Anyone interested in Owning a Retail Pharmacy?

This Pharmacist is getting ready to retire and is wanting to sell his store. He is in a small town in Kansas and he does like 220-300 up to 500 scripts a day. It's kinda cool because the town has laws against Wal-mart/Walgreen's ect. from moving in. (It is growing and won't be dying anytime soon) He is real busy and pulls in about 180-200k a year depending on how busy. What do you guys think about this? Is there still life in these type of stores? I'm a DO and am thinking about going in as a silent partner with a Pharm D on it. Any opinions would be nice and thanks in advance.

If the current owner is typical, he pulls the 200K/year by putting 60+ hours a week into the store himself. Not working there yourself, you would need to replace him with paid labor. If you deduct that expense from your profits, the deal is much less sweet.

bananaface said:

If the current owner is typical, he pulls the 200K/year by putting 60+ hours a week into the store himself. Not working there yourself, you would need to replace him with paid labor. If you deduct that expense from your profits, the deal is much less sweet.

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Hence why you own more than one. 😀

bananaface said:

If the current owner is typical, he pulls the 200K/year by putting 60+ hours a week into the store himself. Not working there yourself, you would need to replace him with paid labor. If you deduct that expense from your profits, the deal is much less sweet.

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Where is your business sense? There is a profit to be made there... Even if your "only" making 50,000 a year in profit, multiply that by 10 years... In additon you will have the leverage to open up additional stores. Need techs??? Hire your children, keep it in the family, have them grow up to run the store.

There's still a lot to be said for being your own boss.

I agree with Bananaface, if you're not a working owner, the profitability will be less....especially if your partnering with a pharmacist. I'm sure you know this, look at his books before you even say yes and look at the whole picture as well. Such as what current techology is he using? will you need to replace it in the near future? And as much as I hate to say it because I love Mom & Pop shops, those monster chains are fierce competition.
Oh and Bananaface- I love your puppy!! What a sweet face!

Thank's for the feedback. I guess I should elaborate more. I have already looked at the books and the town laws for major chains. I would be entering a 8 year deal with the Pharm D in which ownership is 50/50 for four years then he will buy me out 10% at a time until the last year where he will pay off the rest. Of course, he will salary himself at about 90k-100k. Again this is a deal very early in the making and any other advice would be great. I have never done anything like this before.

Oh my Bullseye, that doesn't sound right to me. I don't see how your partner will pay himself that kind of salary in the beginning without bankrupting the business. For a small business just starting out, you normally wouldn't draw a salary- at least not that size. Since you've never done this before, get hold of a good accountant and lawyer and consult with them or a family friend that is successful, savvy and trustworthy.

MALA said:

Oh my Bullseye, that doesn't sound right to me. I don't see how your partner will pay himself that kind of salary in the beginning without bankrupting the business. For a small business just starting out, you normally wouldn't draw a salary- at least not that size. Since you've never done this before, get hold of a good accountant and lawyer and consult with them or a family friend that is successful, savvy and trustworthy.

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I thought he said that it was an existing operation, not a startup venture. The existing owner/pharmacist is probably already drawing the same salary. Bullseye will get 50% of the net profits after salaries and other expenses. As a small business owner myself, I generally expense out everything possible to keep my profits low and pay less taxes.

I read this thread this morning and I was thinking about it most of the day. This could be a very interested venture for a physician on two fronts. First of all, if you want the pharmacy to be more active in patient care, you can sign off on collaborative practice agreements for the pharmacists. By doing this, you can give your partner the authority to run flu clinics and let him make choices to better help the patients at the pharmacy.

Another thing that you can do is you yourself get involved in day to day pharmacy operations. This can be done by setting up an office for yourself at the pharmacy. If you were to set up a walk in clinic and have all your patients fill their prescriptions right there. Hope this helps

Isn't there some states that prevent physicains from owning a certain percentage of a pharmacy? Can I get any vaguer? Heh.
Just a vague memory of some such California law.

Here's the California one (not sure if your state has a similar one?):
(a) Except as otherwise provided in subdivision (b) or (d), the board shall not issue or renew any license to conduct
a pharmacy to any of the following:
(1) A person or persons authorized to prescribe or write a prescription, as specified in Section 4040, in the State of
California.
(2) A person or persons with whom a person or persons specified in paragraph (1) shares a community or other
financial interest in the permit sought.
(3) Any corporation that is controlled by, or in which 10 percent or more of the stock is owned by a person or persons
prohibited from pharmacy ownership by paragraph (1) or (2).
(b) Subdivision (a) shall not preclude the issuance of a permit for an inpatient hospital pharmacy to the owner of the
hospital in which it is located.
(c) The board may require any information the board deems is reasonably necessary for the enforcement of this section.
(d) Subdivision (a) shall not preclude the issuance of a new or renewal license for a pharmacy to be owned or owned and
operated by a person licensed on or before August 1, 1981, under the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) and qualified on or before
August 1, 1981, under subsection (d) of Section 1310 of Title XIII of the federal Public Health Service Act, as amended,
whose ownership includes persons defined pursuant to paragraphs (1) and (2) of subdivision (a).
4112. (a) Any pharmacy located outside this state that ships, mails, or delivers, in any manner, controlled substances,

Interesting thought, I'll look and see if there is a law. However, I won't be prescribing to it. (Stark Law violation) That won't matter though I won't even be in the same state. It is an existing business and I believe that the "salary" number was a misspeak by me. I shouldn't have said salary because his actual "salary" is 53k so the rest is from profit. It is a corp. to take advantage of the tax relief. I spoke with the Pharmacist (owner) today and he leases a physicians' office right next to the pharmacy and is considering doing compounding. Thank you all. I appreciate the responces. My main concern was to see if it was at all attractive to anyone, or if you would say nah I rather work for walgreens, before I approach a Pharmacist about it. I'm glad that gravy looked that law up. I'll check into it and see if KS has a similar law.

I think there are many independent pharmacies thriving. The atmosphere is much more difficult to succeed, but there are many pharmacist entrepreneurs who are making a go of it. If the active partner has the drive and will and the law doesn't preclude it, I think it would be a sound investment.

Check out NCPA's website