation and amortisation. Therefore the higher the EBITDA profits the higher the valuation of the business.

A pharmacy solicitor, also referred to as a pharmacy lawyer, can assist with many different aspects of pharmacy ownership. This includes the sale and purchase of a pharmacy business, the regulatory requirements and company formation, as well as other aspects of pharmacy ownership.

The services of a pharmacy solicitor typically include:

• Company formation and partnership agreements
• Sale and purchase, including due diligence
• Buying, selling and lease of pharmacy premises
• Changes in pharmacy ownership, including retirement
• Pharmacy practice management including redundancies, recruitment and dismissals
• Defence against claims of professional negligence or malpractice
• Representation at misconduct hearings

Your pharmacy lawyer can provide as much or as little support as you need, helping you to make sure that every decision you make is lawful and complies with regulations.

The purchase of any business is a major decision that shouldn’t be undertaken lightly. When buying a pharmacy, the situation is even more complex because of the very nature of the industry and the many regulatory requirements which apply.  Before pressing ahead with a purchase, you should ensure that the following points have been properly considered:

Valuation

This will be a significant part of the purchase negotiations as the seller will want to receive the best price, while you will want to make sure you’re not paying too much. Due diligence will play a large part in determining the value of the business as trading history and current accounts will help to ascertain its profitability.

However, it’s not just the figures that you’ll need to assess. Consider the needs of the area, and how likely it is that the pharmacy will be in demand. For example, how big is the local population and how many pharmacies are operating? Proximity to GP practices will be another factor; existing relationships with health centres and practices would be very beneficial.

Being in an area of development, or where this is potential to expand the pharmacy’s services may bump up the price. It may also mean that the seller is less willing to negotiate..

Conversely, any financial risks could affect the price negatively. This may include the cost of staffing, or premises with a short-term lease. Even if the lease will be renewed, if there is the chance of a rent review and an increase in costs, this must be factored into the value..

Material contracts

The contracts which a pharmacy has in place may be integral to your decision to purchase. With the assurance of existing contracts, you may feel as if there is some security over continued income. However, your pharmacy lawyer will need to check the terms of these contracts. Specifically, they will need to be assured that the contracts can be passed to a new owner, and that they don’t terminate upon transfer of the business.

The premises and the lease

The pharmacy premises are a very important factor in the acquisition of the business and being forced to move could significantly affect profitability. You should therefore ensure that sufficient attention is given to the terms of the lease, to prevent unexpected costs at a later date.

If a bank loan is being used to finance the purchase, the property may be a significant security asset. As part of the due diligence, your pharmacy lawyer will need to receive assurance that the seller holds the rights to the title and there are no restrictive covenants you need to be aware of.

If the premises are leasehold, the terms of the lease should be scrutinised carefully. This includes checking the amount of rent, and whether any rent reviews are due, plus the term of the remaining lease.

Fitness to practise and registration

There are a number of regulatory issues you must comply with when you are purchasing a pharmacy business. The precise structure of the transaction will determine who you need to notify but you should make the sale conditional on receiving approval. The process of gaining approval typically takes several months so it’s essential to make applications as early as you can so the completion isn’t held up. This will also prevent the seller from pressurising you to proceed before approval has been granted.

As part of this process, you may need to let the GPhC know about the transfer of the assets and/or the change in the ownership of the lease. You will also need to let NHS England know, and seek their consent for the purchase. You will need to be able to demonstrate fitness to practise as part of the conditions. During due diligence, your pharmacy lawyer can check to see if there are any terms which could affect your ability to comply with the requirements.

Warranties

As part of any purchase agreement, the seller should be willing to provide warranties. Your pharmacy solicitor will be able to negotiate this in more detail but it’s important to understand why this is a fundamental part of the contract.

Warranties are a means of protection. The document promises being made by the seller, such as the fact they are not aware of any pending litigation, nor of any material changes to the business. These types of factors could not only alter the valuation of a business, they could even change your mind about proceeding with the sale.

If a seller is not willing or able to provide warranties, you may want to seriously consider whether you are happy to continue with the purchase. At the very least, you should expect a significant reduction in the agreed price. If the seller breaches any warranties given, you will be able to sue for financial compensation.

When a pharmacy is being sold, there will be extensive checks carried out to get all the necessary information to make a decision. This process is known as due diligence and involves the selling party providing the details in return for a guarantee of confidentiality. This is to prevent competitors gaining access to sensitive information and using it for a commercial advantage.

You are not obliged to proceed with a sale by carrying out due diligence. It is simply a way of your pharmacy lawyer being able to accurately assess the position of the business and whether there are any issues you should be aware of.

You can contribute by carrying out some research yourself. You may wish to do this before making a formal approach to the pharmacy. This could include checking reviews online for the pharmacy and any other sources where patients can leave feedback. Conversations with local GP surgeries may also be beneficial. It’s useful to know whether the business you plan on taking over has a positive reputation in the local community.

Formal due diligence digs far deeper than just checking for reputation issues, and will normally cover areas such as: 

• Financial history
• Accounts
• Assets
• Stock
• Equipment
• Staff and their contracts
• Results of inspections, including regulatory compliance
• Third party contracts
• Insurance

The process of due diligence should provide you with all the information you need to be able to carry out an accurate assessment of the pharmacy and its financial status. Depending on the results, you may or may not wish to continue with the purchase. If due diligence is carried out properly, there should not be any nasty surprises for you to discover at a later date.

There are a number of steps a pharmacy must take to be properly licensed and registered:

• The General Pharmaceutical Council is the regulator for the industry and all retail pharmacies must be registered.
• To dispense NHS pharmacy prescriptions, you must be licensed by the local NHS England Regional Team
• If you plan on being a commercial supplier of wholesale medicines, you will need a separate licence which can be obtained from the website for Medicines and Healthcare products Regulatory Agency (MHRA).
• Any pharmacy which will be handling industrial methylated spirits (denatured alcohol) will also need a licence from HMRC.
• To play music in the background in your pharmacy, you must obtain a licence from PPL PRS Ltd.
• Pharmacies holding computerised customer data will need to register with the Information Commissioner’s Office. The Information Commissioner’s Office have useful guidelines which ensure all businesses comply with GDPR.

While there are no particular licences to obtain, you should also be aware of health and safety legislation and employment law.

A pharmacist has a critical role to play in the wellbeing of patients, and with an estimated one billion prescriptions processed in England every year, there’s huge pressure on individuals to maintain accuracy in the face of high demand.

Every pharmacy has strict procedures in place which are designed to catch any mistakes. No matter how highly qualified and careful you are, without these checks it’s easy for a mistake to occur. To prevent instances of pharmacy negligence from occurring, it’s strongly advisable to make sure that every process has a failsafe check. As the end consequences of pharmacy negligence have the potential to be so catastrophic, it’s essential to adopt a cautious approach.

Examples of pharmacy negligence include:

• Dispensing the wrong dose or type of medicine
• Placing one patient’s medicine in the box/bag for a different patient
• Giving patients the wrong advice about how to take their medicine
• Failing to advise about potential side effects (where applicable)
• Storing medicine at the wrong temperature and/or failing to tell patients how to store their medicine
• Failing to have adequate processes in place which protect the integrity of the medicines dispensed (eg. not purchasing medicine from authorised sources)
• Failing to keep proper records about the medicine dispensed
• Failing to perform the required checks before dispensing medicine

These are just some of the examples of pharmacy negligence that a pharmacist could face. As a pharmacist you may be facing legal action from a patient, or you could be the subject of an investigation by the GPhC. A pharmacy solicitor is essential for dealing with any claim of negligence, and the earlier you seek legal advice, the better.

No one likes to consider the possibility of complaints, but if you find yourself in this situation, it’s likely that the General Pharmaceutical Council will be involved. Known as the GPhC, they are the regulator for the industry and investigate any cases where there are allegations over fitness to practise. They do not get involved in payment of compensation so it’s possible that you may face legal action and an investigation by the GPhC at the same time.

Depending on the allegations being made and the seriousness of the case, you may be called to a hearing for an interim decision. This is to determine whether you are allowed to continue to practise pending the final outcome of the investigation. If an interim order is issued, you will either be prohibited from practice temporarily,  or the services you are allowed to provide may be restricted.

Once the investigation is complete, the committee may be asked to consider appropriate action. This does not mean that you will necessarily be facing sanctions as there is a wide range of actions which could be recommended. The investigation committee may suggest that no action is taken against you, or they could recommend the issuing of a warning, referral to the fitness to practise committee or even criminal proceedings.

If your case is referred to the fitness to practise committee, they will decide whether any action is warranted. If so this could include conditions on your ability to practise, a warning, suspension or being struck off the GPhC.

The impact that a GPhC investigation can have on your pharmacy business should never be underestimated, even in the case where you believe that the allegations are completely false and unfounded. It’s vital to have a strong and robust defence that can be presented in all cases. If you believe you are completely innocent, a pharmacy lawyer can present the case for the defence and ensure that you have rebutted every claim being made. In the case where liability is being admitted, a pharmacy solicitor can help you to formulate the best strategy to adopt, including preparing evidence of any relevant mitigating factors and remediation.

Many ask us ‘what’s different about you?’ and we like to reply, ‘because we go the extra mile’. We see our work as building and maintaining good business relationships rather than just earning fees. How we do this is by keeping in constant contact with our clients and intermediaries. From pre to post instruction we ensure that our clients are informed of all legal issues that may impact their business and therefore lives. That is why we provide daily or weekly updates to ALL of our clients whether there is anything to tell them or not (we don’t charge for this we just see it as part of our service). We like our clients to rest peacefully knowing that when we are instructed, and we say ‘we will take it from here’ they know we mean it.

The world is changing, and many individuals are realising that lifestyle is as vital to them as is income. We are the lucky ones who can hand pick lawyers who can provide the best quality advice but at outer city costs. Our offices are in North West London which may not be the most salubrious in the market but at the same time this allows us to charge our clients for what they pay for, our advice NOT our office space.

ALL our lawyers have previously worked in large city-based law firms and continue to practise and offer  the same high level service  they provided to clients in the City but without the pressure and demands often dictated by City law firm. This allows us to be competitive on our fees without compromising our service.

All in all, our clients win, which is the way we like it.

All our clients benefit from the same high level of care and attention whether the instruction is big or small. At the outset of each matter, we discuss the entire process with our clients, including the costs, potential outcomes and issues associated. This is to ensure clients are fully aware, knowledgeable and are in control always. Supporting and ensuring we provide the highest level of services, we offer our constant contact process with the partner or barrister leading  your file, a document log in for matters which are for larger and more complicated instructions and on-going support post transaction should our clients require it. Our aim is not just to get the work done, but to make our clients’ lives easier as we do it, which is why we ensure that our clients have regular access to the resources they need from us.