Behind the UK Pharmacy Industry: An Insider’s Look at the Shifts Taking Place Behind the Counter
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Over the past two years, Cur8 Capital has acquired over 40 pharmacies across the North of England, deploying over £24 million into what has become a leading Halal Private Equity opportunity in the UK (read more on this here or watch here). Our Pharmacy of the Future strategy has given us an operational vantage point that is difficult to replicate from the outside: we have pioneered investments into automation robots, assessed hundreds of sites, and watched the sector’s economics shift in real time. This article draws on that experience, demonstrating what has been observed about a sector that is mid-transformation and widely misunderstood.
The community pharmacy sits at the intersection of almost everything a primary health service touches. It is where the elderly come weekly for repeat prescriptions, where parents take sick children rather than face an A&E wait, where a commuter fills a prescription on the way home and ends up staying twenty minutes whilst talking through a drug interaction their GP did not mention.
For many families, the person behind the counter is a neighbour, a community member who speaks their language and understands their circumstances.
Our Private Equity strategy as an example, is primarily based in the Northern-England region, and originates from diverse localities in Manchester, where investors into the strategy will often also be customers, patients, and members of the same community as the operators.
To understand how the pharmacy industry has changed, it helps to go back further than recent headlines. In the early 2010s, community pharmacy was a genuinely comfortable business to own and operate.
The profitability of that era was built on a specific mechanism that was, in its original design, genuinely elegant. The NHS set reimbursement prices for generic drugs through the Drug Tariff. Pharmacies had to dispense whatever a prescription specified, but they were free to source those drugs at whatever price they could negotiate from wholesalers and manufacturers. The difference between what they paid and what the NHS reimbursed them became their retained margin, and this was entirely by design. The NHS wanted pharmacies incentivised to procure drugs efficiently; the retained margin was the reward for doing so effectively.
Through the late 2000s and into the early 2010s, this system delivered generously. As major drugs came off patent and cheaper generic versions entered the market, pharmacies could source them at falling prices while NHS reimbursement rates took time to catch up. That gap was pure margin, and on high-volume drugs dispensed thousands of times a month, it added up to a very comfortable business. A pharmacy dispensing high volumes of these drugs could earn a meaningful spread on each item dispensed. Prescription volumes were growing at the same time: the number of items dispensed in England rose from around 840 million in 2008 to over one billion by 2013, driven by an ageing population, expanding chronic disease management, and the growing use of long-term repeat prescriptions. More items, better spreads, a lower cost base.
The National Living Wage did not exist until April 2016. The adult minimum rate was £7.20 per hour when it launched; it is £12.21 today. A pharmacy running two dispensary staff in 2012 was carrying a payroll cost structurally different from its equivalent today. Business rates were lower in real terms. Drug procurement, particularly from secondary wholesalers, was competitive enough that buying skill still returned meaningful margin above the Drug Tariff rate. For owner-operators, this produced a two-tier income that was genuinely attractive: the business generated profit above the drawn salary, meaning a working pharmacist-owner could earn a professional income while simultaneously building equity in an asset with real resale value. Goodwill multiples were strong precisely because the underlying earnings were reliable and the NHS contract felt like a durable foundation.
The degradation of that model was gradual enough to miss for years. Retained margin per item, adjusted to current prices, ran at £1.11 per item in 2014/15. By 2021/22 it had fallen to 89p. The nominal target for the sector’s total retained margin has barely moved from the £800 million per annum set in the mid-2010s, while prescription volumes grew by hundreds of millions of items over the same period. The margin was spreading thinner across more work long before the formal funding cuts became the headline story.
What made the subsequent squeeze so damaging was that pharmacy owners had very little room to respond. Most businesses facing cost inflation can adjust their prices. Pharmacies cannot. The NHS is the customer for around 90% of what they do, and the price it pays is set by the Department of Health. When the National Living Wage was introduced and ratcheted upward every year, pharmacy payrolls rose with it. When business rates increased and commercial rents followed the wider property market, pharmacy overheads rose with them. The NHS contract, in that same period, delivered uplifts that routinely came in below inflation and frequently arrived late. A business with a rising cost base and a price-taker relationship with its dominant customer will eventually see its margins compressed to nothing, and that is exactly what happened. By 2024, an NHS-commissioned economic analysis found that 47% of community pharmacies were operating at a loss at EBITDA (profit) level. The contract that had funded comfortable owner incomes a decade earlier was, for nearly half the sector, generating less revenue than it cost to run.
The theoretical solution was well understood across the sector. Clinical services, Pharmacy First, Advanced Services, private prescribing: these were better funded, structurally growing, and not subject to the same reimbursement mechanics that made dispensing so exposed. A pharmacy that pivoted toward services could generate a revenue mix that worked even when dispensing margins were thin.
For an agile independent with a single site and a motivated owner, that pivot was difficult but achievable. For a chain operating hundreds or thousands of standardised sites, with central procurement, uniform staffing models, and a head office cost structure built for a different era, it was close to operationally impossible at pace. The large corporates were structurally constrained from fixing the problem. By the time transformation became unavoidable, the economics of the large-estate model had deteriorated past the point where the capital required to turn things around was available or justified.
The scale of what happened to Lloyds Pharmacy between 2022 and 2024 illustrates this clearly. The chain went from 1000+ branches in March 2022 to selling virtually its entire community pharmacy estate within eighteen months, with sites going to independent operators, mid-market pharmacy entrepreneurs, and first-time buyers. The parent company, Aurelius, which had acquired the business for £400+ million in 2021, ultimately filed for liquidation with £293 million in creditors once the pharmacy estate had been divested.
Lloyds was the sharpest example of a wider retrenchment. Boots cut its community pharmacy estate significantly over three years. Across the UK as a whole, the total number of pharmacies fell from around 15,000 to approximately 11,000 over the past decade. In England specifically, pharmacy numbers dropped below 10,000 for the first time on record by March 2025, against a peak of 11,730 in 2017. During 2024 alone, more than five pharmacies were closing every week.
In the space of roughly fifteen years, pharmacy went from a business where dispensing alone could build genuine wealth, to one where owners must work considerably harder across a broader range of services to generate the margins that once came almost automatically.
The large corporates, unable to adapt their sprawling estates quickly enough, took the most visible losses and exited. What remains is a sector in transition: motivated sellers, suppressed asset values, and a policy environment actively rewarding those who have moved toward a services-led model.
The operators who arrived early with the right infrastructure stand to benefit most, and the gap between them and those still running the old playbook is widening. Understanding why starts with the contract that governs almost everything in this sector.
The Community Pharmacy Contractual Framework, negotiated between the Department of Health and Social Care, NHS England, and Community Pharmacy England, is the architecture the entire sector operates within. Historically the CPCF has been structured as a five-year agreement. The 2019 to 2024 deal locked in funding at a time when operating costs were lower and the inflationary environment was benign. Annual uplifts within that deal ran consistently below CPI, meaning the real value of the contract eroded year on year while staff costs, rent, and drug procurement costs kept rising.
Around 90% of a typical pharmacy’s income flows from these NHS contracts: the core dispensing fee paid per item processed, the margin retained on medicines procurement, and fees for Advanced Services. It is worth distinguishing between services that are effectively mandatory for most pharmacies, such as blood pressure monitoring, and those that represent a genuine commercial choice, such as flu vaccinations. The NHS contract has historically rewarded volume dispensing above all else; it is only now, through the expansion of Pharmacy First and clinical services funding, beginning to structurally reward the services pharmacies are being asked to provide.
The fragility of the dispensing fee model has been most visibly exposed through individual drug pricing. In early 2026, a National Pharmacy Association analysis found that pharmacies were paying £3.97 for a standard pack of Aspirin 75mg while the NHS reimbursement was £2.18, a loss of £1.79 per pack dispensed. Across just six commonly dispensed drugs, the NPA estimated the sector was collectively losing £5.8 million per month. These are structural features of how the reimbursement mechanism works, partially balanced by drugs where procurement margins remain healthier, but the net effect is a dispensing model whose economics are materially worse than they appear on paper.
The House of Commons Health and Social Care Committee called the framework “not fit for purpose” and “overly complex” in its May 2024 report. Since then, the funding trajectory has improved. The March 2025 settlement covered 2024/25 and 2025/26, delivering a 19.7% nominal increase on 2023/24 levels, the largest funding uplift across the NHS in that year. The 2026/27 settlement, agreed in May 2026, added a further 10.3%, bringing total CPCF funding to £3.636 billion, with the Pharmacy First budget fully integrated into the core contract for the first time. The direction of travel is now clearly upward, and the recent contracts have also begun to shift reward toward services delivery.
It is important to hold both facts simultaneously. These are genuine improvements, but even combining both settlements, the contract remains materially below where it would stand had it tracked inflation from 2015. The contract structure means that every pharmacy owner in England is, in practice, a contractor to the state, with revenue, cost exposure, and forward planning all shaped by negotiations they do not directly control.
Running parallel to the funding crisis is a structural shift in where NHS care gets delivered, and it is moving in the direction of community pharmacy.
Pharmacy First launched in January 2024, enabling pharmacists to complete full clinical episodes for seven common conditions: sinusitis, sore throat, earache, infected insect bites, impetigo, shingles, and urinary tract infections in women. Patients no longer need a GP appointment for these conditions; they walk in, get assessed, and leave with treatment. By October 2025, 4.5 million Pharmacy First consultations had been completed. Over 2.5 million blood pressure checks and 250,000 contraception consultations have been delivered through pharmacy Advanced Services in the same period. Within the Cur8 Pharmacy of the Future strategy alone, Pharmacy First services have grown from 200 to 800+ consultations per month from Jan-25,to-26 onwards.
The direction of policy is set well beyond these initial services. NHS England’s planning framework for 2026/27 calls on integrated care boards to introduce prescribing-based services into community pharmacies. An All-Party Parliamentary Group published a report in late 2025 recommending that Pharmacy First be developed into a consistent national walk-in service covering a broader range of conditions, with independent prescribing rights for pharmacists where appropriate. The government’s Department of Health has said publicly that it wants to move more care out of hospital and into community settings.
This matters for the economics. A Pharmacy First consultation pays £17. Blood pressure checks, contraception services, and the new medicines service each carry their own profit structures. A pharmacist who spends their day on these services rather than on manual repeat prescription dispensing is generating a fundamentally different revenue & profit profile for the business. The question is how to free up that time.
The answer for well-run operators is automation, and a legislative change in October 2025 has significantly widened its availability.
Until that point, hub and spoke dispensing, the model where prescriptions are dispensed centrally by an automated hub and delivered to pharmacy branches for collection, was restricted to pharmacies under the same legal entity. That restriction has been lifted. Pharmacies under different ownership can now share dispensing infrastructure, which opens the economics of automation to independent operators who could not previously justify or finance a hub of their own.
The efficiency gains are significant: an automated dispensing line operating at full capacity can fill a monitored dosage system tray every five seconds. Manual assembly manages seven or eight trays per hour. The staff time released by that comparison is the operating model of a different kind of business: one where pharmacists run consultations, deliver Pharmacy First pathways, and see patients rather than counting tablets.
The hardware transformation is only half the picture. As dispensing operations are automated and pharmacies take on more clinical complexity, the quality of management software becomes equally important. Pharmacies that can track dispensing volume, service delivery, staff performance, and stock in real time make business decisions on the basis of accurate information rather than intuition. For a group operating multiple sites, the software layer is what allows central management to understand performance across the portfolio, identify which services are generating revenue, and act quickly when something needs attention. The combination of dispensing automation and strong operational software is the infrastructure that makes a modern, services-led pharmacy viable at scale.
NHS England published data from London pharmacies in early 2026 showing that robotic dispensing allowed staff to deliver same-day consultations, vaccinations, and clinical services that had previously not been viable. Three major UK pharmacy representative bodies have called jointly for an AI and automation-enabled future for community pharmacy, with regulatory and funding frameworks updated to reflect it. The infrastructure for this transition exists; the economics are becoming accessible.
The divergence in outcomes across the sector reduces to a single underlying question: is the pharmacy still treating dispensing as its primary product?
Dispensing alone is not a viable standalone business in 2026 for most operators. Gross margins on dispensing have thinned considerably: the dispensing fee has not tracked cost growth, reimbursement prices on some drugs remain below wholesale cost, and staffing costs have risen sharply with successive National Living Wage increases. The 2025 and 2026 funding settlements have provided some relief, but gross dispensing margins remain under structural pressure. An NHS-commissioned economic analysis found that nearly half of all pharmacies were operating at a loss at EBITDA level. For pharmacies where dispensing constitutes the overwhelming majority of income, the arithmetic does not improve by managing costs more carefully. It only improves by changing what the business does.
The one exception is very high-volume dispensers operating 12,000 or more prescription items per month. At that level of throughput, and particularly where automation is deployed to contain labour costs, the economics of a dispensing-led model can still work. But this is a narrow operational window unavailable to most of the 10,000 pharmacies in England.
The pharmacies gaining ground are those that have moved, often aggressively, into services. Private weight management services have become material revenue lines at chains and well-positioned independents, driven by demand for GLP-1 prescriptions that the NHS cannot meet at scale. Ear wax removal, travel vaccinations, minor injury assessments, and the expanding menu of NHS Pharmacy First and Advanced Services are all adding income that is structurally different from dispensing fees: it is generated by clinical expertise. The ownership picture reflects this. The large chains, which struggled to restructure their cost bases and service models fast enough, contracted sharply. Small independent operators increased in number by over 21% since 2021 as the Lloyds and Boots divestments transferred sites to local buyers who understood their markets. The model that is working is local, services-led, and operationally lean.
The investment landscape in UK community pharmacy is best understood by looking back a decade.
Ten years ago, community pharmacy was a reliable, low-drama investment. NHS contract revenue was stable, goodwill multiples were high, and the sector’s defensive characteristics, contractual NHS income, protected licensing, essential healthcare function, made it attractive to institutional capital. The following decade dismantled those characteristics one by one. Real-terms funding cuts accumulated. Large chains became uneconomic. Goodwill values fell. The Lloyds Pharmacy collapse transferred over 1,000 sites to the market at suppressed prices and eroded confidence in the sector’s investment case across the board. Goodwill values for pharmacies fell by 6.3% through 2024.
The conditions have changed materially over the past eighteen months. The 2025 and 2026 funding settlements have established an upward trend in contract funding that did not exist before. Pharmacy First has given the sector a credible services revenue line with a clear expansion trajectory. The hub and spoke legislative change has made automation commercially viable for a much wider range of operators. And many pharmacy owners who acquired sites during the Lloyds and Boots divestments, without the capital or expertise to transform them, are now finding the business difficult and looking to exit. A survey published in early 2026 found 44% of pharmacy owners negative on the sector’s outlook and 31% looking to sell within the year.
The combination of motivated sellers, suppressed valuations, and structural tailwinds that are now clearly in place is the entry condition that generates attractive acquisition opportunities. Pharmacies that resist the pivot to services continue to struggle, and as they do, they surface as acquisition targets for operators with the capital, the model, and the management capability to transform them. That is precisely the opportunity a well-structured, services-led operator is built to take advantage of.
Cur8 Capital entered the pharmacy market at a very strong starting point. The first half of pharmacies were acquired between 2024 and H1 2025 at an average buy cost of around 60pence for every pound of annual revenue. As the volume of available sites grew and Cur8’s acquisition track record developed, subsequent batches came in at around the 50 pence per pound of revenue. Buying in a market where motivated sellers outnumbered confident buyers, and where distress rather than ambition was driving the deal flow, is how the strategy generated its early returns before any operational improvement had been made. Pharmacies in today’s market are averaging closing to 90 pence per pound of revenue given recent improvements to the NHS contract, and the mismatch between lack of good acquisition opportunities vs motivated buyers.
Forty pharmacies have been acquired to date across the North of England, with the net portfolio standing at 35 sites after three mergers and two exits. The share price has grown from £1.00 at inception in November 2024 to £1.26 as of early 2026, with three independent valuations tracking the portfolio’s enterprise value from £11.4 million at the start of 2025 to £23.8 million a year later. Annualised group revenues have grown from £14 million to over £32 million across the same period, driven by a mix of acquisitions and organic growth.
What two years of operating in this market has made clear is that not all pharmacy acquisitions are equal, and the strategy has sharpened accordingly. The sites that respond best to the Everest model share common characteristics: sufficient dispensing volume to sustain the business while services are built out, a location and footprint that can accommodate consultation rooms, and a patient base large enough to generate meaningful clinical services revenue. Pharmacies already running profitably but at subscale are strong candidates for consolidation. Where a site is small, loss-making, carrying high rent, and operating below 5,000 items per month, the path to a viable business is materially harder and the strategy deprioritises these.
What has been demonstrated so far is the acquisition and consolidation playbook. Buying below market value in bulk, merging sites where geography allows, and standing up the hub and spoke model through a £500,000 investment in robotic blister pack automation, now servicing over 35 sites from a central hub, has freed pharmacist time and built the operational infrastructure. Training has been rolled out across branches. Eight sites have been fully fitted out with consultation rooms and external rebranding. Pharmacy First consultations across the portfolio have grown from 210 per month in January 2025 to over 800 by early 2026.
What remains to be fully proven is whether services can be scaled across the entire estate in a way that makes them a significant, recurring part of the revenue mix rather than a growing but still modest contributor. That transition is underway. The infrastructure for it, the consultation rooms, the trained staff, the operational software, and the hub freeing up pharmacist time, is in place. The commercial rollout is the next chapter, and it is the chapter that changes the exit valuation conversation entirely.
The goal therefore becomes one which the Strategy is well-positioned for: to sell an integrated primary healthcare business where dispensing is the foundation, but clinical services, automated operations, and a consistent patient relationship model make the business genuinely differentiated. A buyer acquiring that, whether a corporate, a private equity fund, or a healthcare group, is acquiring something considerably rarer and more valuable than a pharmacy roll-up. This is where our investors’ returns are realised.
Cur8 Capital manages over $250 million and works with established Muslim-owned businesses, families and investors seeking institutional-quality private market strategies.
Private equity has, for decades, been one of the most consistent generators of above-market returns in institutional portfolios – read an introduction to Private Equity here. It has also been almost entirely inaccessible to Muslim investors in a sharia-compliant form. The structures exist in theory; the managers willing to build and operate them at a serious level have been rare. That is the gap Cur8 Capital is building into.
The Pharmacy of the Future deal is one example, and there are more in the pipeline. For investors with a medium-risk appetite and a horizon of five years or more, private equity should form part of a diversified portfolio. The return profile, the low correlation to public markets, and the ability to invest in real businesses undergoing real transformation are characteristics that complement income-generating products well. It is not a fit for everyone, but for those with the tenure and the conviction, the case is strong.
If you have capital of £100,000 or more that you are looking to put to work, you are welcome to book in a call with the Cur8 Capital investment team for an overview of available strategies and diversification plays.
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This article is for educational purposes only and does not constitute financial, tax, legal or investment advice. Capital is at risk. Private market investments can be illiquid and may not be suitable for all investors. Tax treatment depends on individual circumstances and may change. Businesses should obtain appropriate professional advice before making investment decisions.
