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Pharmacies

Pharmacies are the most expensive retail business category in Australia. They sell for five, six or seven times their annual profits.Why? Because they are protected from competition by outsiders. The federal government has for a long time acceded to the Pharmcy Industry's lobbying to prevent Coles and Woolworths entering the retail pharmacy sector.

In fact the federal legislation (in theory) even prevents any single qualified pharmacist from owning more than two retail pharmacies. However the reality is that many pharmacists have at least a minority interest in several retail pharmacies. They are able to do this by offering a part ownership structure to a younger pharmacist, who in effect becomes the managing partner of the expansion pharmacy, with the senior pharmacist becoming the "silent partner".

The next occasion for the federal government to examine the protected nature of pharmacists in Australia is believed to be 2014. The pharmacy lobby will argue it is in the client's health interests to be served by the owner and a person who can form an advisory health relationship with the customer. 

Coles and Woolworths will argue, that having a pharmacy counter in Big W or in K Mart will lower prices, give the public more convenience and still protect the health interests of the customer, as the person advising the customer will still be a qualified pharmacist.  

Whether the pharmacy you are interested in is worth four or seven times its profit, or somewhere in between will depend on numerous factors such as size, location, scrip versus product profit mix and also length of lease. To discuss these issues contact Graham O'hehir on 1300634588 or email support@businessvaluer.net.au.



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