Hi, just a few questions regarding pharmacy values: Is the value of a pharmacy calculated separately from the licence itself? Does the value of a licence vary; or is there a fixed value assumed for the licence? Is the value affected by the proximity of competitors etc? What would be a reasonable value for a suburban pharmacy with a methadone program of approx. 50 persons?

Thank you for your questions Jane,

Here are a few responses. For specific advice, which takes account of the details of your situations or examples, do not hesitate to call us at Medici Capital. These are general comments only and should not be construed as advice to you.

About us

Medici Capital (www.medici.com.au) is a specialist management consulting, finance broker, and business valuation practice which focuses on the health professions and pharmacy in particu…read more

Hi, Could you please indicate to me the current capitalisation rates for pharmacy? Thank you

The current capitalisation rates for pharmacy

Capitalisation rates vary by state and location. Ultimately the capitalisation rates reflect the quality of the business, risks associated with the business, and how 'attractive' the business would be in a market sale.

It would be incorrect to quote a 'current capitalisation rate for pharmacy' as this would be inevitably misleading.

Please call Medici Capital to discuss the specifics of the pharmacy yo…read more

Pharmacy Valuations — Owner's Salary

When valuing a pharmacy it is important that an owner's salary is allowed for to take account of any work undertaken by the owner.

The objective is to determine the value in the hands of an investor and remove any income arising to the owner as a consequence of personal exertion.

Pharmacists' hourly rates range from $35 to $45 per hour plus allowances and penalty rates. In regional and remote areas, a regiona…read more

When looking at pharmacy cap rates, does the owners wage get accounted for before before the calculation is made to derive the return on investment figure? (EBIT FIGURE)

Yes — the owner's wage needs to be accounted for before the calculation is made to determine the business value.

However, you should note:

the adjustment is to allow for hours worked by the owner as a pharmacist; and if the pharmacy is "over staffed" (i.e. too many staff for the business size, trading hours, or annual sales), then you may need to consider what wages an average competent manager would need to achieve the business results as presented.

The…read more

Different circumstances require different business valuations. In pharmacy, re-financing, new partner acquisition and purchases require different methods of valuation to account for changes in style of the operation of the business. Medici Capital is the industry leader in pharmacy valuations and takes these factors into account when valuing a pharmacy.

There are three methodologies for pharmacy valuation:

Method: Explanation: Uses: Discounted Cash Flow