Current Vermont Pharmacy Industry Market Conditions

By Brad MacLiver
Authorship and profile at Google


Currently there are a number of factors that are impacting the current market conditions of the U.S. pharmacy industry in VT. These factors are affecting the pharmacy business valuations of pharmacies and drug stores all across the U.S.

Local Demographics:

The valuation process also includes local market conditions and local demographics. Smaller communities have less growth potential and with the declining profits a buyer will need to purchase at a lower value because they will have to service the debt from a business loan and still try to make a living. The same is true for communities that have lost population due to economic conditions, or have a high rate of unemployment. Fewer people, or fewer customers with the ability to purchase, will mean fewer sales and less chance of any substantial improvement in the near term. This results in a lower Vermont pharmacy business value.

Vermont Pharmacists Shortage:

Pharmacies in Vermont and across the country have had difficulties in finding pharmacists.  This shortage of pharmacists not only affects employee opportunities it also affects the number of potential independent buyers. 

Fewer Buyers:

There are also fewer corporate buyers. Some of the largest pharmacy chains have been purchased and consolidated in the pharmacy industry roll up. Many smaller chains have run into financial difficulties and have stopped their expansion. It is more difficult to drive a price higher when there are fewer willing, or capable, to purchase.

Current Market Conditions Requires Industry Roll-up:

The consolidation of the pharmacy industry is required to get more traffic into a single store.  Due to simple economics, when any business has a reduction in profits they are less attractive to a buyer and pharmacy business values drop. There are many factors contributing to the downward pressure of Vermont pharmacy values and there is not any expectation of a turn around. Pharmacy owners should not be fooled by inexperienced Brokers claiming grand outcomes and over stating pharmacy business values not based on realistic market conditions.

With the consolidation of the pharmacy industry in VT that has been happening for several years, many new brokers have entered the market to broker pharmacy acquisitions. Most brokers do not have pharmacy related experience, nor do they use current market conditions when they value a pharmacy. Most are using simple accounting formulas that hold no sound reasoning for the value when faced with current pharmacy market conditions. Brokers are valuing pharmacies 2 to 3 times more than what the market is realistically willing to pay because of this. Anybody can quote a high value to capture a listing regardless of experience, and an overinflated asking price does not guarantee that the business will sell for that price.

Mail Order Pharmacies in VT:

Some insurance companies have decided to designate a noticeable amount of pharmacy patients as “long-term medications” and it is required that they only purchase the medications from mail order pharmacy companies who provide products at lower prices. This results in local pharmacies both missing out on prescription sales and suffering a decline in front-end sales because customers are not entering the store. Pharmacy mail order sales have now surpassed sales from independent retail Vermont pharmacies.

Choose a firm that provides pharmacy business valuations in Vermont based on real market conditions and does not use a simple formula for calculating the value of a pharmacy. Complex methods are most suitable to derive the value of a pharmacy.

 

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