Medici Capital recently released its annual research into pharmacy business sales in Australia. The Medici Capital Pharmacy Market Risk Report, produced annually and includes pharmacy business sales data and trends, is used to inform banks of the current state of the pharmacy market, and associated risks, to ensure the banks and their credit departments are kept up to date with the most recent data in the pharmacy industry. It is an authoritative and comprehensive analysis of the market.
The evidence shows that although capitalisation rates (yields) on pharmacy have increased slightly in recent times, they have increased compared to the low rates of 2010 and 2011 and are returning to more stable levels experienced in 2009. The pharmacy market has taken some time to ‘digest’ the increased number of pharmacies in administration or receivership however, despite these, capitalisation rates have not increased compared to the rates of 2009.
It is understandable that in the light of PBS Reforms and the recent abnormal number of pharmacies in administration, pharmacy values have softened slightly. However, the changes are in part a reflection of the pharmacy market adjusting for the abnormal current short term high profit levels and increases arising from generic substitution.
While undoubtedly, pharmacy is tougher now than it was in the past, it remains a good and solid investment. It will also remain a key component of the health landscape for some years. Most importantly, pharmacy still outperforms other health practices and retail generally. Returns also remain well above all other investment classes.
If you would like to discuss the findings to the research or obtain further information contact Medici Capital on (03) 9853 7933 or via their website: www.medici.com.au
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