Pharmacy Growth — What’s Next for Your Business?

29 Nov Pharmacy Growth — What’s Next for Your Business?

You’ve built a successful pharmacy — one that serves your community and delivers a solid income. But as scripts rise and margins tighten, many independent pharmacists are asking:

What’s next?

Do you focus on maximising your current site — driving efficiency, growing prescription volume, and strengthening profitability?

Or do you look ahead and start building a multi-site pharmacy group?

If expansion is on your mind, let’s explore how you can make it happen.

Funding Your Next Pharmacy Purchase

Your first thought might be that you’ll need to put cash into a new acquisition.

Based on a purchase price of around £1 million for a new pharmacy, lenders will typically fund up to 80% loan-to-value (LTV) — meaning you’d need to contribute about £200,000 of your own capital.

And that’s before you factor in stock, solicitor fees, and valuation costs.

But what if you could use the value you’ve already built in your existing pharmacy to help fund the next one?

Leveraging Your Goodwill Equity

Your current pharmacy likely has significant goodwill — and that’s something lenders recognise.

Let’s take an example:

• Your existing pharmacy is valued at £800,000
• You have a loan of £400,000 outstanding
• That means you’ve built up £400,000 in goodwill equity

Now, if the pharmacy you’re looking to purchase is valued at £1 million, the combined goodwill across both sites would be £1.8 million.

Lenders could fund up to 80% of that total value — that’s £1,440,000 — enough to refinance your existing loan and purchase the new site.

The great news is that the overall lending may even be available at a lower rate than your current facility, giving you a more efficient structure across both pharmacies.

So instead of having to invest large sums of cash, you’re using the strength and equity of your first pharmacy to fund the growth of your second.

Points to Consider

This approach is realistic and achievable, but a few factors are important to keep in mind:

Lease Terms

• If both sites are leasehold, lenders will want to see sufficient time remaining on the leases for both your existing pharmacy and the new site.
• Typically, the term of the goodwill lending will match the length of the lease — for example, if you have 15 years left on the lease, the loan facility would usually be structured over the same 15-year period.

Freehold Purchases

• If the new site includes a freehold, you’re in an even better position. Some lenders can fund up to 100% of the freehold value, meaning you may not need to contribute any additional capital.

Affordability

• Both pharmacies will need to show they can comfortably service the debt. Lenders look at the combined profitability and cashflow of the group — not just the headline LTV.

Why Banks Like Pharmacies

Pharmacy is seen as a low-risk, stable sector. Regular NHS income, consistent cashflow, and high community value make pharmacies attractive to lenders.

We work closely with the banks’ healthcare broker teams who specialise in pharmacy finance, ensuring your application is presented in the best possible way.

By engaging with the people who truly understand the sector, we help maximise the chances of a smooth, successful outcome.

So, what information will lenders require as part of your application?

For your existing pharmacy:

• Last 3 years’ accounts
• 6 months’ business bank statements
• FP34 statements

For the target pharmacy:

• Last 3 years’ accounts
• Sales particulars
• FP34 statements

Personal details:

• Personal profile (background, income, assets)
• CV
• 6 months’ personal bank statements

Other Elements to Consider

In addition to the purchase price, there are several other costs you’ll need to plan for as part of your funding application:

• Valuations – Lenders will require independent valuations for both your existing pharmacy and the new site. These form an essential part of the credit assessment process.
• Solicitors’ Fees – Legal costs for managing the purchase, reviewing leases or title documents, and handling the loan documentation.
• Stock Purchase – The cost of acquiring stock from the outgoing owner, usually negotiated separately from the goodwill price.
• Bank Arrangement Fees – Most lenders charge an arrangement or facility fee, typically a small percentage of the total loan amount. This cost can usually be added to the overall loan facility rather than paid upfront.
• Stamp Duty Land Tax (SDLT) – If the purchase includes a freehold, or a lease with a premium, SDLT may be payable.
• Refurbishment or Fit-Out Costs – Budget for any improvements, reconfiguration, or rebranding needed to bring the new site in line with your existing business.

Factoring these costs in early will give you a clear picture of your total funding requirement and help avoid any surprises during the purchase process.

Where to Go from Here

We work closely with lenders and pharmacists across the UK to structure funding that supports sustainable growth — whether it’s your first acquisition or your fifth.

If you’re considering purchasing another pharmacy, or simply want to review your existing finance arrangements, we’d love to help.