Pharmacy Financing: Some Banks View As a Hard Pill To Swallow

Over recent years, the pharmacy landscape has changed. Dispensing fees were amended (within the Community Pharmacy Agreement (CPA) in 2016) which gave pharmacies a slight increase in profit. However, since then pharmacies have faced tougher competition, not just within the industry, but from other retailers (such as supermarkets offering extensive ranges of non-prescription items).

How Have Pharmacies Reacted?

Sadly, not all pharmacies have coped well within the intense environment. Some pharmacies reacted by reducing their prices to be competitive, but this resulted in lower profits and, unexpectedly, less customers. Now, many pharmacies have added increased services to their offering (vaccinations; testing of blood pressure and blood glucose; lipid monitoring; and other health checks) in an attempt to attract customers and bolster revenue. And they continue to seek new and different ways to compete, and to stay profitable.

How Have Banks Reacted?

This new (and ever changing) landscape has certainly been noticed by financial institutions – while they previously saw the pharmacy industry as minimum risk, their confidence has now receded somewhat.

So what does this mean for pharmacies? A bank’s perceived increase in risk can often lead to an increase in funding rates, and/or a decrease in willingness to support businesses/projects within the industry. Not great news for pharmacies.

So What Should Pharmacies Do?

Firstly, pharmacies need to regularly review their facilities to ensure structure and pricing is as attractive as possible. While this sounds straight-forward, it often gets forgotten among the pressures of the day-to-day running of a pharmacy within the current environment.

Secondly, it is crucial that pharmacies understand the banks’ appetite for the pharmacy industry – but beware, not all banks are the same! Knowing which bank(s) view the pharmacy industry as positive is paramount in securing the best facility for your business.

Need help? Well, the good news is that Balanz is well-positioned to assist. We have experience in the pharmacy industry. We know banking, inside out. And, importantly, we know which banks are currently viewing pharmacies favourably. So, our experienced team can review your existing facilities, and almost certainly guide you to savings and/or better funding arrangements so that your pharmacy can be as competitive as possible within this complex and challenging environment.

Need guidance with your pharmacy finance? Balanz can help.
Contact John Aird on john.aird@balanz.com.au or 0405 889 026

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