Funding rapid expansion with the liquidity locked into your assets

CST Pharma is a Walsall-headquartered pharmaceutical wholesaler that’s been in operation for 14 years. The company provides a wide range of products and services in the healthcare sector, including importing and exporting branded pharmaceuticals, generic medicines, medical appliances, clinical dressings, diagnostics, nutritional drinks and unlicensed medicines.

The firm specialises in global supply to wholesalers, pharmacy groups, hospitals, charities, NGOs and many other healthcare providers, and operates in diverse geographies from Germany to Finland, and Ghana to Saudi Arabia.

As a global firm, CST Pharma was growing and expanding, forming strategic partnerships with some businesses and acquiring others to extend its reach. Most recently, they partnered with Acre Pharmacy and acquired Spanish wholesaling company Saima Productos y Servicios SL.

This enlarged group of companies needed to be able to resource rapidly and strategically, both in terms of staff and in upgrading and updating its IT systems.

Jason Yates is Managing Director of CST Pharma and no stranger to change management. He has worked in the business since 2006, acquiring the firm in 2018, when he implemented a new board and management structure. This change has allowed the firm to maintain its position as one of the UK’s top specialists in the import of branded pharmaceuticals, generic medicines, medical appliances, clinical dressings, diagnostics and more.

For this latest spurt of growth, Yates needed a financing partner to help drive the expansion. CST Pharma secured a £26m Asset-Based Lending Facility from HSBC UK to provide increased liquidity for the purchase of additional stock. The facility allowed the group to expand the team with 25 more hires, plus a further ten new employees in the coming months. The funding also helped the company to upgrade its IT systems and improve its quality management system, boosting operational efficiency.

“Since acquiring CST Pharma, we have been striving to grow the business. The support we received from HSBC UK has been invaluable in allowing the purchase of more stock, so we can meet this objective and develop the business to its full potential, as well as improving our systems to ensure the sustainability of the company,” said Yates.

Asset-based lending provides businesses with a unique facility for their needs. Whether it’s based on the value of receivables, inventory, property or plant and machinery, it offers a flexible loan-to-value and can be updated in line with asset growth.

For a company like CST Pharma, this facility freed up capital that was tied into assets and allowed them to maximise liquidity at a time of growth.

“We’re delighted to have been able to support CST Pharma with this significant facility and become its dedicated finance partner. The company has skilfully navigated the challenges brought about by COVID-19 and Brexit, and the funding package allowed CST Pharma to continue to grow and pursue its strategic priorities. Resulting in the onboarding of more staff, being beneficial to the local area,” said Sam Owen, Business Development Director at HSBC UK.