Category M clawbacks are set to fall by 60 per cent this quarter, but they will be "nonetheless painful" for contractors struggling to maintain cash flow, experts have warned.

The average pharmacy will lose £466 on generic purchase profits this quarter, down from a loss of £1,200 last quarter, generics manufacturer Actavis has estimated.

But Umesh Modi, pharmacy accountant at Silver Levene, said the decrease would bring little relief to cash-strapped pharmacists.

Pharmacy accountant Umesh Modi says the lower clawbacks this quarter will bring little relief	More on category M Pharmacy owners voice contract fears Q4 2013: Category M Barometer Monthly £700 cat M clawbacks will undermine confidence in pharmacy businesses
	"This is, of course, a lot better than the clawback in the preceding year but nonetheless painful, especially as other costs are on the rise," he told C+D.

Mr Modi said cashflow was "getting tight" for many contractors, who were battling against decreasing turnover and income from services. This month's tax bills and ongoing pressure to ensure pharmacies meet the new General Pharmaceutical Council standards would only exacerbate the problem, he warned.

"I remain cautious for 2014 unless the cost of service inquiry is concluded quickly and better funding is agreed," Mr Modi said.

Numark managing director John D'Arcy agreed there were wider issues affecting the sector's finances. He stressed that red tape and increasing costs had left some contractors feeling the strain.

"It's really just trying to keep your head above water in a very challenging, competitive and tough environment," Mr D'Arcy told C+D.