Is owning a pharmacy profitable? Pros & cons of a pharmacy business
No matter where you are in the world, any successful community will have at least one pharmacy in it. Pharmacies are an important part of the social ecosystem as they provide their customers with life-saving prescription drugs, helpful items that aren't sold elsewhere, and informal medical advice in some places.
With this in mind, independent pharmacies can be an attractive proposition to a business owner with medical experience. Many people may not even be aware that owning a pharmacy is an option that is open to them and so turn to more traditional businesses.
This brings up an interesting question, is owning a pharmacy profitable? This is difficult to answer as there are a lot of factors to consider. In this blog, we'll explain some of the challenges of being a pharmacy owner and the pros and cons of running an independent pharmacy.
What is an independent pharmacy?
The majority of pharmacies you see are contracted and franchised by a local or national health association. These pharmacies are often run with tight-profit margins and are designed to fill an important niche in their community rather than focus on profit. Independent pharmacies, also known as community or retail pharmacies, are privately-owned businesses that operate for profit.
For the purposes of this blog, when we use the terms "pharmacy" or "pharmacies", we are referring to independent pharmacies.
Despite the differences mentioned above, independent pharmacies still rely on contracts from larger pharmaceutical companies and health associations to make up the majority of their profit. This means that some pharmacy owners spend a lot of time advocating for their own business and trying to secure quality contracts.
Who can be a pharmacy owner?
While some rules differ from country to country, there are some general paths to becoming a pharmacy owner. Below, we've compiled some guidelines that apply in most locations:
- You must be a pharmacist - In both the UK and US, to own a pharmacy, you must have a valid pharmacy license. Pharmacies provide important healthcare services and this rule ensures that the business is run by a qualified professional.
- Have the relevant government permits - The main purpose of a pharmacy is to distribute medications to their patients. Since this involves controlled substances and healthcare, you'll require a number of different permits and licenses from the local and national governments. Research to see what you'll need in your location.
- Registration - Most places require both private and public pharmacies to register on a national database. This registration is so that professional standards are maintained nationwide. Professional bodies like the National Community Pharmacists Association (NCAP) in the US and the General Pharmaceutical Council (GPhC) in the UK, have guidance on how best to register in your location.
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Is owning a pharmacy profitable?
The question as to whether running a pharmacy is a profitable venture or not is a tricky one to answer. There are a thousand different variables that can both help and hinder the success of an independent pharmacy. These factors mean that one pharmacy could fail while another flourishes without there being any obvious differences between the two businesses.
To help answer the question as best we can, we've compiled a list of factors you should consider before starting your own pharmacy.
The market
As with all businesses, changes to the market can have a huge effect on the profitability of your pharmacy. Rising inflation rates, employee shortages, falling reimbursements, and overhead costs can drive prices and operating costs up to unsustainable levels.
Pharmacy owners still enjoy one of the best profit margins of any industry. Despite this, many independent pharmacies can be squeezed by unforeseen market forces. To mitigate these risks, you should ensure that you stay on top of market trends and news. Preparation will help you maximize profitability during troubling times.
Prescriptions services
In all independent pharmacies, the average owner makes the majority of their profit by filling prescriptions. The higher the prescription volume your technicians are able to fill, the more money you'll be able to make. To increase your profits, you should always focus on increasing your coverage and filling as many prescriptions as your team can safely fulfill.
In addition to prescriptions, other services and sales have become increasingly important in attaining profitability. There are many other services and products you can offer in-store. These include basic groceries, healthcare equipment, sexual health services, and more. All of these can drive your business to profit.
Customer expectations
Over the last 10 years, consumer habits have changed and moved towards convenience above all else. This has proven itself to be a challenge to traditional businesses as they struggle to offer their customers more options in how they shop. In a world of instant gratification, businesses now must work around their customers' schedules, rather than the other way around.
Refilling a prescription is an annoying part of anyone's day. No matter how efficient your business may be, there will always be a wait that customers have to endure. Adapting to changing consumer behaviour will help you keep profits high while also improving your customer service.
On-demand services such as mail-order prescriptions are relatively simple and cheap to implement. By offering more on-demand services, you can improve your customer service and limit the time required to obtain prescriptions, and you can maximize your profit in the process.
Financial management
Good financial management is an integral part of any profitable business. The better understanding you have of the financial health of your business, the easier it is to improve your long-term profitability.
Hiring a financial manager to take a long look at your finances can be a huge boon to your pharmacy. These professionals can identify the least and most profitable parts of your business and give advice on how you can improve your financial health.
If you'd prefer to handle things yourself, you may want to invest in a professional pharmacy point of sale (POS) system. A pharmacy POS system, like the one offered by Epos Now, can compile up-to-the-minute financial information in easy-to-understand reports. With these reports, you can get a clear picture of how you're doing financially and how you can improve.
The perfect pharmacy POS
A dedicated pharmacy POS system can change the way you do business for the better. With Epos Now's pharmacy system, you can track prescriptions, simplify transactions, and improve your overall service.
Epos Now customers have access to a wide range of premium features including Epos Now payment processing, our suite of award-winning apps, inventory management tools, and much more.
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