What should you check when buying a pharmacy that does compounding?
Check how much of the business compounding drives, who the prescribers and clinics behind it are, whether the skill sits with one pharmacist who may leave, the condition of the compounding room and equipment, the records and formulas, and whether suppliers will keep supplying. Take any standards or regulator questions to your lawyer.
A pharmacy that compounds is a different purchase from a pharmacy that mostly dispenses. Part of what you are buying is a specialized service, and that service often depends on particular people, particular prescribers and a particular room. The usual pharmacy due diligence still applies. This page covers what is added on top of it, so you know what to ask for early.
How much the business depends on compounding
Ask the seller to separate compounded work from ordinary dispensing in the records you are given. Look at what the compounded work is, who asks for it and how steady it has been across the years you can see. If one product line or one clinic accounts for most of it, you want to understand that early. A business can look healthy overall and still rest on a narrow base.
Prescribers, clinics and the pharmacist who holds the skill
Compounding work usually follows relationships with prescribers. Ask who sends the work and whether those relationships belong to the pharmacy or to one pharmacist. If the pharmacist who does the compounding is the seller, or is leaving, talk about how long they will stay and how they will introduce you. How long a seller should stay after the sale is worth reading before you negotiate it.
The room, the equipment and the records
Walk through the compounding area with someone who knows the work. Ask about the age and servicing of the equipment, how it is cleaned and who maintains it. Ask to see the written formulas and the batch and preparation records, and whether they are complete and organized. Whether the room and practice meet the regulator’s standards is a question for your lawyer and the regulator, not something to assume.
Suppliers and continuity
- Which suppliers provide the ingredients, and are any hard to replace?
- Do any supply arrangements stay with the seller or need the supplier’s consent to transfer?
- Is any key equipment leased or owned by someone else?
- Who answers questions from prescribers during the changeover?
Related reading
10 pages on the same subject, grouped by topic.
Due diligence
Buying
Selling
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernmentEquipment purchase financing for entrepreneurs
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