What is a Compounding Pharmacy?

What is a Compounding Pharmacy?

In Australia a compounding pharmacy is a pharmacy that is licensed and qualified to make medicine, and other health care products, at their own local facility using raw, pharmaceutical ingredients. Compounded medication is sometimes referred to as ‘personalised medicine’, as it can be custom-made to address the specific health needs of the individual patient.

Community pharmacies on the other hand may only sell, by law, mass-produced, pre-packaged, set-formula medicines manufactured by a licensed pharmaceutical company approved by Australia’s Therapeutic Goods Administration (TGA). At least 90% of these mass-produced medications are manufactured in large factories located overseas.

Both compounding pharmacies and community pharmacies are bound by law to only supply Schedule 4 (prescription-only) medicine on presentation of a script from a licensed medical practitioner.

In Australia, compounding pharmacies are strictly regulated and must abide by a comprehensive set of rules to ensure all medicines produced at their facilities are safe and effective.

The History of Compounding

Compounded medication is nothing new. In fact it’s very old.  It’s how all medications were routinely made for hundreds of years.

Before the Second World War, most pharmacies were compounding pharmacies. Behind each front counter were small laboratories where the pharmacist would make up medications using raw pharmaceutical ingredients, according to a script prepared by the customer’s doctor. On this script the doctor would list the pharmaceutical ingredients required along with their ratios, and the compounding pharmacist would follow these instructions.

Each little bottle of medicine was prepared fresh and custom-made for the individual patient.

With the advent of mass-manufacturing in the 1950s, this made-from-scratch model of pharmacy went into decline. Regulatory authorities, as well as customers, began to favour the neat uniformity and professional packaging of mass-produced medication. And for pharmacists, out-sourcing the manufacturing process simply made good economic sense.

Like the old-fashioned corner store, most compounding pharmacies began to disappear, however some still survived and today they offer a highly specialised service, preparing hand-made medicine specifically tailored for the needs of the individual.

We’ll never go back to the ‘old fashioned’ way of compounded medication – mass-produced drugs are here to stay – however compounding will always have an important role to play in producing medicine for people whose health condition doesn’t fit the one-size-fits-all mould of modern pharmaceuticals.

The Role of Compounding Pharmacies Today

Like mass-produced fashion, mass-produced medications are made to suit most of the people, most of the time. And on the whole, they work. However we’re not all cut from the same cloth; sometimes we have specific health-care needs that can’t be pigeon-holed and solved by something off-the-shelf.

This is where compounded medication can help:

Helping people with allergies

Medicines often contain preservatives to keep the active ingredients stable for long periods of time. Many also contain other additives such as artificial colours and fillers to make them more attractive to the consumer. Unfortunately, some people are allergic to these non-medical additives, often called excipients.

A compounding pharmacy can make up identical medications locally, from scratch, that are free of all preservatives, colours and other excipients. This means that a patient can continue taking their medication without side-effects.

Helping people who can’t swallow pills

Many people have trouble swallowing large pills and tablets. Newborn babies are one obvious example. And in some adults, their gag-reflex is sensitive, making the act of swallowing a large hard object next to impossible. Tablets and pills can be crushed however this is a messy business and studies have shown that nearly a quarter of the medication can be lost using this method.

A compounding pharmacist can make up medications such as liquids, creams or troches (lozenges) that make the administration of medicine much easier, especially in the case of babies. 

Combining multiple medications

For people with a number of health conditions that require medication, particularly the elderly, the chore of taking numerous pills every day can become problematic.

In many cases, and in consultation with the patient’s doctor,  compounding pharmacists can combine multiple medications in one tablet, troche or liquid. This makes ‘pill time’ a much less stressful time for the patient as well as those responsible for administrating the medication.

Improving flavours

A compounding pharmacy can make up medications in flavours such as vanilla, chocolate, butterscotch, raspberry and bubble gum – a great solution for children (and some stubborn adults!) who refuse to take their medicine.

Unavailable or discontinued medication

Increasingly drug manufacturers are finding themselves unable to keep up with demand for some common medications and for a time they can become hard to find. The COVID-19 pandemic has highlighted how vulnerable Australia is to these worldwide drug shortages, as we import over 90% of our medicines from overseas. In addition, some perfectly safe and effective medications are taken off the market and discontinued as they’re no longer profitable to manufacture.

In these cases, a compounding pharmacist, with a script from the patient’s doctor, can make up the unavailable or discontinued medication, safely in their local laboratory. This allows patients to continue their treatment plans with no disruption and no switching to alternatives that may not be as effective or suitable.

The Difference Between a Compounding Pharmacy and a Drug Manufacturer

Following are the key differences between a compounding pharmacy and large drug manufacturers:

 Compounding PharmacyDrug Manufacturer

Method of manufactureCustomised medication is made from scratch by a specially-qualified chemist as directed by a doctor through a script. The medication is specifically made to suit the needs of the individual.

Medication is mass-produced in a factory to a set formula approved by federal drug agencies.
Ingredients usedRaw ingredients are sourced from wholesalers approved (in Australia) by the Therapeutic Goods Administration (TGA). Each ingredient comes with a certificate of accuracy (CoA). At National Custom Compounding we also randomly sample and test new products to ensure the CoA are accurate.   A compounding chemist does not use any preservatives in their products.

Raw ingredients are sourced from wholesalers approved by federal drug agencies.   Preservatives are often used in mass-produced medications as they are shipped around the world and may remain in storage for long periods of time.
Manufacturing facilitiesNational Custom Compounding’s facility was built in line with the PSA (Pharmaceutical Society of Australia) and USP (United States Pharmacopoeia) guidelines. To avoid cross–contamination our laboratory has three separate rooms, each with a designated function Hormones Vitamins/nutritional Dermatological and other preparations  Medication is manufactured in factories that conform with the government guidelines of the country in which the factory operates.
Location of manufactureAll medications are made locally, on site, at the compounding chemist’s premises.Roughly 43% of the world’s commercial drugs are manufactured in China; 39% in India; 13% in the United States and 5% in other countries (not Australia).  
RegistrationAll compounding chemists in Australia must be registered with the Pharmacy Board of Australia and the Australian Health Practitioner Regulation Agency (AHPRA), and meet these agencies’ very strict guidelines. National Custom Compounding is also a certified QCPP (Quality Care Pharmacy Practice) under the Pharmacy Guild of Australia.  Drug manufacturers must be registered with the relevant public health and drug administration agencies in the countries where their products are sold.
Price of productUnder Australian law a compounding chemist must not sell any medication for less than the retail price of the commercially-available product.The drug manufacturer sets its own price for each product it sells. Prices may vary from country to country.

Safety Assurance

Checks and balances

Every medicinal product made by National Custom Compounding undergoes three layers of quality control. Each product is checked by two Pharmacists and is tracked through our advanced software system.

Formulations are checked from prescription to dispensing and a final check ensures:

  • Correct formulation
  • Correct weight of ingredients
  • Integrity of product.

We conduct independent laboratory testing of our compounds so we can be sure we’re producing medicine of the highest quality and purity. We also run stability tests which enable us to supply patients with accurate expiry dates and storage information.

Specialised Facilities

Our purpose-built laboratories are equipped with powder containment hoods with HEPA filters and each room has its own air supply through individual air-conditioning units. This ensures medicines are not contaminated with other medicines being prepared in the area, or with things like dust and pollen from outside. All equipment is maintained and calibrated according to (very high) USP standards.


All technical equipment is cleaned and disinfected prior to, and after use, or to a pre-determined schedule recommended by the manufacturer. The filters are replaced every 6 months (or sooner if necessary) and the system is serviced and maintained every 3 months.

High Grade Ingredients

The pharmaceutical ingredients we use in our products are of the highest standard available in Australia. We only use ingredients sourced from trustworthy and reputable compounding suppliers who have a long and respected track record. These suppliers include Bella-Corp, Medisca and PCCA.


We operate in line with QCPP (Quality Care Pharmacy Practice) which is an ISO AS 85000:2011 (internationally recognised standard). The program is administered by the Pharmacy Guild of Australia and audited bi-annually by Ernest Young. We are accredited with the Accreditation Commission for Health Care (ACHC) and we also comply with the standards set by USP 795, 797 and 800 (United States Pharmacopeia), the Pharmacy Board of Australia, PSA (Pharmaceutical Society of Australia) Compounding Guidelines, QCPP, complex compounding standards and QCPP operational guidelines.

How to start a ‘compounding’ conversation with your Doctor

If you believe you may have an allergy to your medication; if you have difficulty swallowing pills or if you’re medication has been discontinued or is no longer available, don’t be afraid to ask your Doctor about the possibility of using a compounding chemist. A good doctors will be happy to hear your questions and advise whether compounded medication is suitable for your situation. If your Doctor is unfamiliar with compounded medication, encourage them to visit this website or call our Head Pharmacist, Matthew Bellgrove on 1300 731 755 for an informal chat.

The future of personalised medicine

Futurist Shara Evans speculates that in a post-Covid pandemic world, a new area of job creation might be “Immunity Booster Consultants”.

Ms Evans explains that Immunity Booster Consultants are health professionals who specialise in helping people develop the kind of strong and robust immune system that can ward off viruses and other kinds of chronic illness.

The new industry alluded to by Ms Evans is one that specialises not just in prevention, but in personalised prevention. And it’s this idea of ‘personalised medicine’ where compounding pharmacies will come to the fore.

Demand for mass-produced one-size-fits-all product and service is waning in favour of tailor-made solutions designed to fit the individual. This is not just in health care but across many industry sectors.

At the heart of compounding pharmacy is an ethos that champions a health care culture that treats the unique health care needs of the individual on a case-by-case basis.

The compounding pharmacy sector can make up medication, from scratch, with precisely the right ratio of medicinal ingredients to target a disease or condition as it presents in the individual.  No two people are alike, and neither are their health care needs.

Critical role in times of medication shortages

According to NPS Medicine Wise Australia accounts for only 2 per cent of the pharmaceutical sector’s global market and we import more than 90% of our medicines from overseas.

In 2017 The Society of Hospital Pharmacists of Australia conducted a survey of Australian hospitals which found the five most common medicines regularly in short supply were antibiotics, anaesthetics, cardiology drugs, endocrinology drugs and chemotherapy.

The reasons for these shortages are many, and largely economic – as reported by Fortune Magazine there’s less profit in commonly prescribed medications than medications for rarer diseases and therefore less incentive for drug manufacturers to keep up with demand.

As suggested by Steve Morris, CEO of NPS MedicineWisein Australian Prescriber, “Although international efforts should continue to focus on increasing the resilience of the global pharmaceutical supply chain, we have to consider how the potential consequences for Australian patients can be minimised.”

Fortunately in Australia we have a government regulated and highly responsible compounding pharmacy sector, that can, and often does, make up medications for desperate pharmacies and prescribing doctors who can get certain medications no other way.

With little fanfare, these compounding pharmacies step in and make up medications when commercial manufacturers can’t guarantee supply.

The compounding pharmacy sector not only has access to the raw ingredients needed to make up medicine, but also the skills, knowledge and government licence to do it. The value of this resource cannot be understated. When the very real possibility arises that the country may run out of adequate stock of commercially manufactured medicines, compounding pharmacies are one of the last lines of defence until supply from overseas returns to normal.

Since the start of the Covid-19 pandemic, hospitals around Australia have been working with compounding pharmacies to ensure they have adequate stocks of medicines forecasted to be most in demand during the pandemic period.

And it’s not just hospitals who need compounders during disasters. Community pharmacies have also been partnering with compounding pharmacies to ensure they have an alternative solution should certain medicines become unavailable to them and their customers.

In order to get in front of any future disasters or pandemics our nation needs to harness the specialist skills of all our health care practitioners and this includes compounding pharmacists.

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