Kreis Consulting has introduced an enterprise investment scheme (EIS) that aims to produce income and growth by investing in between 30 and 40 established independent community pharmacies in the North of England.
The independent pharmacy care centres EIS focuses on pharmacies in the North of England because they tend to be NHS-based businesses, while those in the South of England usually operate on a retail model. NHS-based pharmacies have been chosen because they can be developed according to NHS care in the community proposals.
Under the care in the community proposals, health services are split into two groups, primary and secondary. Primary services refer to procedures that are currently conducted by hospitals. The Government has proposed that GPs take on some primary services, such as minor surgery. Pharmacies would then take on some of the services that are currently provided by GPs, such as diabetic testing. This would mean pharmacists would be able to prescribe medicine normally prescribed by GPs and this would drive the bulk of the pharmacies' turnover.
The pharmacy business is non-cyclical as people will always need prescriptions regardless of the swings and roundabouts in the economy. This factor works in favour of this EIS, as does its strategy to invest in a portfolio of established businesses.
EISs have similar tax breaks to venture capital trusts (VCTs), which some investors may prefer to this EIS if they want to diversify investment risk across a range of companies.
However, investors may choose this EIS if they have capital gains to reinvest from up to three years ago, as VCTs can go back only one year to defer capital gains tax. Also, if held for more than two years, EIS investments are free from inheritance tax, a benefit which is not available to VCTs.