In New South Wales and Victoria, only registered pharmacists may own a pharmacy business.[1] In New South Wales, in particular, that restriction is implemented by requiring all holders of a ‘financial interest’ in a pharmacy business to be registered pharmacists.
Restrictions in both jurisdictions also prevent non pharmacists from exercising control over a pharmacy business. Contracts that give non pharmacists unlawful control are either prohibited or void. Similar provisions are being implemented in Queensland with the new Pharmacy Business Ownership Act 2024 that is commencing (in a staged approach) from November 2025.
With new financial models for pharmacy businesses, and the growth of online dispensing, there has been uncertainty and debate about what constitutes a ‘financial interest’ in a pharmacy.
Yesterday’s decision in Blooms the Chemist Management Services Ltd v Pharmacy Council of NSW [2025] NSWSC 1211 makes clear that the term ‘financial interest’ will be interpreted very broadly and will include direct and indirect monetary interests in the business.
In this Insight, we analyse the decision and its consequences for the industry in Australia.
How did we get to the Supreme Court of New South Wales?
Blooms the Chemist Management Services Ltd (Blooms) provides services to the ‘Banner Group’ of pharmacies that operate as ‘Blooms the Chemist’. Blooms also provides loans to individual pharmacists to fund acquisitions in pharmacy business that they then operate. As Blooms is not a registered pharmacist, it is not eligible to own, or have a ‘financial interest’ in, a pharmacy.
In New South Wales, ownership and control restrictions are implemented through the Health Practitioner Regulation National Law (NSW) No 86a of 2009 (National Law). The National Law prohibits the carrying on of a pharmacy business without the approval of the Pharmacy Council and the registration of all holders of financial interest in the business.
The Pharmacy Council refused to register a proposed acquisition by Tran Pharmacy, of a 50% interest in Blooms Cronulla South on the basis that the loan arrangements and an Optimised Service and Licence Agreement (OSLA) meant that Blooms would impermissibly acquire a financial interest in the pharmacy business.
Blooms sought internal review of the Council’s decision and following that decision being confirmed, review in the Civil and Administrative Tribunal (NCAT). The proceedings before NCAT were adjourned by consent following the filing of the Supreme Court proceeding in which Tran Pharmacy sought declaratory relief that Blooms did not have a financial interest in the pharmacy business.
Key findings
The Court refused to make the declaration on two bases:
- First, NCAT had been conferred specialist merits review of Council decisions.
Granting the declaration risked inconsistent judgments of the Supreme Court and NCAT, and improper pre-empting of the independent jurisdiction conferred on NCAT.
- Second, the definition of ‘financial interest’ is broad, encompassing direct and indirect monetary or financial interests that extend beyond proprietary rights.
Critically, the Court found that the arrangements between Tran Pharmacy and Blooms conferred influence over and an interest in the profitability and value of the business, that amounted to an unlawful financial interest.
What is a ‘financial interest’?
In adopting a very broad approach to what will amount to an impermissible interest in a pharmacy business, the Court was persuaded by the deliberate breadth of the drafting of what a financial interest ‘means’ in the National Law, being ‘a direct or indirect monetary or financial interest’.
Further, express exclusions of particular interests that do not amount to a financial interest (for example, employee profit share) were thought to confirm that profit and value‑linked rights as a general proposition are intended to be caught within the definition.
In identifying the ‘real and effective relationship between the parties’ rather than the ‘formal or theoretical one’, the Court considered the OSLA and loan arrangements not in isolation but in their commercial context. It looked to ‘the reality of the relationship’ to ascertain the intention of the parties, and the practical and commercial implications of the arrangements.
Optimised Service and Licence Agreement
The OSLA gave Blooms significant functional influence over core merchandising, buying, marketing collateral, systems and branding. While it was open to pharmacies to request, or not request, services from Blooms, the practical result was that it would be uncommercial for pharmacies to not pay for the bundled services.
There was also an absence of evidence that the pharmacy would not, or that any other Blooms Pharmacies had not, requested the offered services.
Or companies and partnerships that are owned by registered pharmacists.
Blooms relies on phrases in the OSLA which refer to aspects of the supply of goods ‘at the request of the Partnership’. However, there are aspects of the OSLA which, even if the request ... is theoretically required, disclose that the practical operation of the OSLA precludes or seriously inhibits the capacity ... not to request the goods or services mentioned.[2]
Blooms the Chemist Management Services Ltd v Pharmacy Council of NSW [2025] NSWSC 1211 at [294]
Importantly, the fees paid by pharmacies to Blooms did not vary with the services that were requested — the pharmacies were paying for services whether they were provided or not. The arrangement provided an ‘economic disincentive’ that made it ‘wholly impractical’ for the pharmacy business to not request the services offered by Blooms.
The fact that the OSLA prevented any member of the partnership from holding a proprietary, financial or pecuniary interest in a non-Blooms pharmacy also reflected the high degree of control exercised by Blooms.
Loan arrangements
The impugned loan itself was limited‑recourse, permitted deferral and capitalisation of interest, and tightly controlled disposals and sale proceeds. In circumstances of default or exit, Blooms could also compel sale of interests the subject of the loan on mandated terms. Recouping of the loan amount was effectively dependent on the value of the business increasing.[3]
These features of the loan were thought to align (and tie) Blooms’ economic interests to the value of the pharmacy and its profitability. Blooms bore downside risk of the pharmacy diminishing in value and benefited from preservation and increase in its value, which supported a finding that it had (at least) an indirect financial interest in the business.
The combination of operational levers to exert practical control under the OSLA and the value‑linked rights under the loan were determinative.
Key takeaways
For pharmacy owners, franchisees and banner groups, this decision confirms that ‘financial interest’ is a substance‑over‑form inquiry.
Arrangements that, taken together, give a non‑pharmacist entity material economic benefits that are linked to a pharmacy’s profit or turnover, or confer practical control over key drivers of profitability or pharmacy operations, are likely to be found to amount to a financial interest, even in the absence of proprietary rights or day‑to‑day managerial control.
Businesses in this industry should review and carefully consider:
- Franchise service and licensing agreements: Provisions that centralise buying, mandate core product ranges, constrain stocking of competing products or require use of systems/branding in ways that effectively allow an entity other than the registered pharmacist to control merchandising and pricing increase risk, particularly if financial arrangements are tied to profit or turnover (either directly or indirectly).
- Financing structures: Loans that dictate sale mechanics, require consent rights in the event of sale of the pharmacy business or link, in practice, the lender’s recovery to the underlying value of the pharmacy business will increase the likelihood of scrutiny.
Compliant structures should separate arm’s length service provisions from rights that are linked to profit or turnover. Where finance is provided by non‑pharmacist entities as an adjunct, security and recourse should be designed to avoid economic exposure to the value of the business and stick to orthodox creditor protections.
Incoming requirements in Queensland
Queensland Health has published updated guidance stating that the new Pharmacy Business Ownership Act 2024 will commence on 1 November 2025. The Act introduces a new licensing framework for Queensland pharmacy businesses under which existing pharmacy owners must apply for a licence within one year, and new businesses will need to apply for and obtain a licence before starting operations.
Now that Queensland intends to more closely scrutinise ownership and control, we expect regulators in Queensland will pay careful attention to this decision — particularly given Queensland has been comparatively permissive (or at least more explicit) in allowing dispensing and delivery of interstate prescriptions.
Closer scrutiny across the board
Following this decision, we anticipate more vigorous assessment by regulators of existing arrangements. This will include in annual reviews and ongoing compliance. For example, in New South Wales, the National Law requires pharmacies to make an annual declaration about financial interests. We expect to see closer scrutiny of arrangements relating to pharmacy businesses.
Our team has deep expertise in the regulation of the pharmacy industry. If you have any questions about this case or regulation of the industry generally, please get in touch.
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