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Bank's 'appetite' to fund pharmacies 'strong' despite cuts

A pharmacy investment banker said the impact of the funding cuts could be "negated"
A pharmacy investment banker said the impact of the funding cuts could be "negated"

High street bank Santander will continue to invest in pharmacies, despite the funding cuts across England, it has told C+D.

"The bank's appetite remains strong for good quality businesses" where management have "proven" themselves "in operating a retail pharmacy, including stock purchasing", according to a relationship director at Santander, Mark Lawson.

Mr Lawson – who oversaw Santander's £2.3 million investment in online pharmacy group Pharmadose, which led to the company buying two high street pharmacies last week – said the bank continues to "work closely with professionals in the sector".

"The bank can identify relatively closely what the effect of the [funding] cuts to each individual pharmacy will mean to the bottom-line profit," he told C+D on Tuesday (June 20).

Mr Lawson acknowledged this is a "difficult period for pharmacy", but said the impact of the cuts could be "negated" by "other income sources", such as the quality payments scheme and medicines use reviews.

The bank had been "impressed by the strength and experience of the management team" at Pharmadose, because they work "closely with their professional advisers" to "grow their business in a sustainable way", he said.

Pharmacies interested in receiving a loan should "engage with the bank as early as possible", as understanding the available support can help with the buying process, he added.

If there is "the right strategy" then "there would be no reason for Santander not to support further funding to Pharmadose or similar businesses".

Last month, Scott Hayton, director of brokers Hutchings Consultants, said the buying and selling of pharmacies had not been impacted by the funding cuts in England so far.

Have the funding cuts impacted your plans to buy or sell a pharmacy?

Brian Austen, Senior Management

I cannot ever remember a time when banks have ever overvalued assets and it has adversely affected any investors or the finances of the UK. Apart from when the country had to increase its national debt by £1trillion in 2008 of course?

Best Farma, Ecommerce

I presume the due diligence carried out by banks is limited, for instance they wouldn't look at any pharmacy forums that reveal community pharmacy to be an unmitigated disaster.

Dave Downham, Manager

Well he's not going to say "Bugger, what did we lend them that for?" is he?

Best Farma, Ecommerce

Contractors should rejoice. The doom and gloom is over. Surely the banks know wht they're doing. No need to cut wages and rates. Hmmm very telling as the banks know exactly what pharmacies are turning over(and profits) as opposed to what is declared in the accounts to show reduced profits.

Brian Austen, Senior Management

'Relationship Managers' at banks use to regularly monitor cash flow going through accounts and if need be advise accordingly. I don't think they understand businesses, particularly pharmacy business so well nowadays.

Ravi Patel, Community pharmacist

Yep, banks always know what they're doing, they've never been in any crisis!

The quote says they'll lend on "good quality businesses" (makes sense, and not necessarily all pharmacies) and to proven operators - which usually means cross-guarantees against their current businesses which would already have equity. Banks need to lend money, so compare that risk to somone asking them for a loan to start a new restaurant...

Best Farma, Ecommerce

Oh dear. When thousands of pharmacies close as predicted on here all the banks will be left high and dry.

Margaret O'doherty, Community pharmacist

Don't worry about the banks. They are too big to fail. Unlike other businesses, when they make bad decisions the taxpayers are forced to step in and bail them out.

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