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Sector Spotlight: Pharmacies

We explore the current health of UK pharmacies.

We are an increasingly medicated and maintained population, so pharmacies continue to be a good option for investors, and a lucrative franchise opportunity, despite current funding cuts.


Besides providing prescribed medication, pharmacies increasingly cater to a nation obsessed with cosmetic products and health supplements.  With these combined sources of revenue, the future for community pharmacies looks strong and healthy. However, there are some threats and challenges to the sector’s growth.

Major benefits of the industry

The community pharmacy went through a re-birth following the introduction of an NHS contract in 2006 that guaranteed public services such as repeat dispensing, disposal of unwanted medicines, MURs (medicine use reviews), promotion of healthy life-styles, and self-care support. Pharmacies now offer a huge range of support which has made them an even more important service within their community.

The PSNC (Pharmaceutical Services Negotiating Committee) describes how community pharmacy services should be developed across four key domains – medicines optimization, supporting self-care, promotion of healthier lifestyle choices, and the support of independent living. Pharmacy franchisees can expect to benefit as UK pharmacies develop into the ‘third pillar’ of the NHS.

Entrepreneurially spirited pharmacy franchises can also build revenue from new technologies and changes in how the local pharmacy can serve its customers: basic healthcare issues (skincare, pain-relief, asthma, cholesterol, blood pressure, type 2 diabetes) can be managed through chemists, after initial diagnoses, increasing loyalty and demand for their business. There are also opportunities through gaining accreditations, for example joining a body such as Healthy Living Pharmacy may help you stand apart from rival pharmacies.

Challenges facing the Industry

To run a profitable pharmacy, you do have to carefully manage your profit margins,

for example, if the business is making just enough money to cover a locum pharmacist the owner will not see any profit. 

A young pharmacy may have a large number of overheads including salaries, loan repayments, rent and stock. The manager may also have to work 6-7 days a week without holidays before starting to see profit. Another consideration is that longer the shop’s opening hours, the higher the staffing and running costs.

Despite the proven social importance of independent pharmacies, a 6% cut in pharmacy funding in 2016 has presented a new challenge. UK wide NHS funding cuts meant that areas with multiple pharmacies faced pharmacy closures. This was upsetting news for pharmacies that believed they were doing their bit to keep patients with non-urgent medical conditions away from the doctors and A&E and therefore were helping the severely overstretched NHS. There were fears that this latest move would serve no-one.

In October 2017 Lloyds Pharmacy announced nearly 200 store closures, claiming that the NHS cuts, higher business rates, and an apprenticeship levy had all been contributing factors. And in a National Pharmacy Association survey it was revealed that more than 50% of England’s independent pharmacy businesses have halted development plans

This does give independent pharmacies reason for concern, however if you are the only pharmacy in an area you will retain the monopoly on essential services and should be able to weather the storm.


The growth in the popularity of cosmetic products

In addition to the guaranteed income generated by the close relationship pharmacies share with the NHS, pharmacies can also profit from the increasing popularity of cosmetic products and health trends.

Popular current products include anti-aging creams, smile brightening toothpaste, and ‘miracle cure’ supplements. Also, consider that much of your business will be local residents, and elderly residents, who may not have the opportunity to travel further afield for their cosmetic needs, this customer base appreciates having all their needs met under one roof.

Pharmacies should also consider how you can make further gains by offering service and advice in these growing specialist fields. This way you can offer something more personable than the supermarkets and discount stores who may offer similar offers.

However, to remain competitive you must ensure you provide a good retail environment, your store should be well laid out, and products easy to locate. 

Online opportunities

One advantage many independent pharmacies used to enjoy is that they were easily accessible, a special advantage to the old, or disabled, who may have mobility restrictions. However, online opportunities can also now benefit this customer base. And therefore, all pharmacies should consider going online.

Online pharmacies have really started to come into their own, new services such as NHS 11 are now considered fast and efficient and a convenient alternative to traditional pharmacies.

With so much inaccurate healthcare and medical information online, it can be refreshing to receive information and support online from a qualified and therefore trusted source.

However, online pharmacy services do make it harder to build up a personal rapport. It is often the personal human touch in a pharmacy that will guarantee return custom.

Buying a pharmacy  

If you want to run your own pharmacy and are looking to buy a pharmacy business, despite the challenges, it’s still possible, and potentially profitable.

To buy a pharmacy you will most likely need to get a bank loan, and most bank managers will consider a pharmacy a good opportunity and low risk. Try to deal with a bank manager with existing experience of the pharmacy business so they understand how it works and can support you in the process of buying your business.

The bank is likely to ask for the pharmacy’s existing financial records, and ask you to give them a 12-month forecast of loses and gains. You will also need a detailed business plan that takes into consideration current challenges to the industry.

Once a loan is agreed you would be advised to bring in specialist financial and legal advice to make sure you understand the legal ramifications of your loan.

Also, be aware that some large pharmaceutical companies will support your loan bid and even provide a guarantee to the bank. However, there will be strict conditions that may be a disadvantage – make sure you know what deal you are getting into.

Running a pharmacy

Once you have bought your own pharmacy business there are ways you can help it stand apart from the competition and thrive despite current funding cuts.

  • Ensure that you provide excellent customer service, be friendly, helpful and efficient – this is the best way to ensure return custom
  • Make links within the local community, especially with schools, prenatal clinics and nursing homes
  • Provide a wide range of stock, both pharmaceutical and cosmetic, and ensure an easy to navigate shop layout
  • Make sure you offer additional services; make it known that you offer stop smoking support and consultations, that you do diabetic testing, for example
  • Do give offers to compete with supermarkets and larger pharmaceutical stores
  • Keep providing what your regular customers want


Running a pharmacy can be a strenuous endeavor, with a high level of responsibility. However, you are not alone, and there are many organisations, such as The Royal Pharmaceutical Company and National Pharmacy Association, but there to offer guidance and support. You can also rest assured that you are providing an essential service, and being an important part of a community. 

Sophie Mitchell

About the author

Sophie has contributed to, and over the two years she worked at Dynamis House.

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