The pharmacy industry is undergoing a period of rapid and significant transformation. With major brand mergers, aggressive expansion strategies, and renewed energy among legacy players, the competitive landscape has shifted up several gears and pharmacy owners need to be more strategic than ever.
Market activity is strong. Thanks to favourable conditions assisted by a more disciplined pharmacy business models created under the threat of 60DD combined with the certainty of a new 5-year community pharmacy agreement, the demand for pharmacies has surged to levels not seen in over a decade. We are now hearing as many as 20 buyers competing for each transaction—up from circa 7 previously and buyers willing to pay 30% over market price with one example of a cap rates dropping as low as 11%. In this highly competitive environment, how transactions are structured from a legal and funding perspective are critical.
One of the most notable recent developments is the completed Sigma-Chemist Warehouse (CW) transaction. This strategic alliance has immediately intensified competition. Sigma has wasted no time in capitalising on the momentum, heavily marketing its Amcal brand and backing its growth with renewed purpose. Additionally, there are plans to double the number of Chemist Warehouse locations nationwide—a strong indication of its bold and aggressive expansion strategy.
In response, other pharmacy brands are stepping up their game, fighting hard to maintain market share and reinvigorating their presence. While some have previously lacked strong investment, many are now being repositioned with a fresh focus and a clear ambition.
With such profound changes reshaping the market, there has never been a more critical time to be vigilant and deliberate in how you run your pharmacy.
Here are the top things every pharmacy owner should be focused on right now:
1. Choose the Right Partners
The wholesaler and brand relationships you foster today will determine your ability to grow sustainably tomorrow. Align yourself with partners that understand your business goals and can help you compete effectively in this new environment.
2. Stay on Top of Your Numbers
Knowing your financials inside out is no longer optional. Regularly review your performance metrics, understand your margins, and make data-driven decisions.
3. Manage Your Lease Strategically
If your lease is due to expire within the next three years, now is the time to start negotiations to ensure you maintain a strong position. Too often, we see pharmacy owners caught off guard, missing the opportunity to secure favourable terms. Engaging an experienced lease negotiator can not only save you money—it could be the difference between sustaining your business and putting it at risk.
4. Secure the Right Funding Model
If you're planning to pay above market value for a pharmacy for strategic reasons, it's essential to have a clear understanding of your cash flow and funding needs. This will help ensure the business remains financially viable and prevent potential cash flow shortfalls down the line.
5. Protect Your Position
Competitors are on the hunt for opportunities, and pharmacies not actively defending their ground are at real risk of losing market share. Ensure your store remains competitive, visible, and operationally strong.
At Yield, we are deeply immersed in every aspect of the pharmacy industry. We understand the trends, we know the players, and we’re across the numbers that matter. More importantly, we’re here to help pharmacy owners navigate this evolving landscape with confidence and clarity.
The market is shifting—but with the right advice and support, it can be a time to thrive, not just survive.