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Pharmacy 'kept solvent' by loan from wholesaler

A pharmacy has had to rely on 30 days extra credit from a wholesaler to stay solvent due to financial difficulties, C+D has learned.

A “double whammy” of government funding cuts and a £9,000 category M clawback meant that “November was the month where we knew we were going to be hit hardest”, Michelle Myers, manager of Marton Pharmacy in Middlesbrough, told C+D last week (December 1).

Already “heavily into an overdraft”, the pharmacy “approached one of our wholesalers” for a “loan in effect”, Ms Myers explained.

The pharmacy now owes “about £20,000” to the wholesaler, which will be paid back in December – 30 days later than usual.

Swing in funding

Marton Pharmacy experienced a significant “swing” in funding from October to November. “There was a difference of £30,000 in what we got paid for that particular month,” Ms Myers said.

“All our costs are exactly the same,” she added. “We still have to pay the same rent, the same electricity, the same staff wages.”

“It really affects your cashflow, and if you don’t have the money in the bank things get worrying.”

“Loan was in the wholesaler’s interests”

Michael Maguire, managing director and pharmacist at Marton Pharmacy, told C+D that asking for the extra credit had been “very uncomfortable”.

“It wasn’t just the wholesaler being kind. It was in their financial interests to keep us going,” Mr Maguire stressed.

He explained that if the pharmacy had been forced to pay the wholesaler, it would have "gone over our overdraft limit" and "potentially gone bankrupt".

“They didn’t want us to go bankrupt because then we’d stop dealing with them,” he added.

“Particularly bad” for independent pharmacies

As an independent pharmacy, Marton Pharmacy’s situation is “particularly bad”, Ms Myers said.

“We don’t have a head office to do all of our books, our payroll and our clinical governance, so that’s an extra cost to the business,” she said.

“It’s really frustrating because we’re an award-winning pharmacy,” said Mr Maguire, who won Community Pharmacist of the Year at the C+D Awards 2009. "It’s really busy all of the time and we’re always doing innovative things, and yet financially it’s just not sustainable."

Have you relied on credit from a wholesaler to kept your business afloat?

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