New strategies for pharmacies will be required for many pharmacy owners who prefer to expand their drug store’s profits instead of selling their business.
Are PBM headaches and DIR Fees making you consider other business options? As a pharmacy owner, have you seen your net profits decline over the past few years? Is the concept of running a neighborhood pharmacy in the traditional manner still going to work?
As reimbursements get cut, net profits shrink, and new regulations put constraints on sales, mail-order, etc., there are a large number of pharmacies who are closing their doors and walking away.
Chain Drug Stores
A number of years ago, the major drug store chains started building 20,000 square foot stores. They didn’t make the pharmacy departments bigger, but they increased their frontend area. Their business model of larger product lines is to drive traffic to their store and increase sales.
Another strategy implemented by the drug store chains was buying out their local competition. The chains have acquired many pharmacies in their target zone. This assisted independent owners who were ready for an exit strategy. However, recently buying parameters have tightened, and purchase prices have come down. Small stores may no longer be a target for acquisition because the chain will pick-up the customers when the mom and pop drug store simply, goes out of business.
There are some multi-store pharmacy owners who have used the plight of small pharmacies as an opportunity to expand their geographic footprint. They buy struggling pharmacies where they can immediately apply the buyer’s business model. These pharmacy owners are finding under-marketed niches and multiple locations provide them the outlets to expand their customer base. If all, or most, of the monthly expenses of an acquired location are paid by local sales then the niche products generate a great ROI.
Independent Pharmacy Owners
Independent pharmacies with dedicated owners, but little profit, need to shift to new products or services to drive new profits to the business. Finding new products that have a market niche will be necessary. The niche does not need to be some new dynamic product. New inventory can be run of the mill items that have demand and a pharmacy owner who has the ability to capture a portion of the market with good marketing efforts. The niche drives more traffic to the pharmacy and with the proper in-store promotion should also increase sales of other products.
Independent pharmacy owners may not have the means to build new stores or buy out their competition. However, it does not require a huge investment to sell niche products.
What strategies can you implement that will increase your pharmacy’s profits?
Pharmacy Strategies Looking for new pharmacy strategies to increase profits? When you consider there are pharmacies with $3M+ in sales, who are falling into the same hole of declining profits as smaller pharmacies then you know dwindling profits is not a “volume”...