Following the change in the Pharmacy Location Rules many pharmacists have been concerned that these changes will have a detrimental impact on the value of pharmacies. These concerns have been fuelled by industry rumours also hinting of drops in pharmacy values. However in the majority of cases, there is no correlation between Pharmacy Approval Number values and the value of a pharmacy as a going concern. In response to these rumours, Medici Capital has released a piece to address the myths present in the industry.
Medici Capital's Ask An Expert is an on-line knowledge base for pharmacy related issues. The latest piece addresses the concerns in the industry surrounding the recent announcement of changes to Pharmacy Location Rules.
An extract of the article reads as follows:
"Following the change in the Pharmacy Location Rules many pharmacists have been concerned that these changes will have a detrimental impact on the value of pharmacies. These concerns have been fuelled by industry rumours also hinting of drops in pharmacy values. However in the majority of cases, I fail to see the correlation between Pharmacy Approval Number values and the value of a pharmacy as a going concern.
"As a valuation specialist we are receiving calls from pharmacists inquiring about the changes and impact on valuations. First and foremost, we believe the valuation of going concern pharmacies is not expected to change.
"Pharmacies will still be valued according to commonly accepted industry standards using the Capitalisation of Future Maintainable Earnings approach. The key issue remains with all valuations, what are the expected returns for the pharmacy? Value is driven by profitability, growth and associated risks. These remain the key drivers of value (as they always have been)."
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