Current Status of Independent Pharmacies

[pharmatme]

I'm currently a pharmacy student and have heard so many great things about Independent Pharmacies from faculty. Just wondering if it is true that the current status and the perspective of opening is still good. Thanks.

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[MountainPharmD]

Pharmacy is in a tough spot right now. There is no doubt big changes are on the horizon. How these changes effect independent pharmacy is a big question mark. Right now there is a war being fought with PBMs. PBMs completely control the profession. They operate in the shadows with zero regulatory over site. This must change if independent pharmacy is to survive.

The next three to five years will be telling. My advice right now is pass on independent ownership until things get worked out.

 

[southpharmindy]

Really depends on your area and the mix of payers. Id really do a heavy analysis if I were you. Some parts of the country guys are making 26% margins on traditional pharmacy and doing well doing 150 scripts a day. Other areas with large concentrations of Catamaran(Cigna) or Optum(UnitedHealth,AARP PartD), guys are doing 300 scripts and barely making it. Then again, there are a lot of poorly run stores. If you have a niche such as great 340B contracts or compounding, you can make it too.

It is not as easy as it was but there is still opportunity in the right place. Id darn sure rather be working an independent than working for CVS wondering when I was gonna be replaced by a 25 dollar an hour new grad.

 

[BMBiology]

My advise to you is don't open a pharmacy just because you don't want to work for CVS. Do it because you are ambitious and you have the time and plan to go head to head with the big boys.

 

[pharmatme]

My advise to you is don't open a pharmacy just because you don't want to work for CVS. Do it because you are ambitious and you have the time and plan to go head to head with the big boys.

I do have the drive and spirit. I always wanted to be a entrepreneur and still be in the health care field. I know it's still a long way to go, but it's still in the back of my mind to learn about independent pharmacy. In the area I'm thinking about setting up a independent is in my parents' retail/dollar store. In the same area (within blocks) I have two cousins who have separate family medicine practices that could give me referrals. However, this neighborhood is in NYC where the competition is fierce with other independents. Collectively they made a Duane Reade go out of business. Do you guys think with this type of family support and situation is still a viable option down the road to go the independent pharmacy route? Thanks for all responses.

 

[pharmatme]

@Sparda29 I would like your input. I think you worked at independent in NYC. Are referrals from two family medicine practices sufficient where most of the patient are medicaid/medicare?

 

[SpartanLaser]

The independent that I work at is 80% medicaid. It's successful enough that a 2nd store is opening in 3 days

 

[steveysmith54]

My advise to you is don't open a pharmacy just because you don't want to work for CVS. Do it because you are ambitious and you have the time and plan to go head to head with the big boys.

What's wrong with opening an independent just to avoid CVS? I think using anything as motivation works, hard to imagine a more powerful motivation than that.

 

[BMBiology]

What's wrong with opening an independent just to avoid CVS? I think using anything as motivation works, hard to imagine a more powerful motivation than that.

Because you don't have the skills to make it work.

 

[southpharmindy]

Its not hard to make it work if you're willing to put the time in. All of the independents in my area do well.

 

[Dr Wario]

Its not hard to make it work if you're willing to put the time in. All of the independents in my area do well.

They know how to make it work and that is why they are still there.

 

[Gombrich12]

The independent that I work at is 80% medicaid. It's successful enough that a 2nd store is opening in 3 days

That's fine if your state keeps medicaid reimbursements high, what happens when the state needs money and they lower reimbursements?

 

[BMBiology]

Its not hard to make it work if you're willing to put the time in. All of the independents in my area do well.

Actually it is hard. People need to stop thinking if they will do X, Y, Z then they will have a successful business. That is not how things work.

Yes, hard work is important but often it doesn't lead to success. There are other factors, more important factors at play.

 

[Dr Wario]

Actually it is hard. People need to stop thinking if they will do X, Y, Z then they will have a successful business. That is not how things work.

Yes, hard work is not important but often it doesn't lead to successful. There are other factors, more important factors at play.

Wow were you drunk when you posted this? (or am I drunk reading it?)

 

[MountainPharmD]

That's fine if your state keeps medicaid reimbursements high, what happens when the state needs money and they lower reimbursements?

Texas used to be like this until they turned the Medicaid program over to the PBMs and managed care. Pharmacies that did 80% Medicaid went out of business.

 

[BMBiology]

Wow were you drunk when you posted this? (or am I drunk reading it?)

Fixed. Drunk @ 11 am on a Thursday?!? Lol

 

[southpharmindy]

So 2 of the independents that used to post on this board, BF7 and DoctorM, worked stores for 5 years and got out. They're both financially independent now. One of them was in Texas, the other in Florida. Yulp. I wouldn't want to follow in their footsteps. No chance. Doomed.

 

[southpharmindy]

I saw the books on a pharmacy that did 1.9 million in sales (90-100 scripts daily). Did 22% margins and brought home close to 350k a year after overhead. I might have screwed up because I didn't buy it because I was holding out for better.

At any rate, don't believe the guys in the chains that tell you that you have to fill 500 scripts every day with 2 technicians to make any real money.

 

[steveysmith54]

So 2 of the independents that used to post on this board, BF7 and DoctorM, worked stores for 5 years and got out. They're both financially independent now. One of them was in Texas, the other in Florida. Yulp. I wouldn't want to follow in their footsteps. No chance. Doomed.

I don't follow. If those two are so successful, why wouldn't you want to follow in their footsteps?

 

[southpharmindy]

I don't follow. If those two are so successful, why wouldn't you want to follow in their footsteps?

It was my poor attempt at humor. I was being sarcastic. I absolutely want to follow in their footsteps. They're a couple of really smart guys.

 

[MountainPharmD]

I saw the books on a pharmacy that did 1.9 million in sales (90-100 scripts daily). Did 22% margins and brought home close to 350k a year after overhead. I might have screwed up because I didn't buy it because I was holding out for better.

At any rate, don't believe the guys in the chains that tell you that you have to fill 500 scripts every day with 2 technicians to make any real money.

Your analysis is incorrect based on the information provided. Assuming the owner had a gross profit margin of 22%, which is right at the NCPA's published data for average gross profit of an independant, there would be a gross profit of $418,000 on sales of $1.9 million. That's $418,000 to pay yourself a salary, at least one technician and one clerk, and all the associated cost of doing business such as insurance, rent, utilities, computer fees, ect... You will likely take out a loan so don't forget you have to make a monthly payment on that. $1.9 million in sales and a 22% margin equates to approximately an average of 160 scripts a day assuming closed on weekends.

$418,000 - Gross Profit

-$100,000 - Owners salary
-$30,000 - Technician salary
- $20,000 - Clerk salary
-$11,000 - Employment taxes
-$96,000 - Loan payment
-$24,000 - Rent
-$6,000 - Insurance
-$6,000 - Computer software license fees
-$5,000 - Vials and labels
-$7,000 - Utilities
-$5000 - Misc expenses

= $108,000 in net profit

Here's the tricky part. It looks like you will be banking a yearly total of $208,000. Yes, on paper, however you will have approximately $100,000 to $120,000 in your accounts receivables from insurance companies at any one time. You may show on your P&L that there's a $108,000 profit however it won't be in your bank account. It's hanging out there waiting on the insurance company to pay, which takes anywhere from 2 to 6 weeks. I didn't pull these numbers out of my a$$. They are real world numbers.

 

[MountainPharmD]

At any rate, don't believe the guys in the chains that tell you that you have to fill 500 scripts every day with 2 technicians to make any real money.

The cost of goods sold at a corporate retail pharmacy are much lower than for independants. Margins have been report for corporate retail in the 30% range. Just like independants the margins are shrinking because of the PBM scam. There many expenses a corporate retail chain has to pay that an independant doesn't. A big one being benefits like health insurance. There is a reason they are running with only two Rph's and two technicians. Labor is one of the only costs that can be controlled.

500 a day? No, but I figure they need to be in the 250 to 300 a day range to turn an acceptable profit.

 

[BMBiology]

Your analysis is incorrect based on the information provided. Assuming the owner had a gross profit margin of 22%, which is right at the NCPA's published data for average gross profit of an independant, there would be a gross profit of $418,000 on sales of $1.9 million. That's $418,000 to pay yourself a salary, at least one technician and one clerk, and all the associated cost of doing business such as insurance, rent, utilities, computer fees, ect... You will likely take out a loan so don't forget you have to make a monthly payment on that. $1.9 million in sales and a 22% margin equates to approximately an average of 160 scripts a day assuming closed on weekends.

$418,000 - Gross Profit

-$100,000 - Owners salary
-$30,000 - Technician salary
- $20,000 - Clerk salary
-$11,000 - Employment taxes
-$96,000 - Loan payment
-$24,000 - Rent
-$6,000 - Insurance
-$6,000 - Computer software license fees
-$5,000 - Vials and labels
-$7,000 - Utilities
-$5000 - Misc expenses

= $108,000 in net profit

Here's the tricky part. It looks like you will be banking a yearly total of $208,000. Yes, on paper, however you will have approximately $100,000 to $120,000 in your accounts receivables from insurance companies at any one time. You may show on your P&L that there's a $108,000 profit however it won't be in your bank account. It's hanging out there waiting on the insurance company to pay, which takes anywhere from 2 to 6 weeks. I didn't pull these numbers out of my a$$. They are real world numbers.

Informative. Do your numbers also take into consideration social security and medicare tax for the pharmacist? It seems a bit low especially since you would have to pay for the employee and employer portion.

 

[MountainPharmD]

Informative. Do your numbers also take into consideration social security and medicare tax for the pharmacist? It seems a bit low especially since you would have to pay for the employee and employer portion.

I only included the portion the pharmacy is responsible for. For the pharmacist the other half comes out of the salary.

 

[pharmatme]

Your analysis is incorrect based on the information provided. Assuming the owner had a gross profit margin of 22%, which is right at the NCPA's published data for average gross profit of an independant, there would be a gross profit of $418,000 on sales of $1.9 million. That's $418,000 to pay yourself a salary, at least one technician and one clerk, and all the associated cost of doing business such as insurance, rent, utilities, computer fees, ect... You will likely take out a loan so don't forget you have to make a monthly payment on that. $1.9 million in sales and a 22% margin equates to approximately an average of 160 scripts a day assuming closed on weekends.

$418,000 - Gross Profit

-$100,000 - Owners salary
-$30,000 - Technician salary
- $20,000 - Clerk salary
-$11,000 - Employment taxes
-$96,000 - Loan payment
-$24,000 - Rent
-$6,000 - Insurance
-$6,000 - Computer software license fees
-$5,000 - Vials and labels
-$7,000 - Utilities
-$5000 - Misc expenses

= $108,000 in net profit

Here's the tricky part. It looks like you will be banking a yearly total of $208,000. Yes, on paper, however you will have approximately $100,000 to $120,000 in your accounts receivables from insurance companies at any one time. You may show on your P&L that there's a $108,000 profit however it won't be in your bank account. It's hanging out there waiting on the insurance company to pay, which takes anywhere from 2 to 6 weeks. I didn't pull these numbers out of my a$$. They are real world numbers.

Could you gave an analysis of my situation. If it will work or not. So I need 160 scripts to be decent?

 

[MountainPharmD]

Not really. There are so many variables to account for plus you are years away from opening.

Right now, I think your situation sounds good . You have a means to drive volume to your store. Co-locating with your parents retail/dollar store is smart idea especially if it saves you on rent. I imagine retail space rents for a pretty penny in NYC. Have you considered co-locating with one of your cousins? Convenience is king. Being in the same building should almost guarantee you their business.

 

[pezdispenser]

Your analysis is incorrect based on the information provided. Assuming the owner had a gross profit margin of 22%, which is right at the NCPA's published data for average gross profit of an independant, there would be a gross profit of $418,000 on sales of $1.9 million. That's $418,000 to pay yourself a salary, at least one technician and one clerk, and all the associated cost of doing business such as insurance, rent, utilities, computer fees, ect... You will likely take out a loan so don't forget you have to make a monthly payment on that. $1.9 million in sales and a 22% margin equates to approximately an average of 160 scripts a day assuming closed on weekends.

$418,000 - Gross Profit

-$100,000 - Owners salary
-$30,000 - Technician salary
- $20,000 - Clerk salary
-$11,000 - Employment taxes
-$96,000 - Loan payment
-$24,000 - Rent
-$6,000 - Insurance
-$6,000 - Computer software license fees
-$5,000 - Vials and labels
-$7,000 - Utilities
-$5000 - Misc expenses

= $108,000 in net profit

Here's the tricky part. It looks like you will be banking a yearly total of $208,000. Yes, on paper, however you will have approximately $100,000 to $120,000 in your accounts receivables from insurance companies at any one time. You may show on your P&L that there's a $108,000 profit however it won't be in your bank account. It's hanging out there waiting on the insurance company to pay, which takes anywhere from 2 to 6 weeks. I didn't pull these numbers out of my a$$. They are real world numbers.

$208k is not enough higher than even just a regular staff RPh at Wags/CVS to make it worthwhile.

$140,000 if you work 45 hrs x $60/hr like a 1 RPh independent store
$7,000 401k match
$30,000+ ESPP and stock options. Both WBA and CVS stock have been killing it.
$2,500 bonus
$9,000 health insurance for employee, spouse and children
$1,700 short and long term disability and life insurance
incl. in salary 4 weeks PTO + 6 holidays off
=======
$190,200

Not being kept awake at night worrying about insurance charge backs, reimbursement rates or getting screwed by preferred networks: PRICELESS

 

[BenJammin]

$208k is not enough higher than even just a regular staff RPh at Wags/CVS to make it worthwhile.

$140,000 if you work 45 hrs x $60/hr like a 1 RPh independent store
$7,000 401k match
$30,000+ ESPP and stock options. Both WBA and CVS stock have been killing it.
$2,500 bonus
$9,000 health insurance for employee, spouse and children
$1,700 short and long term disability and life insurance
incl. in salary 4 weeks PTO + 6 holidays off
=======
$190,200

Not being kept awake at night worrying about insurance charge backs, reimbursement rates or getting screwed by preferred networks: PRICELESS

What about the freedom of being your own boss? No HR department. No corporate bull****. Your name and face on the marquee. That's not worth it to you? It would be to me. Wish I could start my own hospital and be the hospital world's version of Mountain.

 

[MountainPharmD]

$208k is not enough higher than even just a regular staff RPh at Wags/CVS to make it worthwhile.

$140,000 if you work 45 hrs x $60/hr like a 1 RPh independent store
$7,000 401k match
$30,000+ ESPP and stock options. Both WBA and CVS stock have been killing it.
$2,500 bonus
$9,000 health insurance for employee, spouse and children
$1,700 short and long term disability and life insurance
incl. in salary 4 weeks PTO + 6 holidays off
=======
$190,200

Not being kept awake at night worrying about insurance charge backs, reimbursement rates or getting screwed by preferred networks: PRICELESS

You are exactly right. All of the above needs to be taken into consideration. However, what I'm doing beats working corporate retail by a 1000 miles in my opinion.

Things of course get better as time goes on. The debt service will get paid down, the computer equipment will be paid off, and the business will grow. At 2 million in sales subtracting just the debt service puts almost a 100k in your pocket. I think 2 million in sales is the break even point for a new owner. Sure the numbers show about a $100,000 profit but in reality with your PBM accounts receivable setting at $120,000 your cash flows looks like break even or like your losing money. Once you get sales over the $2 million hump and hit $2.5 million and then $3 million you really start to make money that's actually in your bank account not just on paper.

 

[southpharmindy]

This guy didn't have a loan repayment. He also owned the building. He was firmly established. So if you subtract your rent and loan repayment, that comes out to 330,000 yearly.
I didn't go with it because I didn't feel like it had enough potential for growth. Like you said, those loan repayment years would be lean. But once you got through those, you would be doing well.

My point is it can be done. I admire you guys for doing it. It is our profession. To me t he future looks much brighter with the legislation we have coming down the pipe. I think the PBM's have finally
pushed too far.

Anything is better than corporate anything. I would darn near have to be starving before I could do that again.

 

[MountainPharmD]

Just curious...what was he asking for it?

 

[southpharmindy]

His margins might have even been higher. His gross profit was 456k thousand. Sales were 1.9 million. Dropped from 3.5 million over a 3 and a half year period and then leveled off. Two more pharmacies opened in the small town. Only chain competition was right aid.

He wanted 600k. Rent the building for 3 years then buy it for 200k. He was desperate. If he had offered building and all for 400k I wouldve considered it. But there was no chance to do more than 120 a day in that town. Too saturated with pharmacies.

I want to get a store in a town where I can do 1000 scripts a week.

 

[MountainPharmD]

I would have passed as well. 600k for everything would have been attractive if there was some growth opportunity. Dropping to 1.9 from 3.5 million is bad. He's lucky he's still in business.

 

[Digsbe]

This is a little anecdotal, but the independents I've rotated at have told me you aren't going to make much if you just dispense, PBMs and insurance companies are trying to eat them alive. Some chains are getting their own PBMs and dipping into that market as well to keep themselves up. Any successful independent I've seen has done something different to diversify themselves like LTC or having some sort of innovative clinic set up as well as providing other services like medical equipment or a niche specialty. None of the successful ones just dispensed like what most chains do. With insurance tending the way it is I don't know if you can do that anymore.

 

[MountainPharmD]

This is a little anecdotal, but the independents I've rotated at have told me you aren't going to make much if you just dispense, PBMs and insurance companies are trying to eat them alive. Some chains are getting their own PBMs and dipping into that market as well to keep themselves up. Any successful independent I've seen has done something different to diversify themselves like LTC or having some sort of innovative clinic set up as well as providing other services like medical equipment or a niche specialty. None of the successful ones just dispensed like what most chains do. With insurance tending the way it is I don't know if you can do that anymore.

This is the reason for my war with PBMs comment above. It has become increasingly difficult if not impossible to have a single pharmacy and survive by doing 90% or greater dispensing. It appears the tide is turning against the PBMs. The war is far from over. If there isn't massive reform and change in the way PBMs operate independent pharmacy is over. That's why my recommendation to anyone wanting to get into independant pharmacy is to wait and see how things shake out.

 

[pharmerjohn]

This is the reason for my war with PBMs comment above. It has become increasingly difficult if not impossible to have a single pharmacy and survive by doing 90% or greater dispensing. It appears the tide is turning against the PBMs. The war is far from over. If there isn't massive reform and change in the way PBMs operate independent pharmacy is over. That's why my recommendation to anyone wanting to get into independant pharmacy is to wait and see how things shake out.

What sorts of change would shift things in favor of independent pharmacy? What should we be looking out for?

 

[southpharmindy]

He is saying that the legislation in Arkansas and Iowa about basing our MAC prices on updating our MAC prices weekly based on the prices we pay to the big 3 wholesalers. Also the audit legislation in several states.

 

[MountainPharmD]

He is saying that the legislation in Arkansas and Iowa about basing our MAC prices on updating our MAC prices weekly based on the prices we pay to the big 3 wholesalers. Also the audit legislation in several states.

Correct. PBMs use of MAC pricing for the majority of low cost generics is the single biggest threat to all of retail pharmacy. How a PBM determines the MAC price for a drug and how often they update that price is a big secret and is not specified in the contract. This gives the PBM an unlimited opportunity to manipulate reimbursement in their favor, to boost their profit.

I believe the laws in Iowa and Arkansas are the catalyst for real change at the federal level. CMS is currently reviewing a reimbursement methodology based on the NADAC (National Average Drug Acquisition Cost) plus a set dispensing fee. Texas will move to this model on January, 1st 2016 for fee for service Medicaid. The reimbursement formulae is a $7.93 dispensing fee + (1.96 percent of the ingredient cost) per claim. This is huge. It eliminates MAC pricing and sets a fair reimbursement based on the actual acquisition cost plus a realistic and fair dispensing fee. Unfortunately, fee for service Medicaid accounts for only 10% of all Texas Medicaid claims. The other 90% are managed care i.e. PBM managed plans. The PBM lobby was able to get the managed care portion of the Texas bill removed.

Change is in the air. The big question mark is how far will it go, especially with the PBM lobby throwing millions of dollars a year at our state and federal legislatures to keep the status quo. If CMS adopts the NADAC reimbursement model we are good to go. The PBMs will fight with everything they have to block. I am hopeful for change.

 

[wickedone]

I owned an independent for 4 years. I worked corporate purchasing prior to opening an independent.

The money is there in independent pharmacy. Those who feel you are not qualified, this is not true. I have a friend and his wife who opened up in an area that i felt would not work due to lack of foot traffic. Instead of accepting defeat everyday, they went out and got their scripts. The money is there just be driven. I would rather open an independent pharmacy and make less money than work retail. However, the only way you fail is by being lazy or just taking narcotic scripts until the DEA knocks on your door.

I know plenty that make 7 figures a year.

I would NOT open in a small town. I would NOT open in an area where private insurance is dominant. I will never target an independent pharmacy, there is plenty of business out there. Open next to a 24 hour store and market to everyone and establish a niche.

 

[BF7]

So 2 of the independents that used to post on this board, BF7 and DoctorM, worked stores for 5 years and got out. They're both financially independent now. One of them was in Texas, the other in Florida. Yulp. I wouldn't want to follow in their footsteps. No chance. Doomed.

I walked away with $1.2 million above what I paid for my store in June of 2010 but I am not financially independent given my age (38 and the fact that I have three kids 5 and under). I simply have diversified my income streams with the sale of my store by investing in beach rental properties and I also have a little bit of cash for my next ventures.

I am planning on opening a new Pharmacy by 2017 or so but it will be health food focused store with smoothies and ready to go healthy meals (www.iconmeals.com to give you an idea--buy for $5 sell for $7) and I will try and push my store sales to 75:25 or 70:30 Pharmacy: Front end revenues. That is a mix that would allow overall store profitability to be in the 25-27% GP range( assuming a 20% GP in Pharmacy and 40% GP from front end sales)which is what Walmart does storewide: https://www.stock-analysis-on.net/NYSE/Company/Wal-Mart-Stores-Inc/Ratios/Profitability

If given the chance, the person that started this thread should go begin his career working for a chain store to see how they do things (and to learn from their mistakes) and then go to an Independent Pharmacy for a year or 2 before diving into ownership.

 

[BF7]

I owned an independent for 4 years. I worked corporate purchasing prior to opening an independent.

The money is there in independent pharmacy. Those who feel you are not qualified, this is not true. I have a friend and his wife who opened up in an area that i felt would not work due to lack of foot traffic. Instead of accepting defeat everyday, they went out and got their scripts. The money is there just be driven. I would rather open an independent pharmacy and make less money than work retail. However, the only way you fail is by being lazy or just taking narcotic scripts until the DEA knocks on your door.

I know plenty that make 7 figures a year.

I would NOT open in a small town. I would NOT open in an area where private insurance is dominant. I will never target an independent pharmacy, there is plenty of business out there. Open next to a 24 hour store and market to everyone and establish a niche.

Interesting. Small towns tend to be rural with only a single pharmacy that can often times lead to more profitable PBM contracts(which is what my store was). Private insurance was much more profitable than the majority of Medicaid or Med D.

I'm just curious as to why you came to your conclusion highlighted above?

 

[BF7]

In my opinion, 100-120 rxs a day is a comfortable living for a Pharmacist store owner with a clerk and 1.5 techs. 160-180 is truly a sweet spot if you don't want to be open 60 hours a week and prefer the 9am-6pm M-F model. The average price of a Prescription is roughly $60.

So as a quick and dirty calculation : $60 x 100rx per day x 5 days x 52 weeks= $1.56 million in gross sales x 20% GP= $312,000 to pay your bills with. And yes, third party delays in payment are typically 15-30 days; Express Scripts is particularly latent. Make sure you sign up for direct EFT if available.

-You want to make sure that you have payment terms with your primary wholesaler similar to this: purchases made on days 1-15 of the month due on the 25th and days 16- 30/31st due the following month on the 10th.

- you also want to get a business credit card and use secondary generic wholesalers to save money and increase GP while improving cash flow(and racking up rewards points)

- Once you've been in business for 24 months, go speak with your local banker about getting an unsecured business line of credit as well. *DO NOT BANK WITH LARGE NATIONAL BANKS. They will treat you just as a chain pharmacy treats it's patients.**

 

[pharmerjohn]

What else can an independent pharmacy do to attract customers and keep them from going to a run of the mill CVS/Walgreens? Provide good customer service, have some sort of a niche, free delivery (?)... From a customer's perspective, I'm trying to see why a customer would choose an independent over CVS/Walgreens/etc...

 

[pharmerjohn]

I walked away with $1.2 million above what I paid for my store in June of 2010 but I am not financially independent given my age (38 and the fact that I have three kids 5 and under). I simply have diversified my income streams with the sale of my store by investing in beach rental properties and I also have a little bit of cash for my next ventures.

I am planning on opening a new Pharmacy by 2017 or so but it will be health food focused store with smoothies and ready to go healthy meals (www.iconmeals.com to give you an idea--buy for $5 sell for $7) and I will try and push my store sales to 75:25 or 70:30 Pharmacy: Front end revenues. That is a mix that would allow overall store profitability to be in the 25-27% GP range( assuming a 20% GP in Pharmacy and 40% GP from front end sales)which is what Walmart does storewide: https://www.stock-analysis-on.net/NYSE/Company/Wal-Mart-Stores-Inc/Ratios/Profitability

If given the chance, the person that started this thread should go begin his career working for a chain store to see how they do things (and to learn from their mistakes) and then go to an Independent Pharmacy for a year or 2 before diving into ownership.

Besides filling prescriptions, was your original store selling other things to boost profit as well?

 

[BF7]

What else can an independent pharmacy do to attract customers and keep them from going to a run of the mill CVS/Walgreens? Provide good customer service, have some sort of a niche, free delivery (?)... From a customer's perspective, I'm trying to see why a customer would choose an independent over CVS/Walgreens/etc...

Free Delivery, Free Flavoring of medications and recommendations from physician's offices who much prefer to relay business to locally owned pharmacies. It's up to you as the owner to develop the "goodwill" by letting customers and prescribers know "Same Copay... Better service! @ PharmerJohn's" "small town courtesy, big city convenience"....basically something clever but TRUE. Additionally sponsor a little league team, create a local scholarship ($500 or so) and utilize social media (FB, twitter, etc)

 

[pharmatme]

The way that I look at it the patient wants convenience. Which pharmacy offers a ease of access and a friendly environment. Part of the reason I want to co-locate with my parent is because our neighbor is a popular 24/7 grocery/supermarket and their is also lots of foot traffic. I'm still a bit uneasy with competing with other independent pharmacies in my area, but my ambition to be an entrepreneur is still there.

 

[strawberry606]

If you really want it, then do it. I think that you may have a chance for succeeding. Though, heads up... It may not be legal for your cousins in the family practice to make referrals like that. LOL. But, all the posts are right, do you know how to start a business?... Try writing a business plan first and see how far you get with that.

And my last two cents... Find a pharmacist you really trust and open it together. All the successful indies I know had at least two and it makes it easier to file a 8832 to make yourself in to a c corp (I think it would be better tax savings for your situation). Good luck!!!!

 

[southpharmindy]

Try to have convenience. Have a drive-thru. Have a cash discount card to compete with chains(doesn't have to be $4.00 but ballpark). Get out and actually visit doctor's offices and market yourself as the guy/gal that they call with their problems; you get their problems you get everything else. Sponsor some little league/buddy league teams. Get your name out on the high school football field. Have the grade school kids that make honor roll get a free ice cream. I saw a guy give free backpacks/school supplies to K-3. Free local delivery.

REMEMBER PEOPLE'S NAMES!!! make it a routine habit to wave at people or say hi. Doesn't have to be in depth conversation. They know you're busy. But just letting them know they're important and their business matters is enough.

AND anytime you donate, make sure to take pictures and post on your facebook and website.

If a customer can come to your store and get the same prices (or better), better service, shorter wait time, and you've got a convenient drive thru why would they go somewhere else? You're also responsible member of the community. The only reason is because they like somebody else better or are related. In my case, sometimes being related didn't matter.

Now, if you're the type of guy/gal that doesn't have the drive or want, it probably won't work out. You're not going to be able to sit behind your counter all day and have no interaction with customers and wait on the business to come to you.

 

[TheIndependentPharmacist]

What else can an independent pharmacy do to attract customers and keep them from going to a run of the mill CVS/Walgreens? Provide good customer service, have some sort of a niche, free delivery (?)... From a customer's perspective, I'm trying to see why a customer would choose an independent over CVS/Walgreens/etc...

Niche services is a must. Offering Medicare consultations, direct-access lab testing, animal medications, unique products, vaccines, telemedicine/pharmacy, loyalty programs, discounts for transfers, etc. There are many other ways to stay ahead of the game. Check out "Why Use an Independent Pharmacy" for more information like this.

 

[rph3664]

The independent that I work at is 80% medicaid. It's successful enough that a 2nd store is opening in 3 days

You're definitely not in Illinois.