Pharmacy Industry in Wyoming: Current 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. These factors are affecting the pharmacy business valuations of pharmacies in WY 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 pharmacy business value.

Pharmacists Shortage in Wyoming:

Pharmacies across the United States are having difficulties in finding pharmacists.  This shortage of pharmacists in Wyoming 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 in Wyoming 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 Wyoming 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 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 WY pharmacy. Most are using simple accounting formulas that hold no sound reasoning for the value when faced with current pharmacy market conditions. Due to this many brokers are valuing pharmacies 2 to 3 times more than what the market is really willing to pay. Any inexperienced person can quote a high value to capture a listing.  However, that does not mean the over inflated asking price is what the business will actually sell for.

Mail Order Medication:

Some insurance companies are designating a significant amount of pharmacy patients in WY as “long-term medications.”  They require that they purchase their medications only from mail order pharmacy companies who provide products at lower prices. This has the result of local pharmacies not only missing out on prescription sales, but also suffering a decline in front-end sales since the customer is not entering the store. Pharmacy mail order sales have surpassed sales from independent retail pharmacies at this point.

Use a firm that provides Wyoming pharmacy business valuations based on real market conditions and does not use simple formulas when calculating the value of a pharmacy. Experienced companies use complex methods to derive the value of a pharmacy.

It is best to use a company with a specialty in pharmacy and has current and extensive industry data.  Choose pharmacy specialists who have worked in the pharmacy industry for enough time to have extensive Wyoming pharmacy experience and an excellent reputation.  Companies that have good credentials possess a large amount of national data.  The largest financial institutions, national chain pharmacies, regional pharmacy chains, independently owned drug stores, and pharmacy equity investment groups use the services of companies fitting this description.

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