need help from independent pharmacists

[Beksooh82]

Hello I am a current pharmacy student in my last year of study and on rotations. I don't know who to ask regarding opening up an independent pharmacy so I figured I would try my chances here. Me and a few of my friends are trying to weigh the options of opening up a pharmacy as opposed to signing with one of the major chains. The questions I hope to have answered are pretty numerous. The group of us are pretty motivated in opening up a new independent pharmacy not just buying a previously owned pharmacy. We have spotted locations out and we wish to pursue this option as far as possible. The major question that needs to be answered is the initial investment that we would have to take. Now I realize that depending on the size/market/location of the pharmacy this would all be relative, but theoretically speaking what would be a good figure to work with when it comes to initial stocking of medications from various suppliers? I understand that this would again be relative on the size of the pharmacy and it would make more sense to not order some medications in the beginning until a need arises. So I realize that this is a loaded question to begin with, but any help regarding a average figure. Let's say for an average size pharmacy doing 3-400 scripts a day, what would initial inventory costs be around?
We are trying to put together some sort of business plan mainly for ourselves and some of these questions that need to be asked is extremely hard to get answers for. Another question was what would be the legal form of business for an independent pharmacy? I know that with three or four individuals a general partnership is the easiest form, but others have spoken to be regarding the LLC and LLP as viable forms of business structure.
I hope somebody can help us or put us in the right direction. Again thanks for any replies or views. Up until today I didn't realize that such a forum existed and I feel much relief that there is some sort of help from knowledgeable individuals. Thanks again.

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[REMPharmD2012]

I recently attended NCPA Pharmacy Ownership Workshop...and highly recommend it as a starting point if you are truly interested in owning your own store....great info, lots of resources, and as you know, networking is essential so between the attendees and presenters, not only can you get yourself connected with key people, the time and the money is all worth it. For members, cost is $650 (inludes hotel & some meals) not sure how much if you are not a member of NCPA. I am a member of the student chapter at my school which is how I found out about it and got the discount...more info on NCPA website...good luck!

 

[that1guy]

I've talked to a McKesson and a Cardinal rep and they both say you can't really get started without 75K of inventory. That's just if you're filling scripts only. But that's definitely not for 400 scripts a day. FYI that is a very high target for a starting pharmacy. Almost all the established independents I talk to are doing between 150-200. There will be outliers of course, but that seems about average. And that number takes some time to reach. The consensus is that it takes at least a year for a new pharmacy to turn a profit. It's not unusual to hear stories of new owners sitting behind a counter and not filling a single script the whole day.

If you're thinking of compounding there are a lot of additional expenses to consider such as lab set-up, equipment, raw materials and marketing.

As far as your business structure, I understand what you mean about answers being hard to find. I did a lot of research into the subject myself and still feel relatively ignorant on the subject. The consensus at the pharmacy ownership workshop was to hire a good lawyer and accountant and have them advise you on the best structure based on your particular situation. You'll have to pay, of course, but to do it any other way you really risk some kind of unforeseen accounting or legal problem.

With all that said, I thinks it's an interesting idea to have multiple new grads going in together on an independent. It distributes the risk and allows you all to draw a check by working elsewhere.

What kind of pharmacy do you guys have in mind?

 

[twinspharm]

Hello I am a current pharmacy student in my last year of study and on rotations. I don't know who to ask regarding opening up an independent pharmacy so I figured I would try my chances here. Me and a few of my friends are trying to weigh the options of opening up a pharmacy as opposed to signing with one of the major chains. The questions I hope to have answered are pretty numerous. The group of us are pretty motivated in opening up a new independent pharmacy not just buying a previously owned pharmacy. We have spotted locations out and we wish to pursue this option as far as possible. The major question that needs to be answered is the initial investment that we would have to take. Now I realize that depending on the size/market/location of the pharmacy this would all be relative, but theoretically speaking what would be a good figure to work with when it comes to initial stocking of medications from various suppliers? I understand that this would again be relative on the size of the pharmacy and it would make more sense to not order some medications in the beginning until a need arises. So I realize that this is a loaded question to begin with, but any help regarding a average figure. Let's say for an average size pharmacy doing 3-400 scripts a day, what would initial inventory costs be around?
We are trying to put together some sort of business plan mainly for ourselves and some of these questions that need to be asked is extremely hard to get answers for. Another question was what would be the legal form of business for an independent pharmacy? I know that with three or four individuals a general partnership is the easiest form, but others have spoken to be regarding the LLC and LLP as viable forms of business structure.
I hope somebody can help us or put us in the right direction. Again thanks for any replies or views. Up until today I didn't realize that such a forum existed and I feel much relief that there is some sort of help from knowledgeable individuals. Thanks again.

In my opinion which doesn't a whole lot is going into business with a couple friends sounds like a good idea but may fail. These people may seem nice and motivated, but once the pharmacy opens and the work begins, it will be more difficult that one previously thought. People won't pull their wait, it's that simple. Someone will get stuck doing more work. There is a ton of behind the scene work that goes into running a business. Who gets stuck doing more work will get disgruntled and want more money.

I currently own a landscaping business with my brother. This business is tiny compared to owning ur own pharmacy, but from owning this business I have learned there is a ton of behind the scenes work to running it. I trust my brother and he trusts me. We have few problems, but how much trust can you have opening with a few friends.

I recommend only going into business with family or beyond close friends. I mean beyond close friends would be a friend that you have full confidence in, a friend that is as close as family. I don't have any friends this close, besides my bro

Albeit, I could be wrong but opening up a pharmacy will place you in great risk financially until its paid off. If something goes wrong, there goes your credit, what savings you've had, and your short-term future.

Why do you want to open your own pharmacy? I feel buying one would be much easier, gaurateed clientel and profit. You will have a predecessor show you how to operate it, and their will be much less risk because this business you buy will already be have substantial cash flow to pay off the business loan. Also Pharmacies are currently selling very cheap due to the amount of people retireing and the lack of people willing to buy independent pharmacies. I've seen them for sale for as lot as 1 - 1.5 years of annual profite, plus inventory.

 

[TheTimeIsNow]

Hello I am a current pharmacy student in my last year of study and on rotations. I don't know who to ask regarding opening up an independent pharmacy so I figured I would try my chances here. Me and a few of my friends are trying to weigh the options of opening up a pharmacy as opposed to signing with one of the major chains. The questions I hope to have answered are pretty numerous. The group of us are pretty motivated in opening up a new independent pharmacy not just buying a previously owned pharmacy. We have spotted locations out and we wish to pursue this option as far as possible. The major question that needs to be answered is the initial investment that we would have to take. Now I realize that depending on the size/market/location of the pharmacy this would all be relative, but theoretically speaking what would be a good figure to work with when it comes to initial stocking of medications from various suppliers? I understand that this would again be relative on the size of the pharmacy and it would make more sense to not order some medications in the beginning until a need arises. So I realize that this is a loaded question to begin with, but any help regarding a average figure. Let's say for an average size pharmacy doing 3-400 scripts a day, what would initial inventory costs be around?
We are trying to put together some sort of business plan mainly for ourselves and some of these questions that need to be asked is extremely hard to get answers for. Another question was what would be the legal form of business for an independent pharmacy? I know that with three or four individuals a general partnership is the easiest form, but others have spoken to be regarding the LLC and LLP as viable forms of business structure.
I hope somebody can help us or put us in the right direction. Again thanks for any replies or views. Up until today I didn't realize that such a forum existed and I feel much relief that there is some sort of help from knowledgeable individuals. Thanks again.

I sense great motivation and good intentions in regards to opening a pharmacy with a "few" of your friends. You do need to consider a couple of major hurdles with this "plan." To preface, I worked retail for 4 yrs, saved some money, and am about to close escrow on my first pharmacy with money down and SBA financing. I am also starting a pharmacy from scratch simultaneously.

I highly recommend that you work first and save capital so that you have some money to put down. Banks are reluctant to lend when you have no money down. Even with a startup (which I also don't recommend for a first time buyer d/t initial lack of cashflow), you will need approximately $50K in shelving/furn/fixtures for a mid-sized (about 1500 sq) pharmacy, and about $100K initial inventory. And figure another $100K for additional inventory before you see reimbursments roll in, to ensure you are cash-sufficient to run the pharmacy with adequate inventory. With multiple partners, the potential for misaligned responsibilities and unfair workloads increase considerably. You are correct to consider forming a corporation to limit liability, but having a partner who may not agree with your business direction may be a bigger liability to the business, hence, why I am the sole stockholder of my S-Corp.

Like the previous poster mentioned, 300-400 scripts a day is well above average for an independent; I would peg the average daily count closer to 200, but a startup may not reach that number until after the 2nd year, if at all. The biggest risk of a startup is that it might never fulfill your projections of ideal revenue, now you'll have a "few" friends pointing fingers at each other. A going business will NOT have that uncertainty, granted there's been a steady history, and no major unforeseen future events occur to change the cash flow. Also a going business will obviously carry a higher pricetag for admission, but at least there will be solid cash flow from the very beginning.

In regards to purchasing a going pharmacy, the "fair purchase price" varies significantly depending on location and many, many other variables, including revenue per hrs of operation, location, insurance/cash mix, gross per script, etc. The "fair purchase price" is what you and the seller determine is appropriate. You can throw all these other formulas out the window, it's what YOU determine YOU want to pay for a proven revenue stream with potential for increase.

Final opinion on your plan as it stands: move on to PLAN B.

Hope this honest opinion helps.

 

[TheTimeIsNow]

Sorry, dbl post.

 

[Doctor M]

Hello I am a current pharmacy student in my last year of study and on rotations. I don't know who to ask regarding opening up an independent pharmacy so I figured I would try my chances here. Me and a few of my friends are trying to weigh the options of opening up a pharmacy as opposed to signing with one of the major chains. The questions I hope to have answered are pretty numerous. The group of us are pretty motivated in opening up a new independent pharmacy not just buying a previously owned pharmacy. We have spotted locations out and we wish to pursue this option as far as possible. The major question that needs to be answered is the initial investment that we would have to take. Now I realize that depending on the size/market/location of the pharmacy this would all be relative, but theoretically speaking what would be a good figure to work with when it comes to initial stocking of medications from various suppliers? I understand that this would again be relative on the size of the pharmacy and it would make more sense to not order some medications in the beginning until a need arises. So I realize that this is a loaded question to begin with, but any help regarding a average figure. Let's say for an average size pharmacy doing 3-400 scripts a day, what would initial inventory costs be around?
We are trying to put together some sort of business plan mainly for ourselves and some of these questions that need to be asked is extremely hard to get answers for. Another question was what would be the legal form of business for an independent pharmacy? I know that with three or four individuals a general partnership is the easiest form, but others have spoken to be regarding the LLC and LLP as viable forms of business structure.
I hope somebody can help us or put us in the right direction. Again thanks for any replies or views. Up until today I didn't realize that such a forum existed and I feel much relief that there is some sort of help from knowledgeable individuals. Thanks again.

Ok, here goes:

you will not need inventory for 300-400 rx's per day, probably never.

Start by ordering 1 bottle of the top 200 most prescribed drugs. You will buy many generics. Of the Brand name drugs, buy no more than 1 bottle also. Your starting inventory for Prescription drugs should be no more than $40,000. If you are carrying OTC products, you should spend about $10,000 (assuming a 1500 sq ft). Now, you are at about $50,000. Next, you have to assume you will not fill many rx's for the first few months, and you have $40,000 of inventory on your shelf. Third Parties take 2-4 weeks to pay, and your wholesaler will want payment within 15 days. Try to get 6 month dating if you can. If you can't you will need the $50000 up front. Next, realize that many bottles come in 90 and 100 ct bottles. Many times, reimbursement for an rx does not pay for the full bottle, so just because you made 10 dollars on drug X for 30 tabs, you still have 70 tablets remaining. you havent paid off the full bottle yet! Its even worse when you have a brand name drug and you have 70 tabs left! You have to have cash flow to buy new drugs too...Take for example Kadian 100 mg #60 caps. In order to see profit, you have to fill the drug 5 times, that is turning your inventory. In case you didnt know, 100 caps of kadian runs around $1400. So you have to spend $7000 to make $500-$600. Its all about turning your inventory.

In addition, new patients will be walking in the door with new drugs. You will need money to buy those new drugs...Turning the inventory. You should have 20000-30000 stashed away for new inventory if you want to grow.

You are now up to $80,000 upfront. What about fixtures, computer system, labels, vials, and other supplies? What about 1 tech salary? Will you offer delivery? Will you need a delivery driver? Business insurance? Internet and phones? You will need at least $40,000 up front for this. Realize that you will not be stable for at least 8 months. It will take 8 months for you to be comfortable. And there are 4 of you??? Will you all be pharmacists? Thats a lot of payroll. You are now up to $120000. you should have a cushion for inforseen expenses because they always pop up. Have $25000-$30000 cushion. 150k is the bare minimum. Now, there are 4 of you, so you will need 1 year of living expenses for all you until the business can support all of you. This seems a bit far fetched when the avg independent makes anywhere between $15-$20 an rx on average. That means, in order to pay all you salaries, you would need to fill like 615 rx's daily to just pay all of your salaries. This does not include expenses. Think twice about this because you will need a lot of capital and will need to fill a lot of rx's.

If I were you, I would work for a chain for awhile, get some experience, save some cash, and find a business partner you can trust wholeheartedly. Good luck!

Dr. M

 

[Neighborhood Rx]

Hello,

I am in Houston, Texas. I am looking for a pharmacist in charge. Myself and the pharmacist will hire pharmacy techs and will work together daily to insure there is no theft or illegal activity.

I have roughly 1200 sq./ft. for my insurance practice and another 1200 sq./ft. of space for the pharmacy. The community is underserviced and underserved. A pharmacy is much needed.

I am working on the buildout, but would like to submit documents immediately to begin the paperwork process. My understanding is that Harris County takes roughly 5-6 months to open a pharmacy. During which time, I will complete the buildout of the pharmacy, work out security details and set up the computer systems.

If interested, please reply.

Thanks in advance.

 

[Trunks9807]

The pharmacist I worked for worked for kaiser 10 years before he decided to open his own store. the pharmacy literally surrounded by 3 clinics. the first 3 months, he was filling less than 10 Rxs a day. one year later, it averages 50 Rxs a day.

With more than 1 partners, how do you expect to survive on that fresh out of pharmacy school?

 

[that1guy]

Hello,

I am in Houston, Texas. I am looking for a pharmacist in charge. Myself and the pharmacist will hire pharmacy techs and will work together daily to insure there is no theft or illegal activity.

I have roughly 1200 sq./ft. for my insurance practice and another 1200 sq./ft. of space for the pharmacy. The community is underserviced and underserved. A pharmacy is much needed.

I am working on the buildout, but would like to submit documents immediately to begin the paperwork process. My understanding is that Harris County takes roughly 5-6 months to open a pharmacy. During which time, I will complete the buildout of the pharmacy, work out security details and set up the computer systems.

If interested, please reply.

Thanks in advance.

I feel compelled to comment on this one.

I did a rotation on the Texas State Board of Pharmacy. While there, I was told by several board members that the number one way pharmacists lose their license is by agreeing to be a PIC for a non-pharmacist looking to open a pharmacy. Basically they pay you a nice fat check to attach your license to the "pharmacy" so they can get approval to open, and then they start running controls through. This a very serious problem...in Houston and El Paso particularly. So beware.

 

[lihini]

I feel compelled to comment on this one.

I did a rotation on the Texas State Board of Pharmacy. While there, I was told by several board members that the number one way pharmacists lose their license is by agreeing to be a PIC for a non-pharmacist looking to open a pharmacy. Basically they pay you a nice fat check to attach your license to the "pharmacy" so they can get approval to open, and then they start running controls through. This a very serious problem...in Houston and El Paso particularly. So beware.

I just saw this several months too late, but wanted to comment on this as well. I have been offered a decent salary to be PIC at a non-pharmacist owned pharmacy. The owners are a doctor and an entrepreneur. The pharmacy is located next to a doctors office and it seems like a legit establishment from what I can tell. After reading this I am having second thoughts and wondering what |I need to check into before signing on the dotted line. I am hoping that-guy will comment on this. Thanks for any help guys!

 

[garzarx007]

Let me just add my two cents. I owned my own pharmacy for 16 years - it was a very nice run - but eventually you either have to sell it to a chain or another RPh that wants to go on their own. Alot of time involved - you will have more freedom and more time for your family by working for someone else. If you want to take on a PIC position as stated above -- the only thing I can say is YOU have to maintain very tight control over all Controlled Substances ordered - make sure you are the one in charge of all Controlled drugs coming in - and keep a tight inventory of what comes in and out.

 

[504poboy]

its the not the number of scripts but the margin on each script