Profit Survey

[Tiger Wong]

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Just curious how much profit did your pharmacy generate last year? And what is your rx volume? I work for wally world and we do around 1600 - 1700/ week and our net profit for past year was $1.01 million.

Btw profit includes both pharmacy and OTC section.

 

[BF7]

Tiger..I doubt sincerely that WALMART (or any chain store) allows you to see what your actual pharmacy department profit is. You don't have access to rebates (so you don't know what your actual AQ is), you have no idea what your electricity, switching fees, etc are either. Anyhow, here's how it might work if you did.

As a rule of thumb, the average independent pharmacy makes around 23-24% GROSS PROFIT. Gross profit is your margin that you make ABOVE drug AQ cost. (NET SALES - DRUG AQ= Gross profit)
The average pharmacy NET PROFIT is ~3 to 4%. The NET profit is the GROSS PROFIT MINUS all of the expenses (payroll, electricity, pharmacy system, alarm, water, lease, etc)

Lets take your numbers of 1650 rxs per week for a quick and dirty estimate......1650 rxs/ week x 52 weeks= 85,800 per year. The average PRICE of a RX in 2012 was $60 (last year I have data on)...so take 85,800 rxs x $60 per RX= Net sales revenues of $5,148,000 for your store (RXs only) . Take 5,148,000 x .23 (AVG GROSS MARGIN) and that leaves you with $1,184,040 of GROSS MARGIN dollars --this is used to pay salaries, vials, electricity etc. .....I'm not sure how your store is staffed, but the next time your district manager wants to cut your staff hours, let them know that based on the RX script count numbers you provided here, that there should really be no need🙂 I hope this helps.

BF7

 

[Tiger Wong]

Tiger..I doubt sincerely that WALMART (or any chain store) allows you to see what your actual pharmacy department profit is. You don't have access to rebates (so you don't know what your actual AQ is), you have no idea what your electricity, switching fees, etc are either. Anyhow, here's how it might work if you did.

As a rule of thumb, the average independent pharmacy makes around 23-24% GROSS PROFIT. Gross profit is your margin that you make ABOVE drug AQ cost. (NET SALES - DRUG AQ= Gross profit)
The average pharmacy NET PROFIT is ~3 to 4%. The NET profit is the GROSS PROFIT MINUS all of the expenses (payroll, electricity, pharmacy system, alarm, water, lease, etc)

Lets take your numbers of 1650 rxs per week for a quick and dirty estimate......1650 rxs/ week x 52 weeks= 85,800 per year. The average PRICE of a RX in 2012 was $60 (last year I have data on)...so take 85,800 rxs x $60 per RX= Net sales revenues of $5,148,000 for your store (RXs only) . Take 5,148,000 x .23 (AVG GROSS MARGIN) and that leaves you with $1,184,040 of GROSS MARGIN dollars --this is used to pay salaries, vials, electricity etc. .....I'm not sure how your store is staffed, but the next time your district manager wants to cut your staff hours, let them know that based on the RX script count numbers you provided here, that there should really be no need🙂 I hope this helps.

BF7

BF7,

Actually we can see the profit at the end of the year at Walmart. Other walmart pharmacists here can also confirm this. Our bonus and annual evaluation are based on sales and net profit along with some other factors like customer surveys.

Your expected annual sales is ---- vs actual sales ----
Expected profit ----- vs actual profit -----

Also the calculation you made in your post only includes pharmacy portion. As I said earlier, by profit I mean pharmacy + OTC section.

 

[BF7]

While I have no doubt that you are given a yearly report that is labeled "net profit" for your pharmacy department, I hope that you have taken into consideration how fool hardy it would be for Walmart to disclose to thousands of employees the ACTUAL net profit in their Pharmacy department. That information is considered proprietary and on a need-to-know basis only. However, I am very interested in seeing other Walmart Pharmacy managers reply to your initial post and to post their numbers as well. What I gave to you is an easy to understand assessment tool that can be utilized to evaluate the business of pharmacy in REAL WORLD scenarios utilizing current average Pharmacy models.

I'm also interested in hearing the amount of bonus a PIC and a Staff RPh would get for having net sales at or above $1 million for Walmart...

 

[anewmanx]

The average pharmacy NET PROFIT is ~3 to 4%. The NET profit is the GROSS PROFIT MINUS all of the expenses (payroll, electricity, pharmacy system, alarm, water, lease, etc)

If you don't mind my asking, how much does a pharmacy usually get pinged for the lease in an urban setting? I.E. do they gouge you for being a pharmacy? Also, in your calculation for net profit there, are you taking out the working pharmacist owner's salary from the gross?

I bet a husband / wife pharmacist team could really do quite well owning a busy pharmacy.

Thanks.

 

[txpharmguy]

GP LY was about 23%, TY about 20%...not as many blockbuster generics and declining reimbursement contribute to the trend

 

[Doctor M]

too much to post🙂

 

[BF7]

If you don't mind my asking, how much does a pharmacy usually get pinged for the lease in an urban setting? I.E. do they gouge you for being a pharmacy? Also, in your calculation for net profit there, are you taking out the working pharmacist owner's salary from the gross?

I bet a husband / wife pharmacist team could really do quite well owning a busy pharmacy.

Thanks.

Every commercial lease is a negotiation between the landlord and yourself. But yes, to be frank, when a landlord realizes that you are wanting to lease and that you are health care related, they will attempt to charge you a premium. It's very important to know your local market rate and to consult with a commercial real estate agent. And yes, the NET profit includes having already paid the working pharmacist salary. When you own your own store you want this number to be as close to ZERO as possible so you can make this happen by paying yourself a year end BONUS or simply by hiring a Pharmacist to work in your store part time...for those interested in ownership, I recommend you first attend this: http://www.ncpanet.org/conferences-events/ownership-workshop/pharmacy-ownership-workshop

 

[BF7]

GP LY was about 23%, TY about 20%...not as many blockbuster generics and declining reimbursement contribute to the trend

Hello Txpharmguy. I assume that you are an independent owner as well. Indeed--I'm down 2% from 2011-2013 in terms of Gross profit for 2014

 

[txpharmguy]

Hello Txpharmguy. I assume that you are an independent owner as well. Indeed--I'm down 2% from 2011-2013 in terms of Gross profit for 2014

Nope, work for a national chain, but trend isn't isolated to just independent pharmacies

 

[BF7]

Nope, work for a national chain, but trend isn't isolated to just independent pharmacies

True however you don't actually have access to your company's true drug acquisition costs because you're not aware of any rebates that the company gets from wholesalers ( or manufacturers if the chain owns it's own warehouse) . That alone can influence the degree to which your profit has increased or decreased. Our 2014 decrease is due almost exclusively to MAC pricing from Medicare part D and one Medicaid provider PBM ( us script)

 

[maria1oh]

Cvs incentive pay is based on script count/script budget (excludes controls and narcotics) and customer service metrics like kpm, mce.
Does walmart exclude narcotics and controls sales/profits from their bonus structure?