Selling a pharmacy – how does it proceed? What to remember? What to pay attention to?

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Selling a pharmacy – how does it proceed? What to remember? What to pay attention to?

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    After reading the article below, we recommend its second part: How to sell a pharmacy – after the Supreme Administrative Court's judgments from 2022.

    Opening a pharmacy itself is many times more difficult than opening another type of business. The sale of a pharmacy is also much more of a sale than a "traditional" disposal of an enterprise.

    As part of ours Pharmaceutical Law Office Every year, we conduct several projects involving comprehensive support for clients in the sale and purchase of individual pharmacies and pharmacy chains. So let me, in addition to suggesting you the possibility of contacting us contact In order to consider the possibility of establishing cooperation, we will share below some of the knowledge and experience that our Team has gathered so far in such transactions.

    What is the sale of a pharmacy from a legal point of view?

    Pharmacies are run in two basic forms, i.e. as sole proprietorships and as commercial companies. The sale of a pharmacy is essentially a sale of an enterprise or an organized part thereof if it is conducted as part of a business activity or is carried out by selling shares - in capital companies and the rights and obligations of partners - in partnerships.

    The most important practical conclusion is that in preparation for the sale of a pharmacy, it is first necessary to confirm the legal form in which the enterprise operating the pharmacy is registered. This information determines what will actually be the subject of the sale, although it is often much more advantageous to sell a pharmacy by making appropriate changes to its legal form.

    Another important issue is determining exactly what components constitute the assets of this enterprise - this is also not always fully obvious, and the parties to the transaction usually try to additionally include or exclude some elements from the sale. 

    To answer the most frequently asked question: yes, it is possible to sell a pharmacy selling medicines. It is worth emphasizing, however, that many buyers do not want to pay the same amount for all drugs available in the pharmacy. A particular problem here are expiring and non-rotating medicines, in which potential buyers of pharmacies are often less or not interested at all. This issue is usually the subject of long-term negotiations, so it should be taken into account when preparing the pharmacy for sale.

    How to determine how much a pharmacy is worth? How much should you sell your pharmacy for? 

    The basic way to value a pharmacy is to determine its value based on its turnover over the last 12 months. A monthly average is derived from this period and then multiplied by various coefficients. The final remuneration for the sale of the pharmacy also depends on other key issues - the ownership of the premises, the length of the lease agreement and its stability, the pharmacy's margins, the pharmacy's debt, the value of its warehouse, development prospects, the size and stability of the staff, and the situation on the local market. 

    If necessary, such a valuation is performed by specialized auditors (some of them cooperate with our law firm). From the practice of such transactions - it is usually better not to save on a professional valuation, because the final valuation made by buyers is most often a reflection of the seller's substantive preparation for sale. 

    What form should the pharmacy sales agreement take?

    You should prepare a pharmacy sales contract experienced in the field pharmaceutical law lawyer. This is what common sense and experience suggest, but of course it is not a legal obligation, and although we do not recommend it - purely theoretically, anyone can try to prepare such a contract on their own. 

    When concluding a pharmacy sales contract, the key issue is the form of concluding the contract. The form provided for by the legislator must be maintained under pain of nullity (ad solemnitatem). This form is less typical because it is an "intermediate" step between a traditional written contract and a notarial deed. Pursuant to Art. 751 § 1 of the Civil Code, a sales contract for an enterprise (e.g. a pharmacy) requires a written form with notarially certified signatures. To meet this requirement, after signing the "traditional" written contract, the signatures must be authenticated by a notary or the contract must be signed in his presence. It is worth noting that, of course, nothing prevents such an agreement from being concluded in the form of a notarial deed - it is a form of a "higher order" than the form required by the legislator. It should be remembered that in the rare case when the enterprise includes real estate, for example not only a pharmacy is sold, but also the premises in which the pharmacy is run, the required form is a notarial deed and there are no exceptions to this rule. (Article 158 of the Civil Code). To sum up - the sale of a pharmacy should be made in writing with notarially certified signatures or in the form of a notarial deed.

    Of course, the obligations are different in a situation where the subject of sale is a commercial law company operating a pharmacy and not a pharmacy run as a sole proprietorship. There, we most often deal with the sale of shares or the entry of a new partner into the company. You can find more on this topic in our second article on pharmacy sales.

    A difficult issue is liability for the obligations incurred by the current owner of the pharmacy

    A common problem for sold pharmacies are receivables and liability for them. Under the law, the purchaser of an enterprise (in this case, a pharmacy) is jointly and severally liable with the seller for his obligations related to running the enterprise, unless he was unaware of these obligations at the time of acquisition, despite exercising due diligence. 

    The above regulation - undoubtedly unattractive from the point of view of a pharmacy buyer - contains several elements that should be considered. First of all, it is necessary to determine what the joint and several liability of the buyer and the seller of the pharmacy is. Pursuant to Article 366 § 1 of the Civil Code, the essence of the joint and several obligation of debtors is the right on the part of the creditor, allowing him to satisfy all or part of the benefit from all debtors jointly or from each separately. Of course, satisfying the creditor by any of the debtors releases the others.

    This means that in every serious transaction, buyers spend a lot of time "screening" the seller of the pharmacy, because the above-mentioned provision shows that the buyer's liability does not extend only to those obligations that the buyer was not aware of despite exercising due diligence. Appropriate diligence in examining the financial condition of the acquired enterprise will allow, firstly, to fully determine the circle of the seller's creditors to whom the buyer will be liable, and also - potentially - to be released from some liabilities. Due diligence in this type of relationship will include, for example, an appropriately thorough examination that will allow us to assess whether and to what extent the seller is in debt. What counts here is the experience of the buyer or the law firm representing him - allowing this process to be carried out as reliably and quickly as possible.

    Detailed legal solutions in the case of sale of pharmacies

    The most important group of provisions that should be noted in the described context are Art. 99-105 of the Act of September 6, 2001, Pharmaceutical Law.

    It should be noted that the sale of a pharmacy or shares in a company operating a pharmacy is a separate matter, and the change or transfer of a license to operate it is a separate matter. The transfer of the authorization, if necessary, must be carried out in accordance with the procedure specified by law before the Provincial Pharmaceutical Inspector. The above issue is regulated by Art. 104a of the Pharmaceutical Law, which is systematically related to other provisions of this Act.

    Below, let's analyze exactly what this procedure looks like, what to pay attention to and where potential problems may arise.

    Who can run a pharmacy? Who can buy a pharmacy?

    The answer to the above questions is determined by the group of buyers and sellers of pharmacies, which results from the above-mentioned provisions of the Pharmaceutical Law. It should be emphasized that for several years (since June 2017) not everyone has been able to open a pharmacy. Additionally, to complicate matters even more, not every person can purchase every pharmacy already operating on the market. Recent rulings of the Supreme Administrative Court show - as we write in more detail in our second article - that who can purchase a given pharmacy also depends on when it was opened. To the so-called old permits do not apply because the restrictions resulting from the amendment to the act commonly known as Pharmacy for Pharmacists do not apply - therefore, according to the currently prevailing views, they can be freely sold also to entities that do not meet the current requirements, as discussed in more detail below.

    Article 99 of the Pharmaceutical Law specifies that a pharmacy must be operated on the basis of a permit to operate a pharmacy issued by the Provincial Pharmaceutical Inspector. The issuance of such a permit is subject to certain conditions that result from the above-mentioned provision, but it would be pointless to describe them in detail here - after all, we are focusing on the transaction of selling the pharmacy and transferring the permit to operate it, so we assume that the seller has this permit. However, it is impossible to ignore certain issues that result from the above-mentioned article and directly affect the possibility and effectiveness of transferring or changing the permit.

    1. First of all, we should refer to the group of entities which, in accordance with the currently applicable Art. 99 section 4 of the Pharmaceutical Law may obtain a permit to run a pharmacy. This is about:

    A/ A pharmacist with the right to practice the profession, running a sole proprietorship and

    B/ A general partnership or partnership whose business is solely to run pharmacies, and whose partners are only pharmacists, the right to practice the profession referred to in point 1.

    Since only the above-mentioned entities can obtain an "initial" permit to operate a pharmacy, it can only be "transferred" to them - if the permit to operate a pharmacy was issued after the entry into force of the Pharmacy for a Pharmacist. Thus, you can purchase a pharmacy established under the new regulations, i.e. after June 25, 2017. only a pharmacist or a general partnership/partnership that deals exclusively with running pharmacies and whose partners/partners are exclusively pharmacists. Of course, entrepreneurs and pharmacy chains operating on the market have already found their own solutions to this, but this is not the time or place to publish them.

    What is equally important, there are provisions in the Pharmaceutical Law that specify who - despite meeting the above conditions - cannot obtain a permit to operate a pharmacy, and therefore it cannot be transferred to him upon the sale of the pharmacy. If the buyer is in the group covered by the above-mentioned inclusions, the Provincial Pharmaceutical Inspector will not consent to the transfer or change of the authorization.

    Joke. 104a shows that the authorization cannot be transferred to the entities described in Art. 99 section 3, i.e. those that:

    – They run or have applied for a permit to run a pharmaceutical wholesale store or are involved in intermediation in the trade of medicinal products or

    – They run more than 1% pharmacies in the voivodeship or entities controlled by them, directly or indirectly, run a total of more than 1% pharmacies in the voivodeship

    – They are members of a capital group whose members run more than 1% pharmacies in the voivodeship.

    New pharmacies cannot be transferred to persons and entities described in Art. 99 section 3a, i.e. those that:

    – They are partners, including a partner, in a company or companies that run at least 4 generally available pharmacies in total or;

    – They run at least 4 generally accessible pharmacies or an entity or entities controlled by it directly or indirectly run at least 4 generally accessible pharmacies, or;

    – They are members of a capital group whose members run at least 4 generally available pharmacies, or;

    – They are members of the governing bodies of a company authorized to operate a pharmaceutical wholesale store or an intermediary in the trade of medicinal products.

    Entities described in Art. 101 points 2-5, so:

    – Those whose authorization to manufacture or import medicinal products or veterinary medicinal products, operate a pharmacy or pharmaceutical wholesaler was withdrawn within a period of 3 years prior to the date of submission of the application for the transfer of the authorization, or who were deleted from the National Register of Intermediaries in the period of 3 years prior to the date of submission of the application Trade in Medicinal Products;

    – Those that have a permit to manufacture or import a medicinal product or a veterinary medicinal product or have applied for such a permit, run a pharmaceutical wholesaler or a pharmaceutical wholesaler of veterinary medicinal products or have applied for a permit to operate it, are involved in the intermediation of trade in products medicinal products or have applied for entry into the register referred to in Art. 73a section 3, or perform medical activities or have applied for entry in the register referred to in Art. 100 paragraph 1 of the Act of 15 April 2011 on medical activities;

    – Which do not guarantee the proper running of the pharmacy;

    – On which, within the period of 3 years prior to the date of submission of the application for the transfer of the permit, a financial penalty was imposed pursuant to Art. 127, art. 127b or art. 127c;

    Please remember to make sure before purchasing a pharmacy that you are among the entities authorized to have a permit to operate this particular pharmacy. Otherwise, the entire transaction may even lead to the loss of the license to operate a pharmacy and, consequently, the loss of invested funds.

    It is worth mentioning here that in the case of the sale of a pharmacy, the demographic and geographical restrictions described in the cited regulations do not apply, because the purchased pharmacy is operated at the current address, already covered by a permit issued after the Provincial Pharmaceutical Inspector examined the issue of population density and distance of pharmacies.

    To sum up, an entity purchasing a pharmacy opened after June 25, 2017, i.e. already under the new regulations:

    1. Must have appropriate status - authorizations of a pharmacist or a specific company;

    2. It cannot be excluded from the group of entities that may obtain a permit pursuant to: Art. 99 section 3, 3a, 4-4b and art. 101 points 2-5 of the Pharmaceutical Law.

    These restrictions - in accordance with the emerging jurisprudence of the Supreme Administrative Court - do not apply to the so-called old permits issued before the entry into force of the so-called Pharmacies for pharmacists, i.e. before June 25, 2017. Pharmacies covered by these permits may be subject to much more free trade.

    How to sell a pharmacy and transfer the license to operate a pharmacy?

    After determining the group of entities that may be authorized to operate a pharmacy, the procedure for its transfer under Art. 104a of the Pharmaceutical Law.

    The transfer of the authorization must take place through the authority that issued the authorization, i.e. the Provincial Pharmaceutical Inspector. This is done in an administrative procedure, which obliges you to comply with the legal requirements. An administrative matter is initiated by submitting an appropriate application to the above-mentioned authority. As follows from the above-mentioned provision, the parties to this proceeding are the entity that purchased the pharmacy and the entity to which the transferred permit was issued. In short – the buyer and seller of the pharmacy. They are obliged to jointly submit an application for the transfer of the permit, and - pursuant to Art. 105 of the Pharmaceutical Law - payment in the amount of five times the minimum wage. The buyer must meet the legal requirements and is therefore obliged to submit the following along with the application:

    – A written declaration of acceptance of all conditions contained in the permit,

    – Declaration that the address of the pharmacy does not change,

    – Documents confirming that it meets the requirements described in the above paragraph (it is not subject to exclusion from the group of entities authorized to obtain authorization under Article 99(3), 3a, 4-4b and Article 101(2-5) of the Pharmaceutical Law),

    – Agreement – in the appropriate form, as described in the first part – for the sale of the enterprise (pharmacy),

    – Confirmation that you are an entity that can obtain a permit, i.e. a document proving the right to practice the profession of pharmacist and/or an excerpt from CEIDG/KRS confirming the appropriate nature of the activity/company,

    – Documents confirming that the buyer guarantees the proper operation of the pharmacy,

    And not only…

    ...it should be emphasized that the set of documents described above that must be attached to the application does not result directly from the provisions of the Act. Moreover, the catalog indicated above is not exhaustive. The regulations specify the minimum requirements that the purchaser of a pharmacy must meet, without specifying how he or she is to demonstrate compliance with these requirements. Therefore, knowledge of the practices of individual local WIFs is crucial here.

    What can the Provincial Pharmaceutical Inspector do with such an application?

    The inspector conducts a detailed procedure, examines the application and the applicant's status in terms of compliance with the legal requirements, and only on this basis issues a decision. The entire procedure ends with the issuance of an appropriate decision by the Provincial Pharmaceutical Inspector. If the application is approved and after taking evidence, it transfers the license to operate a pharmacy to the buyer. Only then can it be said that the procedure for selling the pharmacy as an enterprise is complete and the buyer can conduct business.

    Tax issues important when selling a pharmacy.

     

    The described sale is usually VAT-free, but it will not avoid the PCC fee, i.e. tax on civil law transactions.

    Pharmacy sales - a brief presentation of the entire procedure

    To summarize the pharmacy sales procedure:

    1. The buyer must make sure that he or she belongs to the group of entities authorized to hold a permit to operate a pharmacy, and that he or she is not secondarily excluded from this group by the relevant regulations - although here, as a result of case law, there have been very clear changes this year and in relation to some permits, the group of buyers has expanded significantly;

    2. The Buyer and the Seller must conclude a properly constructed contract for the sale of the enterprise within the meaning of Art. 551 et seq. of the Civil Code (of course, shares in commercial law companies operating pharmacies may also be sold).

    3. The contract must be concluded in an appropriate form (generally in writing with notarially certified signatures, in certain cases a notarial deed is required);

    4. The buyer must exercise appropriate diligence when analyzing the purchased enterprise - the best way is to conduct a professional audit or comprehensive due diligence;

    5. The Buyer and the Seller must submit an application for the transfer or change of the permit to operate a pharmacy, together with the appropriate documentation, to the Provincial Pharmaceutical Inspector and cooperate with him in the proceedings to examine the application and ensure that the purchaser meets the legal requirements;

    6. After the decision to transfer or change the authorization to the buyer is issued, the sale of the pharmacy may be considered completed

    What are the potential pitfalls for the pharmacy buyer and seller?

     

    Selling a pharmacy is a process that rarely goes completely according to plan. Virtually every aspect of this activity involves some risk. You can point out here, for example:

    1. Failure to regulate the issue of the right to the premises in which the pharmacy is located (the issue of ownership of the premises, its transfer as part of the sale of the enterprise or, for example, settling the lease relationship with the lessor, entering into an ongoing lease relationship, etc.);

    2. Inadequate regulation in the contract regarding the sale of movable property in the pharmacy, such as medicines or equipment;

    3. Faulty analysis of the legal status and history of the pharmacy's operations;

    4. Faulty valuation of the enterprise;

    5. Incorrect preparation of the application to the Provincial Pharmaceutical Inspector;

    6. Attaching incomplete documentation along with incorrect demonstration of necessary issues, such as meeting the requirements of the relevant competition (which may significantly prolong the proceedings before the Inspector and result in additional costs in the form of paying an expert in this field);

    7. Inappropriate drafting of the contract - including: in terms of its form, as well as failure to pay the appropriate tax, inappropriate definition of the parties' obligations;

    8. Incorrect determination of the moment of transfer of the enterprise, and, as a consequence, unnecessary loss of several dozen or more days of running the pharmacy (this is the time when people must receive remuneration, and often the owner of the premises demands rent). 

    Is it worth using a lawyer's help when buying or selling a pharmacy?

     

    A faulty sale of a pharmacy may result in much more losses than profits. In not so rare cases, incorrect performance of this procedure may even result in the loss of the license to operate a pharmacy. A lawyer experienced in pharmaceutical law – a comprehensive service provider for the entire project should provide the most satisfactory solutions for both the seller and the buyer, but at the same time as safe as possible for all parties to the contract. It should be noted here that the pharmacy sales market is a relatively niche market, and much of the knowledge comes from experience. Therefore, it is crucial to choose advisors specializing in such transactions. Fortunately for our clients, there are a dozen or so of us professionals operating efficiently on this market.

    If you were looking for information about selling or buying a pharmacy, we hope that the above article has well outlined the key elements of this rather complicated process. 

    To sum up: The basic and key differences between transactions leading to a change of ownership of a pharmacy depend on whether a given pharmacy is a sole proprietorship or a commercial company, when the permit was issued, and who is the buyer of the pharmacy. Each of these transactions requires the implementation of a slightly different operating scenario, a thorough analysis of all documentation and the design of a solution that will allow the entire operation to be carried out as safely as possible.

    Brief information about how we can help you:

     

    If you are interested, go through the process described above together with our Team Pharmaceutical Law Office – we can guide you, supporting you with our experience, market knowledge and negotiation skills. 

    We provide legal and business support in the transaction of purchasing or selling a pharmacy. We have extensive experience on both sides of the negotiation table, which allows us to negotiate the most favorable transaction terms for our clients. We support interested sellers of pharmacies in preparing an offer, searching for buyers, negotiating price conditions and determining other parameters and provisions of the pharmacy sale agreement. If necessary, we also undertake the preparation and verification of contractual security, tax consultancy, audits and valuation of pharmacies. Using our services usually pays off for our clients.

    Precedential judgments of the Supreme Administrative Court in 2022 - sale of a pharmacy without the Pharmacy for the Pharmacist - we write about the latest judgments and their importance for practice here [click] 

    If you want to use professional legal and business support regarding the purchase or sale of a pharmacy, please contact us via e-mail pharmacy sales@klodzinskikancelaria.pl or by phone at +48 509 259 434.

    In our office, it is possible to book an appointment electronically initial consultation at our headquarters in Warsaw. If necessary, we also have a branch in Krakow, and we are happy to meet clients from other parts of Poland online. 

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    Selling a pharmacy – how does it proceed? What to remember? What to pay attention to?

    Contents
      Add a header to begin generating the table of contents
      Scroll to Top

      Entry

      After reading the article below, we recommend its second part: How to sell a pharmacy – after the Supreme Administrative Court's judgments from 2022.

      Opening a pharmacy itself is many times more difficult than opening another type of business. The sale of a pharmacy is also much more of a sale than a "traditional" disposal of an enterprise.

      As part of ours Pharmaceutical Law Office Every year, we conduct several projects involving comprehensive support for clients in the sale and purchase of individual pharmacies and pharmacy chains. So let me, in addition to suggesting you the possibility of contacting us contact In order to consider the possibility of establishing cooperation, we will share below some of the knowledge and experience that our Team has gathered so far in such transactions.

      What is the sale of a pharmacy from a legal point of view?

      Pharmacies are run in two basic forms, i.e. as sole proprietorships and as commercial companies. The sale of a pharmacy is essentially a sale of an enterprise or an organized part thereof if it is conducted as part of a business activity or is carried out by selling shares - in capital companies and the rights and obligations of partners - in partnerships.

      The most important practical conclusion is that in preparation for the sale of a pharmacy, it is first necessary to confirm the legal form in which the enterprise operating the pharmacy is registered. This information determines what will actually be the subject of the sale, although it is often much more advantageous to sell a pharmacy by making appropriate changes to its legal form.

      Another important issue is determining exactly what components constitute the assets of this enterprise - this is also not always fully obvious, and the parties to the transaction usually try to additionally include or exclude some elements from the sale. 

      To answer the most frequently asked question: yes, it is possible to sell a pharmacy selling medicines. It is worth emphasizing, however, that many buyers do not want to pay the same amount for all drugs available in the pharmacy. A particular problem here are expiring and non-rotating medicines, in which potential buyers of pharmacies are often less or not interested at all. This issue is usually the subject of long-term negotiations, so it should be taken into account when preparing the pharmacy for sale.

      How to determine how much a pharmacy is worth? How much should you sell your pharmacy for? 

      The basic way to value a pharmacy is to determine its value based on its turnover over the last 12 months. A monthly average is derived from this period and then multiplied by various coefficients. The final remuneration for the sale of the pharmacy also depends on other key issues - the ownership of the premises, the length of the lease agreement and its stability, the pharmacy's margins, the pharmacy's debt, the value of its warehouse, development prospects, the size and stability of the staff, and the situation on the local market. 

      If necessary, such a valuation is performed by specialized auditors (some of them cooperate with our law firm). From the practice of such transactions - it is usually better not to save on a professional valuation, because the final valuation made by buyers is most often a reflection of the seller's substantive preparation for sale. 

      What form should the pharmacy sales agreement take?

      You should prepare a pharmacy sales contract experienced in the field pharmaceutical law lawyer. This is what common sense and experience suggest, but of course it is not a legal obligation, and although we do not recommend it - purely theoretically, anyone can try to prepare such a contract on their own. 

      When concluding a pharmacy sales contract, the key issue is the form of concluding the contract. The form provided for by the legislator must be maintained under pain of nullity (ad solemnitatem). This form is less typical because it is an "intermediate" step between a traditional written contract and a notarial deed. Pursuant to Art. 751 § 1 of the Civil Code, a sales contract for an enterprise (e.g. a pharmacy) requires a written form with notarially certified signatures. To meet this requirement, after signing the "traditional" written contract, the signatures must be authenticated by a notary or the contract must be signed in his presence. It is worth noting that, of course, nothing prevents such an agreement from being concluded in the form of a notarial deed - it is a form of a "higher order" than the form required by the legislator. It should be remembered that in the rare case when the enterprise includes real estate, for example not only a pharmacy is sold, but also the premises in which the pharmacy is run, the required form is a notarial deed and there are no exceptions to this rule. (Article 158 of the Civil Code). To sum up - the sale of a pharmacy should be made in writing with notarially certified signatures or in the form of a notarial deed.

      Of course, the obligations are different in a situation where the subject of sale is a commercial law company operating a pharmacy and not a pharmacy run as a sole proprietorship. There, we most often deal with the sale of shares or the entry of a new partner into the company. You can find more on this topic in our second article on pharmacy sales.

      A difficult issue is liability for the obligations incurred by the current owner of the pharmacy

      A common problem for sold pharmacies are receivables and liability for them. Under the law, the purchaser of an enterprise (in this case, a pharmacy) is jointly and severally liable with the seller for his obligations related to running the enterprise, unless he was unaware of these obligations at the time of acquisition, despite exercising due diligence. 

      The above regulation - undoubtedly unattractive from the point of view of a pharmacy buyer - contains several elements that should be considered. First of all, it is necessary to determine what the joint and several liability of the buyer and the seller of the pharmacy is. Pursuant to Article 366 § 1 of the Civil Code, the essence of the joint and several obligation of debtors is the right on the part of the creditor, allowing him to satisfy all or part of the benefit from all debtors jointly or from each separately. Of course, satisfying the creditor by any of the debtors releases the others.

      This means that in every serious transaction, buyers spend a lot of time "screening" the seller of the pharmacy, because the above-mentioned provision shows that the buyer's liability does not extend only to those obligations that the buyer was not aware of despite exercising due diligence. Appropriate diligence in examining the financial condition of the acquired enterprise will allow, firstly, to fully determine the circle of the seller's creditors to whom the buyer will be liable, and also - potentially - to be released from some liabilities. Due diligence in this type of relationship will include, for example, an appropriately thorough examination that will allow us to assess whether and to what extent the seller is in debt. What counts here is the experience of the buyer or the law firm representing him - allowing this process to be carried out as reliably and quickly as possible.

      Detailed legal solutions in the case of sale of pharmacies

      The most important group of provisions that should be noted in the described context are Art. 99-105 of the Act of September 6, 2001, Pharmaceutical Law.

      It should be noted that the sale of a pharmacy or shares in a company operating a pharmacy is a separate matter, and the change or transfer of a license to operate it is a separate matter. The transfer of the authorization, if necessary, must be carried out in accordance with the procedure specified by law before the Provincial Pharmaceutical Inspector. The above issue is regulated by Art. 104a of the Pharmaceutical Law, which is systematically related to other provisions of this Act.

      Below, let's analyze exactly what this procedure looks like, what to pay attention to and where potential problems may arise.

      Who can run a pharmacy? Who can buy a pharmacy?

      The answer to the above questions is determined by the group of buyers and sellers of pharmacies, which results from the above-mentioned provisions of the Pharmaceutical Law. It should be emphasized that for several years (since June 2017) not everyone has been able to open a pharmacy. Additionally, to complicate matters even more, not every person can purchase every pharmacy already operating on the market. Recent rulings of the Supreme Administrative Court show - as we write in more detail in our second article - that who can purchase a given pharmacy also depends on when it was opened. To the so-called old permits do not apply because the restrictions resulting from the amendment to the act commonly known as Pharmacy for Pharmacists do not apply - therefore, according to the currently prevailing views, they can be freely sold also to entities that do not meet the current requirements, as discussed in more detail below.

      Article 99 of the Pharmaceutical Law specifies that a pharmacy must be operated on the basis of a permit to operate a pharmacy issued by the Provincial Pharmaceutical Inspector. The issuance of such a permit is subject to certain conditions that result from the above-mentioned provision, but it would be pointless to describe them in detail here - after all, we are focusing on the transaction of selling the pharmacy and transferring the permit to operate it, so we assume that the seller has this permit. However, it is impossible to ignore certain issues that result from the above-mentioned article and directly affect the possibility and effectiveness of transferring or changing the permit.

      1. First of all, we should refer to the group of entities which, in accordance with the currently applicable Art. 99 section 4 of the Pharmaceutical Law may obtain a permit to run a pharmacy. This is about:

      A/ A pharmacist with the right to practice the profession, running a sole proprietorship and

      B/ A general partnership or partnership whose business is solely to run pharmacies, and whose partners are only pharmacists, the right to practice the profession referred to in point 1.

      Since only the above-mentioned entities can obtain an "initial" permit to operate a pharmacy, it can only be "transferred" to them - if the permit to operate a pharmacy was issued after the entry into force of the Pharmacy for a Pharmacist. Thus, you can purchase a pharmacy established under the new regulations, i.e. after June 25, 2017. only a pharmacist or a general partnership/partnership that deals exclusively with running pharmacies and whose partners/partners are exclusively pharmacists. Of course, entrepreneurs and pharmacy chains operating on the market have already found their own solutions to this, but this is not the time or place to publish them.

      What is equally important, there are provisions in the Pharmaceutical Law that specify who - despite meeting the above conditions - cannot obtain a permit to operate a pharmacy, and therefore it cannot be transferred to him upon the sale of the pharmacy. If the buyer is in the group covered by the above-mentioned inclusions, the Provincial Pharmaceutical Inspector will not consent to the transfer or change of the authorization.

      Joke. 104a shows that the authorization cannot be transferred to the entities described in Art. 99 section 3, i.e. those that:

      – They run or have applied for a permit to run a pharmaceutical wholesale store or are involved in intermediation in the trade of medicinal products or

      – They run more than 1% pharmacies in the voivodeship or entities controlled by them, directly or indirectly, run a total of more than 1% pharmacies in the voivodeship

      – They are members of a capital group whose members run more than 1% pharmacies in the voivodeship.

      New pharmacies cannot be transferred to persons and entities described in Art. 99 section 3a, i.e. those that:

      – They are partners, including a partner, in a company or companies that run at least 4 generally available pharmacies in total or;

      – They run at least 4 generally accessible pharmacies or an entity or entities controlled by it directly or indirectly run at least 4 generally accessible pharmacies, or;

      – They are members of a capital group whose members run at least 4 generally available pharmacies, or;

      – They are members of the governing bodies of a company authorized to operate a pharmaceutical wholesale store or an intermediary in the trade of medicinal products.

      Entities described in Art. 101 points 2-5, so:

      – Those whose authorization to manufacture or import medicinal products or veterinary medicinal products, operate a pharmacy or pharmaceutical wholesaler was withdrawn within a period of 3 years prior to the date of submission of the application for the transfer of the authorization, or who were deleted from the National Register of Intermediaries in the period of 3 years prior to the date of submission of the application Trade in Medicinal Products;

      – Those that have a permit to manufacture or import a medicinal product or a veterinary medicinal product or have applied for such a permit, run a pharmaceutical wholesaler or a pharmaceutical wholesaler of veterinary medicinal products or have applied for a permit to operate it, are involved in the intermediation of trade in products medicinal products or have applied for entry into the register referred to in Art. 73a section 3, or perform medical activities or have applied for entry in the register referred to in Art. 100 paragraph 1 of the Act of 15 April 2011 on medical activities;

      – Which do not guarantee the proper running of the pharmacy;

      – On which, within the period of 3 years prior to the date of submission of the application for the transfer of the permit, a financial penalty was imposed pursuant to Art. 127, art. 127b or art. 127c;

      Please remember to make sure before purchasing a pharmacy that you are among the entities authorized to have a permit to operate this particular pharmacy. Otherwise, the entire transaction may even lead to the loss of the license to operate a pharmacy and, consequently, the loss of invested funds.

      It is worth mentioning here that in the case of the sale of a pharmacy, the demographic and geographical restrictions described in the cited regulations do not apply, because the purchased pharmacy is operated at the current address, already covered by a permit issued after the Provincial Pharmaceutical Inspector examined the issue of population density and distance of pharmacies.

      To sum up, an entity purchasing a pharmacy opened after June 25, 2017, i.e. already under the new regulations:

      1. Must have appropriate status - authorizations of a pharmacist or a specific company;

      2. It cannot be excluded from the group of entities that may obtain a permit pursuant to: Art. 99 section 3, 3a, 4-4b and art. 101 points 2-5 of the Pharmaceutical Law.

      These restrictions - in accordance with the emerging jurisprudence of the Supreme Administrative Court - do not apply to the so-called old permits issued before the entry into force of the so-called Pharmacies for pharmacists, i.e. before June 25, 2017. Pharmacies covered by these permits may be subject to much more free trade.

      How to sell a pharmacy and transfer the license to operate a pharmacy?

      After determining the group of entities that may be authorized to operate a pharmacy, the procedure for its transfer under Art. 104a of the Pharmaceutical Law.

      The transfer of the authorization must take place through the authority that issued the authorization, i.e. the Provincial Pharmaceutical Inspector. This is done in an administrative procedure, which obliges you to comply with the legal requirements. An administrative matter is initiated by submitting an appropriate application to the above-mentioned authority. As follows from the above-mentioned provision, the parties to this proceeding are the entity that purchased the pharmacy and the entity to which the transferred permit was issued. In short – the buyer and seller of the pharmacy. They are obliged to jointly submit an application for the transfer of the permit, and - pursuant to Art. 105 of the Pharmaceutical Law - payment in the amount of five times the minimum wage. The buyer must meet the legal requirements and is therefore obliged to submit the following along with the application:

      – A written declaration of acceptance of all conditions contained in the permit,

      – Declaration that the address of the pharmacy does not change,

      – Documents confirming that it meets the requirements described in the above paragraph (it is not subject to exclusion from the group of entities authorized to obtain authorization under Article 99(3), 3a, 4-4b and Article 101(2-5) of the Pharmaceutical Law),

      – Agreement – in the appropriate form, as described in the first part – for the sale of the enterprise (pharmacy),

      – Confirmation that you are an entity that can obtain a permit, i.e. a document proving the right to practice the profession of pharmacist and/or an excerpt from CEIDG/KRS confirming the appropriate nature of the activity/company,

      – Documents confirming that the buyer guarantees the proper operation of the pharmacy,

      And not only…

      ...it should be emphasized that the set of documents described above that must be attached to the application does not result directly from the provisions of the Act. Moreover, the catalog indicated above is not exhaustive. The regulations specify the minimum requirements that the purchaser of a pharmacy must meet, without specifying how he or she is to demonstrate compliance with these requirements. Therefore, knowledge of the practices of individual local WIFs is crucial here.

      What can the Provincial Pharmaceutical Inspector do with such an application?

      The inspector conducts a detailed procedure, examines the application and the applicant's status in terms of compliance with the legal requirements, and only on this basis issues a decision. The entire procedure ends with the issuance of an appropriate decision by the Provincial Pharmaceutical Inspector. If the application is approved and after taking evidence, it transfers the license to operate a pharmacy to the buyer. Only then can it be said that the procedure for selling the pharmacy as an enterprise is complete and the buyer can conduct business.

      Tax issues important when selling a pharmacy.

       

      The described sale is usually VAT-free, but it will not avoid the PCC fee, i.e. tax on civil law transactions.

      Pharmacy sales - a brief presentation of the entire procedure

      To summarize the pharmacy sales procedure:

      1. The buyer must make sure that he or she belongs to the group of entities authorized to hold a permit to operate a pharmacy, and that he or she is not secondarily excluded from this group by the relevant regulations - although here, as a result of case law, there have been very clear changes this year and in relation to some permits, the group of buyers has expanded significantly;

      2. The Buyer and the Seller must conclude a properly constructed contract for the sale of the enterprise within the meaning of Art. 551 et seq. of the Civil Code (of course, shares in commercial law companies operating pharmacies may also be sold).

      3. The contract must be concluded in an appropriate form (generally in writing with notarially certified signatures, in certain cases a notarial deed is required);

      4. The buyer must exercise appropriate diligence when analyzing the purchased enterprise - the best way is to conduct a professional audit or comprehensive due diligence;

      5. The Buyer and the Seller must submit an application for the transfer or change of the permit to operate a pharmacy, together with the appropriate documentation, to the Provincial Pharmaceutical Inspector and cooperate with him in the proceedings to examine the application and ensure that the purchaser meets the legal requirements;

      6. After the decision to transfer or change the authorization to the buyer is issued, the sale of the pharmacy may be considered completed

      What are the potential pitfalls for the pharmacy buyer and seller?

       

      Selling a pharmacy is a process that rarely goes completely according to plan. Virtually every aspect of this activity involves some risk. You can point out here, for example:

      1. Failure to regulate the issue of the right to the premises in which the pharmacy is located (the issue of ownership of the premises, its transfer as part of the sale of the enterprise or, for example, settling the lease relationship with the lessor, entering into an ongoing lease relationship, etc.);

      2. Inadequate regulation in the contract regarding the sale of movable property in the pharmacy, such as medicines or equipment;

      3. Faulty analysis of the legal status and history of the pharmacy's operations;

      4. Faulty valuation of the enterprise;

      5. Incorrect preparation of the application to the Provincial Pharmaceutical Inspector;

      6. Attaching incomplete documentation along with incorrect demonstration of necessary issues, such as meeting the requirements of the relevant competition (which may significantly prolong the proceedings before the Inspector and result in additional costs in the form of paying an expert in this field);

      7. Inappropriate drafting of the contract - including: in terms of its form, as well as failure to pay the appropriate tax, inappropriate definition of the parties' obligations;

      8. Incorrect determination of the moment of transfer of the enterprise, and, as a consequence, unnecessary loss of several dozen or more days of running the pharmacy (this is the time when people must receive remuneration, and often the owner of the premises demands rent). 

      Is it worth using a lawyer's help when buying or selling a pharmacy?

       

      A faulty sale of a pharmacy may result in much more losses than profits. In not so rare cases, incorrect performance of this procedure may even result in the loss of the license to operate a pharmacy. A lawyer experienced in pharmaceutical law – a comprehensive service provider for the entire project should provide the most satisfactory solutions for both the seller and the buyer, but at the same time as safe as possible for all parties to the contract. It should be noted here that the pharmacy sales market is a relatively niche market, and much of the knowledge comes from experience. Therefore, it is crucial to choose advisors specializing in such transactions. Fortunately for our clients, there are a dozen or so of us professionals operating efficiently on this market.

      If you were looking for information about selling or buying a pharmacy, we hope that the above article has well outlined the key elements of this rather complicated process. 

      To sum up: The basic and key differences between transactions leading to a change of ownership of a pharmacy depend on whether a given pharmacy is a sole proprietorship or a commercial company, when the permit was issued, and who is the buyer of the pharmacy. Each of these transactions requires the implementation of a slightly different operating scenario, a thorough analysis of all documentation and the design of a solution that will allow the entire operation to be carried out as safely as possible.

      Brief information about how we can help you:

       

      If you are interested, go through the process described above together with our Team Pharmaceutical Law Office – we can guide you, supporting you with our experience, market knowledge and negotiation skills. 

      We provide legal and business support in the transaction of purchasing or selling a pharmacy. We have extensive experience on both sides of the negotiation table, which allows us to negotiate the most favorable transaction terms for our clients. We support interested sellers of pharmacies in preparing an offer, searching for buyers, negotiating price conditions and determining other parameters and provisions of the pharmacy sale agreement. If necessary, we also undertake the preparation and verification of contractual security, tax consultancy, audits and valuation of pharmacies. Using our services usually pays off for our clients.

      Precedential judgments of the Supreme Administrative Court in 2022 - sale of a pharmacy without the Pharmacy for the Pharmacist - we write about the latest judgments and their importance for practice here [click] 

      If you want to use professional legal and business support regarding the purchase or sale of a pharmacy, please contact us via e-mail pharmacy sales@klodzinskikancelaria.pl or by phone at +48 509 259 434.

      In our office, it is possible to book an appointment electronically initial consultation at our headquarters in Warsaw. If necessary, we also have a branch in Krakow, and we are happy to meet clients from other parts of Poland online. 

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