Profit margin for a pharmacy?

[gdk420]

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I was wondering does anyone know what the profit margin for a pharmacy? Is it better to simply work as a pharmacist for a chain or to own your own store? I know the food industry is around 8%. Thanks

 

[mbapharmd77066]

My pharmacist first worked for a chain then opened his own pharmacy. Now he has 3. For me, it is all about owning your own store. Working for a chain company sucks. I am in my 4th year working with a major chain company. I hate it; however, I need the money.

 

[bananaface]

The margin differes in each store. The average independent store owner in the US makes about 200K/year. But, that is variable too. And, they can expect to put in more than a 40 hour work week (50-60ish).

 

[GravyRPH]

The margin differes in each store. The average independent store owner in the US makes about 200K/year. But, that is variable too. And, they can expect to put in more than a 40 hour work week (50-60ish).

GP percentage ranges from 18-25% depending on 3rd party contracts/cash:insurance ratio/rebates/etc.

 

[ZpackSux]

GP percentage ranges from 18-25% depending on 3rd party contracts/cash:insurance ratio/rebates/etc.

Let's do the math.

What's the average price of a prescrption? $40 to $55? Let's say $45. If I'm way off, y'all tell me. I'm not a retail pharmacist.

100 rx per day = $4,500 gross. open 5.5 days a week = $24750 per week.
$1,287,000 gross per year.

Worst case scenario at 17% gross margin = $218,790 gross profit.

1 FTE tech = $35,000 with benefits
Overhead (lease, utilities, this and that) $50,000

$133,790 net including your salary... that's about equivalent to $100,000 per year with benefits.. except you get to work 52 saturday every year. Or if you use a relief pharmacist .... subtract anywhere from $50 to $100 per hour from your profit.

There are variables. Overhead could be lower and the gross margin could be higher. The number of prescriptions could be lower or it could be higher.

But the most of my buddies who own their pharmacies do really well... one guy does over 500 scripts a day..and services bunch of nursing homes.

I just chose DME business...because it doesn't require me to be there all the time.

 

[RxGirl]

I don't mean to sound stupid or anything, but what is DME business?

 

[ZpackSux]

I don't mean to sound stupid or anything, but what is DME business?

Durable Medical Equipment.

We supply Enteral Nutrition, Medicare Oxygen... we cover 1 state right now. Working on second location...the next state.

 

[skp]

Dented Medical Equipment

🙂D sorry, it just sounded so funny in my head )

 

[skp]

hmm...
methinks its time for me to go to bed


okay, here's a question:

what/how much would one be looking at opening their own pharmacy (items, and $$)?

thanks,
-skp

 

[bananaface]

hmm...
methinks its time for me to go to bed


okay, here's a question:

what/how much would one be looking at opening their own pharmacy (items, and $$)?

thanks,
-skp

You currently need access to about 150K to get a new store up and running and keep it going until you profit. NCPA is the group that provided that figure.

 

[Caverject]

Store I work at has a 138K inventory....150 seems low

 

[ZpackSux]

Store I work at has a 138K inventory....150 seems low

You wouldn't need $138K worth of inventory to start a pharmacy. You can start with a lower level of inventory since it's unlikely that a new store will be cranking out volume.

At least 3 to 6 months worth of pharmacist salary should be included in the start up cost. Highly doubt the big 3, Mckesson, AB, or Cardinal will provide a long term credit... more likely week or 2 weeks term or 2% discount for paid in advance.

Hopefully the volume will build fast enough and the reimbursement from medicaid and 3rd party payors will be quick enough for the pharmacist to build a prosper business. It can be done.

With some real estate equity, with 25% down you can get an SBA loan...or with a great business plan, business loan isn't out of the question.

An alternative is to buy into a successful pharmacy where the owner is retiring. Friend of mine took over a small town pharmacy..only store in town..only paid for inventory...worked his butt off and had a 5 year plan. Make enough money in 5 years to retire. After 5 years, he had the store up for sale. He was doing close to 200 scripts per day.

 

[DrugMan]

Let's do the math.

What's the average price of a prescrption? $40 to $55? Let's say $45. If I'm way off, y'all tell me. I'm not a retail pharmacist.

100 rx per day = $4,500 gross. open 5.5 days a week = $24750 per week.
$1,287,000 gross per year.

Worst case scenario at 17% gross margin = $218,790 gross profit.

1 FTE tech = $35,000 with benefits
Overhead (lease, utilities, this and that) $50,000

$133,790 net including your salary... that's about equivalent to $100,000 per year with benefits.. except you get to work 52 saturday every year. Or if you use a relief pharmacist .... subtract anywhere from $50 to $100 per hour from your profit.

There are variables. Overhead could be lower and the gross margin could be higher. The number of prescriptions could be lower or it could be higher.

But the most of my buddies who own their pharmacies do really well... one guy does over 500 scripts a day..and services bunch of nursing homes.

I just chose DME business...because it doesn't require me to be there all the time.

The information listed above is pretty accurate...you would average about $4-$7 per/script after paying the difference in the medicine being ordered...however, what really kills you is the meds that you have on the shelf at least $300,000 worth. 👍 and 👎 ...pending on if you can deal with the dept and time it takes to put into it.