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Pharmacy Business Loans

Loans For Independent Pharmacies

Every single person that has ever had a health issue, even something as simple as a cold, has dealt with a retail pharmacy. Many customers actually hate dealing with retail pharmacies due to long wait times, confusing information, and high copayments for specific medications – but consumers need to remember that it is not a retail pharmacies fault! Retail pharmacists typically deal with overwhelming amounts of people all demanding different things – filling a prescription, doing blood pressure checks, giving flu shots, explaining prescriptions, answering health related questions for patients, dealing with insurance companies, and so much more – all in a matter of minutes.

retail pharmacy is an established business that deals with a wide range of retail products for prescription medications and over the counter medications; retail pharmacies also typically sell health and beauty items, toiletries, and consumable goods to consumers on a walk in basis. Many retail pharmacies also offer a variety of services such as administering flu shots at relatively low prices and basic health screenings and information. Retail pharmacies employ pharmacists who are trained to help patients with their medication needs through filling prescriptions, communicating with their doctors and insurance providers, and answering questions. To become a pharmacist, a Doctor of Pharmacy (Pharm.D) is required, as well as continuous licensing and education throughout a pharmacy career. After earning a Doctor of Pharmacy, most pharmacists are required to successfully complete the North American Pharmacist Licensure Examination (NAPLEX), as well as the Multi-State Pharmacist Jurisprudence Examination (MPJE) issued by the National Association of Boards of Pharmacy. As mentioned above, continuous training is mandatory in the retail pharmacy industry, so professional organizations such as the American Association of Colleges of Pharmacy, the Accreditation Council for Pharmacy Education, and the American Society of Health System Pharmacists offer education options to allow pharmacists to maintain their licensure.

After all of the tedious schooling is completed, retail pharmacists are then able to dispense drugs and provide other clinical services for patients. Many times, pharmacists deal with patients, physicians, physician’s assistants, and insurance companies all in the same day to effectively manage a prescription program or to simply provide quality general health care information.

Pharmacy Industry Trends

So if becoming a pharmacist takes so much work, and has ongoing requirements for schooling throughout a pharmacists career, why even bother becoming a pharmacist or owning a pharmacy? Simply put, the retail pharmacy industry is booming, even with more regulations being put in place and healthcare reform still up in the air. The Pharmacy Forcast for 2016-2020 from the American Society of Health-System Pharmacists Foundation (ASHP) recently analyzed pharmacy trends for the upcoming years that all retail pharmacists need to be aware of, as well as describing strategies for pharmacists to keep up with the constantly changing market trends for the retail pharmacy industry. Some of the major industry trends that all retail pharmacy business owners need to be aware of for the upcoming years to stay ahead in this competitive and diverse market include:

  • Generic drug pricing has been a much debated over issue in the past few years, however it is becoming a more prominent issue today, leading to more federal inquiry into the issue has it continues to develop. Raw material shortages and manufacturing issues are the two largest contributors to the price increases with generic drugs, as well as the lack of competition in production of these generic drugs. As patents expire, the generic drug market is seeing fewer competitors for sales. For retail pharmacists, this means at likely increase of 5 percent over the next five years for most generic drugs.
  • All retail pharmacies know about the Drug Supply Chain Security Act (DSCSA) that was enforced as of July 1, 2015 (and if you don’t know, your pharmacy is in for a rude awakening!). This act was prompted from the increasing concern about counterfeit drugs entering the supply chain, forcing many retail pharmacists to comply with these new policies. The Pharmacy Forecast showed that over 75 percent of pharmacists today believe they will need to add many more resources to their pharmacy to comply with the stringent laws, as well as to help manage the administrative burden of the DSCSA.
  • Specialty drug spending is also growing due to legislative provisions of the Affordable Care Act, advancements in biotechnology, and growing demand for specialty drug therapies amongst consumers. Studies are showing that over 40 percent of all drug spending for retail pharmacies in 2016 will be allocated towards specialty drugs
  • In correlation with increased specialty drug spending comes greater use of limited drug distribution networks to obtain these specialty drugs for a retail pharmacy. By 2020, it is expected that these drugs will only be available through a small amount of specialty distributors which could drive prices up.

All of these major industry trends are both good and bad for the retail pharmacy industry. While many retail pharmacies will see positive growth and increased profitability from these emerging trends, it also comes with higher costs and a need for more qualified pharmacists, as well as many retail pharmacies needing to transition into a new way of running their businesses. All of these issues are leading to increased costs and more spending for many retail pharmacies, which is why looking into the variety of lending and financing options available to a retail pharmacy can help.

Reasons a Pharmacy Would Need Financing

  • Compliance with new and emerging laws and regulations can be expensive, up front ventures that are out of the hands of most retail pharmacies, which is why reviewing loan possibilities can help a retail pharmacy owner easily afford these transitions.
  • Keeping employees up to date on all of the licensures involved with being a pharmacist is not easily affordable. A pharmacy is not required to cover the cost of employee’s schooling, but many retail pharmacies see a benefit in covering these costs, especially because it will keep hard working employees with your business.
  • Payroll is an unavoidable expense in the retail pharmacy industry, but this can be difficult to manage when there is a need for more and more pharmacists every year. Working capital is essential when covering payroll costs, but if you have a smaller retail pharmacy, lending options are available.
  • Expansion is always an option for a thriving retail pharmacy that is looking to compete against big pharmacy chains, but this venture can cost more than you think! Considering a finance option could be your best solution.
  • Technology is vital for the retail pharmacy industry. Without transitioning into the most up to date technological trends for your retail pharmacy, you could have lower customer satisfaction rates, higher labor costs, and less effective ways of running your pharmacy. There are many systems out there today that can help your pharmacy run much more efficiently, therefore boosting customer satisfaction and profitability.

Types of Pharmacy Loans

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
SBA 6-10% 3-7 years 10-30 days
Line of Credit 5-15% 1 – 3 years 7-30 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Pharmacy Bank Loans

Traditional bank loans and lines of credit are the best financing option for retail pharmacies if your pharmacy has great credit and sufficient documentation. Traditional bank loans have the best rates and terms out of all other loan options.

  • Rates: 4-10%
  • Terms: 1-5 years

Pharmacy SBA Loans

SBA loans are another good option for a small retail pharmacy that has decent credit because the Small Business Administration will back a portion of the SBA lenders loan. There are also less strict requirements for obtaining an SBA loan.

  • Rates: 6-8%
  • Terms: 7-25 years

Alternative Pharmacy Loans

Mid-prime alternative finance options for pharmacies have less requirements than traditional bank loans and higher approval rates, but alternative financing still requires decent credit.

  • Rates: 9-16%
  • Terms: 1-5 years

Pharmacy Cash Advance

A pharmacy cash advance is always a viable option for a pharmacy that does not have good credit or sufficient documentation to obtain a traditional bank loan. There are higher rates and fees associated with cash advances, but there is also a quicker approval process.

  • Rates: 16-100%
  • Terms: 4 months – 2 years

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