Pharmacies, despite being regarded in the commercial property business as "serious footfall generators" and being highly coveted by landlords because of their lucrative nature, are paying exorbitant sums of money for leasehold interests in high profile locations. One recent example of very high key money was the purchase for around £600,000 (762,000) by O'Connell's pharmacy of the leasehold interest of the former EBS premises located between Pia Bang and Captain Americas on Grafton Street, now called Grafton Pharmacy.
O'Connell's have another chemist shop at the corner of Grafton Street and Duke Street.
Its competition on Grafton Street is the Boots-owned former Hayes Conyngham &Robinson store, where they located in 1998 when Boots bought the chain out for a reported £13 million (16.5m). The rent on O'Connell's new 800 sq ft shop is believed to be £83,000 (105,390) and is up for review in October.
The EBS closed its office on Grafton Street in the autumn of last year because it no longer made economic sense to retain a high-cost premises there.
Another example of landmark key money paid by a pharmacy operator was the reputed £3.2 million (4.06m) paid by Roy McCabe for an exclusivity deal at the Crescent shopping centre in Limerick.
The deal means that McCabe's will be the only pharmacy to locate in the shopping centre.
Under current legislation, pharmacies will continue to open at a premium, "particularly if they have exclusivity or a General Medical Service (GMS) contract", says Fintan Tierney of Lambert Smith Hampton.
"If somebody offers enough money for exclusivity in a shopping centre, the landlord may take the view... well why not?"
There are around 1,170 chemists in the country with GMS contracts - which means they can accept prescriptions that are covered under the state community drug scheme - but under current regulations introduced in 1996, new ones will be awarded only "if there is a definite health need".
The Government is expected to act on the recommendations of a study conducted by the Organisation for Economic Co-operation and Development regarding the elimination of location restrictions on the granting of contracts.
Last year, the Western Health Board refused to grant Knock a licence because it could see no definite public health need - and if one was granted it would adversely affect other pharmacies in nearby towns.
Under the regulations, new GMS contracts will not be awarded for locations within 250 metres of another chemist in an urban area and within five kilometres in a rural area.
According to Marie Hogan of the Irish Pharmaceutical Union, the regulations have been in place for five years, and so there is cause for review. "The union welcomes the review and is anxious it proceed and will approach it openly and constructively.
"But we believe that the regulations have contributed to a rational distribution of pharmacies. Since they were put in place, 50 chemists have opened, 27 of them in rural areas where they might not otherwise have opened."
