With the sector booming again, now is a great time to buy a pharmacy business. But prices are rising fast and getting the finance for an acquisition can be tough. It could be time to look into a new way of funding your dream that can give you access to more capital, with complete control of when and how much you repay, says experienced pharmacy lender TradeBridge.

The Pharmacy Guild of Australia is forecasting around 2.5% growth each year for the sector. With the future looking bright and profitable, it’s no surprise that surging demand is pushing up the prices of pharmacy businesses. As a specialist lender with years of experience helping pharmacists to achieve their dreams, we know something about the funding challenges. To get the views of another market expert, we caught up with seasoned broker and pharmacy finance specialist Mark Churchill, to discuss the best ways for entrepreneurial pharmacists to fund their dream acquisition in 2025.

With nearly 30 years in the business, Mark is founder and Managing Director of Allfin Financial Services, Australia’s leading pharmacy finance broker. His advice to anyone buying a pharmacy, whether they’re a current owner or a first-time buyer, is straightforward – act now and get in early, the sooner you buy, the sooner you can build up equity. But with traditional lenders offering the vanilla option, Mark advises pharmacists to look at a mix of bank debt and flexible funding models such as TradeBridge, who review real-time trading data and other business information to offer specialist finance of up to 10X weekly PBS income.

Buying now is a great investment

“Buying a pharmacy is probably one of the safest investments in Australia,” Mark says, “as it is viewed as somewhat of a closed market delivering consistent growth. That means you can get a great return on your investment in a short period of time.” But this growth trajectory, combined with lower interest rates gradually cutting the cost of borrowing, means that demand has never been higher. “With only 6,000 pharmacies in Australia,” he explains, “they’re a scarce and profitable resource, so the market is driving up prices.”

The day one funding shortfall and rising valuations

Those pharmacists looking to acquire premises will have a requirement for cash to close the deal from day one. With the banks funding up to 75% or 80% of a valuation price, there is an immediate need for fast access to bridge the equity gap.

“The banks will fund the lower of sale price or valuation amount,” Mark explains. “But will lend you up to 75 – 80% of that amount, which leaves a sizeable shortfall that the buyer has to find elsewhere.” At the same time, the strength of the market creates an additional challenge – sale prices are often higher than valuation prices.

Using the average pharmacy value of around $2 million as an example, Mark explains that a bank would lend up to $1.6 million. But the sale price might be $2.2 million, which leaves a gap of $600,000 for the buyer to find elsewhere. Bridging this gap is the biggest challenge for anyone buying a pharmacy, but especially first-time buyers.

First-time buyers face a bigger challenge

With limited equity, first-time buyers have to be even more creative and find another way of raising funds. “Just like with the housing market”, Mark explains, “it’s difficult for first-time buyers to get into the market.”

He continues, “but now buyers can get a flexible line of credit from someone like TradeBridge. I think this kind of funding is going to become more and more important.” Lenders such as TradeBridge are increasingly being used to sit alongside the more traditional products and both bridge this funding shortfall and provide cashflow.

Research your acquisition

As the amount of debt for any acquisition is significant, entrepreneurial pharmacists need to give themselves the best chance of success, and the first step is to understand the business they are proposing to buy. Validating PBS receipts, tracking customer traffic, researching the community and understanding the competitive landscape are all vitally important. In fact, Mark says “I would be much more likely to lend money to someone who has worked in the business for a couple of years because they will know how everything works.”

A flexible line of credit sits well alongside a fixed-term loan

It is highly likely that a pharmacist acquiring a new business will have a traditional fixed term loan with regular monthly payments. A line of credit from a provider like TradeBridge will sit alongside this traditional form of debt. Such a facility will give you flexibility – you can pay down the debt early when cash is available enabling you to start building equity faster, for example. “When you buy a pharmacy, you buy all its stock,” Mark says, “and you usually get a grace period before you pay the wholesaler for your first order. So, you’re earning revenue during that period, so you are essentially cash positive from day one.” Unlike a fixed-term loan, a flexible credit line allows you to make repayments of any amount, whenever you want to, whilst only charging on your current balance. “That means you can use cashflow to start paying off debt straight away with the knowledge you can safely redraw on something like a TradeBridge facility,” Mark advises, “which is a smarter way of doing it because you’ll be paying less interest in the long term.” The flexibility of the product trumps the interest rate.

Fast approval decisions give buyers an advantage

With profitable pharmacies in high demand, securing finance quickly gives buyers an advantage in a fast-moving market. “Good assets don’t stay on the market long,” Mark explains. “A prize pharmacy will be sold in one or two weeks, so the faster the buyer can get a funding decision, the better. Once they have approval, they can make an offer subject to finance.”

Banks need to assess much more information, which makes the whole process slower. “TradeBridge look primarily at the pharmacy’s income from prescriptions,” Mark explains, “which they can see straight away from PBS receipts, so it’s a simple process with a very quick decision.”

“You can repay the facility as quickly as you like to keep your debt down,” says TradeBridge Managing Director Will Davison, “but the key thing is it’s discretionary. Unlike a fixed term loan, you can make repayments whenever it works for you.” This flexibility is the big advantage, but a fast approval process makes a difference too. “We know how fast the market can move,” Will says, “so we’ll make sure you get a decision quickly and have the funds available for your completion date.”

Who are TradeBridge?

TradeBridge may not be a name you’ve heard of, but we’re a long-established market leader in the UK, and have made payments of over $5 billion to thousands of pharmacies across the UK and Australia. More and more Australian pharmacy Owners are using a flexible credit line from TradeBridge to fund acquisitions, store refits or extra cashflow, and the product is endorsed by former National President of the Pharmacy Guild of Australia, George Tambassis, who says:

“This facility from TradeBridge has been built from the bottom up specifically to meet the needs of our sector.”

If you’d like to find out how a TradeBridge credit facility can help you achieve your ambitions, contact our Business Development Manager, Dan McKeown, on +61 403 701 584 or email dan@tradebridge.com