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Factors to Consider When Purchasing or Setting Up a Pharmacy Business

In Short

  • Pharmacy ownership in Australia is generally limited to registered pharmacists, with caps on the number of pharmacies one can own varying by state.
  • Selecting an appropriate business structure, such as a partnership, company, or trust, is crucial for legal compliance, tax efficiency, and risk management.
  • Ensure you obtain all required licences and approvals, including registration with the Pharmacy Board of Australia and compliance with state-specific regulations.

Tips for Businesses

When establishing or purchasing a pharmacy, it is essential to familiarise yourself with state-specific ownership laws and restrictions, consult professionals to determine the most suitable business structure for your circumstances, and ensure all necessary licences and approvals are obtained before commencing operations. This approach will help you navigate the complex regulatory landscape and set a solid foundation for your pharmacy business.


Table of Contents

Purchasing or setting up a pharmacy business in Australia involves navigating a complex regulatory landscape. As a prospective pharmacy owner, you must ensure compliance with various federal and state laws while protecting your business interests. This article explains the key factors you should consider when establishing or acquiring a pharmacy business to set your pharmacy up for success.

Ownership Restrictions

Regulators enforce strict rules on the pharmacy sector in Australia to ensure public health and safety. Most states and territories restrict pharmacy ownership to registered pharmacists. To own a pharmacy, you must register with the Pharmacy Board of Australia and comply with state-specific ownership laws. Some jurisdictions allow structured partnerships or companies under limited circumstances, provided pharmacists maintain majority ownership and control.

Most states impose limits on the number of pharmacies a person can own. Victoria, New South Wales, and Queensland cap ownership at five pharmacies per pharmacist, while Western Australia limits it to four. These restrictions apply regardless of the business structure, so consider them carefully, especially if you plan future expansion.

Business Structure

The appropriate business structure is critical as it impacts:

  • legal compliance;
  • tax efficiency; and
  • risk management.

While a sole trader structure might seem simplest, it is often unsuitable for pharmacies due to ownership restrictions and personal liability risks. Partnerships can be viable in some jurisdictions but must comply with specific pharmacy partnership rules. Corporate structures can offer benefits in terms of limited liability and potential tax advantages but must adhere to strict pharmacy ownership laws. Trust structures are another option in some jurisdictions but require careful design to comply with ownership regulations. Regardless of your chosen structure, ensure your governance documents align with pharmacy ownership laws and outline all parties’ rights and responsibilities.

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Licensing and Approval Processes

Before opening, you will need to navigate various licensing and approval processes. At the federal level, to dispense medications under the Pharmaceutical Benefits Scheme (PBS), you must obtain approval from the Australian Government Department of Health. This process involves meeting specific criteria in relevant legislation that can be lengthy.

Each state has licensing requirements. In New South Wales, for example, you must obtain approval from the Pharmacy Council of NSW. These processes typically involve submitting detailed floor plans, lease agreements, and other documentation and arranging pre-opening inspections.

Premises Considerations

The Australian Community Pharmacy Authority (ACPA) sets and oversees location rules that dictate where new pharmacies may be established. Before selecting a location, check the existing pharmacy distribution in the area and ensure your proposed location complies with ACPA rules.

If you are leasing premises, carefully negotiate and review the commercial lease. Certain lease provisions may be void under pharmacy ownership laws, such as granting the landlord control over the business or profit-sharing arrangements. Many states prohibit locating a pharmacy within or directly accessible from a supermarket, so ensure your chosen location complies with these restrictions.

Your pharmacy premises must also comply with specific health and safety standards, including:

  • secure medication storage;
  • appropriate dispensing areas; and
  • patient consultation rooms. 
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Key Contracts

Several important contracts are involved when setting up or purchasing a pharmacy business. If you are buying an existing pharmacy, the purchase agreement is crucial. It should cover the transfer of ownership, asset valuation, staff transfers, handover of patient records, and potentially non-compete clauses. You must also negotiate supply agreements with pharmaceutical wholesalers and suppliers, covering aspects like pricing, delivery schedules, and quality assurance.

For any services provided to the pharmacy (such as marketing or IT support), ensure you have written service agreements detailing the scope and payment terms. Do not forget about employment contracts for your staff, addressing roles, responsibilities, confidentiality, and compliance with pharmacy regulations.

Key Takeaways

To successfully set up or acquire a pharmacy business in Australia, you must navigate strict ownership regulations, choose the right business structure for legal and tax compliance, and secure necessary federal and state licenses. Carefully select a location that complies with Australian Community Pharmacy Authority rules, ensure your premises meet health and safety standards, and negotiate key contracts, including purchase, supply, service, and employment agreements. LegalVision can help guide you through the process and ensure full compliance with all requirements.

If you need guidance on the process of establishing or acquiring a pharmacy business and ensuring you meet all legal requirements while protecting your business interests, our experienced healthcare lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

Who can own a pharmacy in Australia?

Most Australian states and territories restrict pharmacy ownership to registered pharmacists. Some jurisdictions allow certain structured partnerships or companies, provided pharmacists maintain majority ownership and control.

What approvals do I need to open a pharmacy?

You will need approval from the Australian Government Department of Health to dispense PBS medications. You will also need to meet state-specific licensing requirements, which typically involve registering your premises and obtaining a business license.

Can I buy an existing pharmacy business?

Yes, but the purchase must comply with pharmacy ownership laws. The purchase agreement should cover transfer of ownership, asset valuation, staff transfers, and handover of patient records. You will also need to obtain necessary approvals from relevant authorities.

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Ushna Bashir

Ushna Bashir

Senior Lawyer | View profile

With a deep understanding of commercial and regulatory landscapes, Ushna provides guidance to businesses across diverse industries. She drafts and negotiates a wide range of contracts, including in IT, ecommerce and professional services. She also has expertise in assisting businesses with managing their privacy and data obligations in compliance with Australian privacy laws.

Qualifications: Bachelor of Laws, Bachelor of Arts, Graduate Diploma of Legal Practice, University of Technology Sydney.

Read all articles by Ushna

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