Buying and Selling Pharmacies
Buying and selling a pharmacy is very different than acquiring a general business, as there are very technical issues to consider. Our expertise can help you to navigate the various issues that arise with this type of transaction, including transfer of ownership of the NHS contract currently in place.
Our specialist legal advice covers the commercial aspects of a pharmacy purchase or a sale, regulatory requirements and due diligence. The sale and purchase of a pharmacy is subject to much more stringent requirements than a simple property or general business sale and purchase, but we can ensure that every aspect is properly considered.
For more information about our healthcare legal services please call us on +44 (0)20 3475 6751 or email firstname.lastname@example.org
What to consider when buying or selling a pharmacy
Thinking of buying or selling a pharmacy? Our legal team is experienced with pharmacy sales and can provide expert advice for the whole process.
If you are considering acquiring or selling a pharmacy, it’s strongly recommended that you use a legal firm who has experience in this field. The sale and purchase of pharmacies has complexities which are specific to the industry and it’s essential to have experts who understand these intricacies in detail.
We have many years in assisting clients with both the sale and purchase of pharmacies, and can help with any aspect you require.
Some of the primary points you may want to consider include:
Buying a pharmacy is not just like buying a house; there are certain requirements that a buyer will have to fulfil before being permitted to proceed with the sale. This will particularly be the case if there is an NHS contract attached to the pharmacy. As part of the process an application will need to be made to NHS England.
It is becoming common for the seller to request a deposit. This is to ensure that the buyer is serious about the potential sale and isn’t just enquiring for a speculative purpose. In some cases the deposit may be used to cover the seller’s fees if the buyer pulls out.
A buyer will want to instruct their legal team to carry out due diligence before the sale goes ahead. This means fact-finding on all aspects of the pharmacy, including contracts, suppliers, finances and complaints. A confidentiality agreement is often signed before this type of information is disclosed by the seller. This stage will need to be completed before you can move on to negotiation.
Pharmacies have access to sensitive information so extreme care must be taken with data protection. It is a requirement for the business to be registered with the Information Commissioner’s Office, the body who is responsible for data protection in England.
YOUR HEALTHCARE LEGAL TEAM
Over the past few years we have assisted over 800 pharmacy owners in buying or selling a pharmacy business
Acted for an Indian Pharmaceutical company in the £multi-million acquisition of a UK pharmaceutical company
Are you looking for information from an expert pharmacy lawyer?
Our team of pharmacy solicitors at Carter Bond can help with all your legal needs.
Owning, managing, purchasing and selling a pharmacy can be very complex, and at every stage there’s a requirement to comply with regulatory standards. A pharmacy lawyer is essential for any individual involved with a pharmacy, or planning to run one.
Expert advice in the industry is essential because of the numerous compliance standards which apply, such as those set out by NHS England. Your pharmacy solicitor can provide expert guidance to make sure you are compliant, and not accidentally in breach of the law.
For advice about your personal circumstances or a particular pharmacy, please get in touch with us to arrange a chat. If you’re just looking for general information about pharmacy solicitors and the process of buying and selling, the information below is the ideal starting point.
Do I need a pharmacy lawyer to assist with the sale or purchase?
Buying and selling a pharmacy is a complex transaction, and not one that can be completed on a whim. You will need the assistance of a pharmacy lawyer to make sure that the sale goes through smoothly, and that you have all the information necessary to make an informed decision.
Unlike buying a regular business, a pharmacy is subject to strict regulation. A new owner will therefore need to satisfy a number of requirements for a sale to proceed, and this can take extra time if you haven’t planned ahead.
As experienced pharmacy lawyers, we have assisted with the acquisition and disposal of many pharmacies and are ideally placed to offer expert advice. Whether you are considering selling your pharmacy, or you are interested in buying, we can provide you with professional legal advice from start to finish. This includes getting regulatory approval as quickly as possible, as well as carrying out due diligence to ensure you make the right decision.
What do pharmacy solicitors do?
A pharmacy solicitor, also referred to as a pharmacy lawyer, can assist with many different aspects of pharmacy ownership. This includes the sale and purchase of a pharmacy business, the regulatory requirements and company formation, as well as other aspects of pharmacy ownership.
The services of a pharmacy solicitor typically include:
- Company formation and partnership agreements
- Sale and purchase, including due diligence
- Buying, selling and lease of pharmacy premises
- Changes in pharmacy ownership, including retirement
- Pharmacy practice management including redundancies, recruitment and dismissals
- Defence against claims of professional negligence or malpractice
- Representation at misconduct hearings
Your pharmacy lawyer can provide as much or as little support as you need, helping you to make sure that every decision you make is lawful and complies with regulations.
What should I consider before purchasing a pharmacy?
The purchase of any business is a major decision that shouldn’t be undertaken lightly. When buying a pharmacy, the situation is even more complex because of the very nature of the industry and the many regulatory requirements which apply. Before pressing ahead with a purchase, you should ensure that the following points have been properly considered:
This will be a significant part of the purchase negotiations as the seller will want to receive the best price, while you will want to make sure you’re not paying too much. Due diligence will play a large part in determining the value of the business as trading history and current accounts will help to ascertain its profitability.
However, it’s not just the figures that you’ll need to assess. Consider the needs of the area, and how likely it is that the pharmacy will be in demand. For example, how big is the local population and how many pharmacies are operating? Proximity to GP practices will be another factor; existing relationships with health centres and practices would be very beneficial.
Being in an area of development, or where this is potential to expand the pharmacy’s services may bump up the price. It may also mean that the seller is less willing to negotiate..
Conversely, any financial risks could affect the price negatively. This may include the cost of staffing, or premises with a short-term lease. Even if the lease will be renewed, if there is the chance of a rent review and an increase in costs, this must be factored into the value..
The contracts which a pharmacy has in place may be integral to your decision to purchase. With the assurance of existing contracts, you may feel as if there is some security over continued income. However, your pharmacy lawyer will need to check the terms of these contracts. Specifically, they will need to be assured that the contracts can be passed to a new owner, and that they don’t terminate upon transfer of the business.
The premises and the lease
The pharmacy premises are a very important factor in the acquisition of the business and being forced to move could significantly affect profitability. You should therefore ensure that sufficient attention is given to the terms of the lease, to prevent unexpected costs at a later date.
If a bank loan is being used to finance the purchase, the property may be a significant security asset. As part of the due diligence, your pharmacy lawyer will need to receive assurance that the seller holds the rights to the title and there are no restrictive covenants you need to be aware of.
If the premises are leasehold, the terms of the lease should be scrutinised carefully. This includes checking the amount of rent, and whether any rent reviews are due, plus the term of the remaining lease.
Fitness to practise and registration
There are a number of regulatory issues you must comply with when you are purchasing a pharmacy business. The precise structure of the transaction will determine who you need to notify but you should make the sale conditional on receiving approval. The process of gaining approval typically takes several months so it’s essential to make applications as early as you can so the completion isn’t held up. This will also prevent the seller from pressurising you to proceed before approval has been granted.
As part of this process, you may need to let the GPhC know about the transfer of the assets and/or the change in the ownership of the lease. You will also need to let NHS England know, and seek their consent for the purchase. You will need to be able to demonstrate fitness to practise as part of the conditions. During due diligence, your pharmacy lawyer can check to see if there are any terms which could affect your ability to comply with the requirements.
As part of any purchase agreement, the seller should be willing to provide warranties. Your pharmacy solicitor will be able to negotiate this in more detail but it’s important to understand why this is a fundamental part of the contract.
Warranties are a means of protection. The document promises being made by the seller, such as the fact they are not aware of any pending litigation, nor of any material changes to the business. These types of factors could not only alter the valuation of a business, they could even change your mind about proceeding with the sale.
If a seller is not willing or able to provide warranties, you may want to seriously consider whether you are happy to continue with the purchase. At the very least, you should expect a significant reduction in the agreed price. If the seller breaches any warranties given, you will be able to sue for financial compensation.
What is included in due diligence in the purchase/sale of a pharmacy?
When a pharmacy is being sold, there will be extensive checks carried out to get all the necessary information to make a decision. This process is known as due diligence and involves the selling party providing the details in return for a guarantee of confidentiality. This is to prevent competitors gaining access to sensitive information and using it for a commercial advantage.
You are not obliged to proceed with a sale by carrying out due diligence. It is simply a way of your pharmacy lawyer being able to accurately assess the position of the business and whether there are any issues you should be aware of.
You can contribute by carrying out some research yourself. You may wish to do this before making a formal approach to the pharmacy. This could include checking reviews online for the pharmacy and any other sources where patients can leave feedback. Conversations with local GP surgeries may also be beneficial. It’s useful to know whether the business you plan on taking over has a positive reputation in the local community.
Formal due diligence digs far deeper than just checking for reputation issues, and will normally cover areas such as:
- Financial history
- Staff and their contracts
- Results of inspections, including regulatory compliance
- Third party contracts
The process of due diligence should provide you with all the information you need to be able to carry out an accurate assessment of the pharmacy and its financial status. Depending on the results, you may or may not wish to continue with the purchase. If due diligence is carried out properly, there should not be any nasty surprises for you to discover at a later date.
How do I open a pharmacy in my name?
Pharmacies in England cannot simply be purchased and run by anyone; only individuals who are suitably qualified will be permitted to commence or continue operating. This point is key to understand; even if you are purchasing an existing pharmacy, unless you have the legal right to run a pharmacy yourself you will be breaking the law if you keep it open.
The process of gaining the necessary permissions to run a pharmacy can take several months, so it’s important to make the applications as soon as possible. Your pharmacy lawyer will be vital in helping to submit the documentation at the earliest point, which will ensure that any purchase is not delayed.
To receive authorisation you must demonstrate fitness to practise to NHS England as set out in the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013. Only a pharmacist, or a partnership made entirely of pharmacists may operate a pharmacy. If a corporation, such as a limited company wishes to purchase a pharmacy, they must have a nominated superintendent pharmacist who takes responsibility for pharmaceutical practice within the business and meets the criteria set out in law. A superintendent pharmacist can only act in this capacity for a single company; they are not permitted to hold this position for multiple companies simultaneously.
What licenses must a pharmacy hold?
There are a number of steps a pharmacy must take to be properly licensed and registered:
- The General Pharmaceutical Council is the regulator for the industry and all retail pharmacies must be registered.
- To dispense NHS pharmacy prescriptions, you must be licensed by the local NHS England Regional Team
- If you plan on being a commercial supplier of wholesale medicines, you will need a separate licence which can be obtained from the website for Medicines and Healthcare products Regulatory Agency (MHRA).
- Any pharmacy which will be handling industrial methylated spirits (denatured alcohol) will also need a licence from HMRC.
- To play music in the background in your pharmacy, you must obtain a licence from PPL PRS Ltd.
- Pharmacies holding computerised customer data will need to register with the Information Commissioner’s Office. The Information Commissioner’s Office have useful guidelines which ensure all businesses comply with GDPR.
While there are no particular licences to obtain, you should also be aware of health and safety legislation and employment law.
What is pharmacy negligence?
A pharmacist has a critical role to play in the wellbeing of patients, and with an estimated one billion prescriptions processed in England every year, there’s huge pressure on individuals to maintain accuracy in the face of high demand.
Every pharmacy has strict procedures in place which are designed to catch any mistakes. No matter how highly qualified and careful you are, without these checks it’s easy for a mistake to occur. To prevent instances of pharmacy negligence from occurring, it’s strongly advisable to make sure that every process has a failsafe check. As the end consequences of pharmacy negligence have the potential to be so catastrophic, it’s essential to adopt a cautious approach.
Examples of pharmacy negligence include:
- Dispensing the wrong dose or type of medicine
- Placing one patient’s medicine in the box/bag for a different patient
- Giving patients the wrong advice about how to take their medicine
- Failing to advise about potential side effects (where applicable)
- Storing medicine at the wrong temperature and/or failing to tell patients how to store their medicine
- Failing to have adequate processes in place which protect the integrity of the medicines dispensed (eg. not purchasing medicine from authorised sources)
- Failing to keep proper records about the medicine dispensed
- Failing to perform the required checks before dispensing medicine
These are just some of the examples of pharmacy negligence that a pharmacist could face. As a pharmacist you may be facing legal action from a patient, or you could be the subject of an investigation by the GPhC. A pharmacy solicitor is essential for dealing with any claim of negligence, and the earlier you seek legal advice, the better.
What obligations does a pharmacist have to prevent counterfeit medicines being issued?
In recent years, concerns have grown about the prevalence of counterfeit medication and the potential impact it could have on patients. Without any checks on the quality, patients could be exposed to medicines which are either ineffective or stronger than the stated dose. There is also the risk of contamination.
Known as the Falsified Medication Directive, new legislation has been introduced which sought to make medications safer by tracking their movement and bringing in new features.
Within Europe, all prescription medication now has two separate markers on the packet. One is in the form of a bar code and the other is an anti-tampering device. From 9 February 2019, pharmacists are required to make sure that the anti-tampering device is intact before dispensing the medication. They must also scan the barcode on the packet of medication and change the status to “inactive – supplied” from “active”. This is completed via the National Medicines Verification System.
Any pharmacist not complying with these requirements could face disciplinary action from the GPhC and potentially, legal action from patients.
What happens at GPhC investigations and how can a pharmacy lawyer help?
No one likes to consider the possibility of complaints, but if you find yourself in this situation, it’s likely that the General Pharmaceutical Council will be involved. Known as the GPhC, they are the regulator for the industry and investigate any cases where there are allegations over fitness to practise. They do not get involved in payment of compensation so it’s possible that you may face legal action and an investigation by the GPhC at the same time.
Depending on the allegations being made and the seriousness of the case, you may be called to a hearing for an interim decision. This is to determine whether you are allowed to continue to practise pending the final outcome of the investigation. If an interim order is issued, you will either be prohibited from practice temporarily, or the services you are allowed to provide may be restricted.
Once the investigation is complete, the committee may be asked to consider appropriate action. This does not mean that you will necessarily be facing sanctions as there is a wide range of actions which could be recommended. The investigation committee may suggest that no action is taken against you, or they could recommend the issuing of a warning, referral to the fitness to practise committee or even criminal proceedings.
If your case is referred to the fitness to practise committee, they will decide whether any action is warranted. If so this could include conditions on your ability to practise, a warning, suspension or being struck off the GPhC.
The impact that a GPhC investigation can have on your pharmacy business should never be underestimated, even in the case where you believe that the allegations are completely false and unfounded. It’s vital to have a strong and robust defence that can be presented in all cases. If you believe you are completely innocent, a pharmacy lawyer can present the case for the defence and ensure that you have rebutted every claim being made. In the case where liability is being admitted, a pharmacy solicitor can help you to formulate the best strategy to adopt, including preparing evidence of any relevant mitigating factors and remediation.
What does the law say about the use of locums?
In pharmaceutical practices, it’s not uncommon for locums to be used to ensure continuity of service. Providing you ensure that any locums you use are properly qualified and fit to practise, complying with all necessary legislation, there is no issue with the use of locums within a pharmacy.
However, care needs to be taken over the employment status.
Locums are self-employed and not intended to become a permanent member of the workforce. They receive the benefits of a self-employed status so you may be under the assumption that their position is clear-cut. However, recent case law has demonstrated that in some cases a locum is eligible to receive full benefits under employment law. This includes sick pay, holiday pay and protection against unfair dismissal.
Failing to correctly recognise the status of a locum could create a claim under an Employment Tribunal and result in a significant financial liability. If you use a locum on a regular basis in your pharmacy, you may be at risk. It’s essential that any locum contract clearly states the nature of the working relationship and provides protection against a change which you haven’t approved. Your pharmacy lawyer can draft a locum contract which is watertight, and prevents unintended status migration.
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All our clients benefit from the same high level of care and attention whether the instruction is big or small. At the outset of each matter, we discuss the entire process with our clients, including the costs, potential outcomes and issues associated. This is to ensure clients are fully aware, knowledgeable and are in control always. Supporting and ensuring we provide the highest level of services, we offer our constant contact process with the partner or barrister leading your file, a document log in for matters which are for larger and more complicated instructions and on-going support post transaction should our clients require it. Our aim is not just to get the work done, but to make our clients’ lives easier as we do it, which is why we ensure that our clients have regular access to the resources they need from us.
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Whatever the reason behind your decision to sell your pharmacy, it’s important to give yourself enough time to prepare your pharmacy for sale, as prospective buyers will be looking for a number of factors when conducting their due diligence.