Do you want to know how much it costs to open an independent pharmacy? If YES, here are factors that influence the cost of opening an independent pharmacy.
An independent pharmacy is a retail pharmacy that is not directly affiliated with any chain of pharmacies and is not owned (or operated) by a publicly traded company. Independent pharmacies are pharmacist-owned, privately held businesses in varying practice settings.
They include single-store operations, pharmacist-owned multiple store locations, franchise, compounding, long-term care (LTC), specialty, and supermarket pharmacy operations. Independent pharmacy owners generally have more flexibility to build personalized customer relationships and they strive to differentiate their services from big-chain corporations.
The Independent pharmacy industry is a big industry in the United States and studies show that in 2010, there were 23,064 independent pharmacies in the U.S. Independent pharmacies dispensed approximately 1.5 billion prescriptions annually accounting for nearly 40 percent of the retail prescriptions.
The average independent pharmacy had total sales of approximately $4 million and average prescription sales of approximately $3.7 million per location (accounting for 92.5 percent of all independent pharmacy sales). Over 26 percent of independent pharmacy owners have ownership in two or more pharmacies.
The average independent community pharmacy location dispensed 64,169 prescriptions (205 per day) in 2010, up from 61,071 in 2005. The independent pharmacy industry is very open to any aspiring entrepreneur who has acquired the required training, skills, and perhaps professional certifications.
Estimated Cost to Open an Independent Pharmacy Business
When it comes to opening a standard independent pharmacy business, one is expected to spend the bulk of the startup capital on renting and equipping a store facility. Aside from that, you are expected to purchase a wide range of drugs and medical devices, secure the required license and permits, pay your employees and utility bills.
In view of that, here are the key areas where you are expected to spend your startup capital on;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (P.O.S machines and receipt issuing machine) – $7,300.
- Marketing promotion expenses for the grand opening of the independent pharmacy store in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant including writing a business plan – $3,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $5,400.
- The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $46,000.
- The cost for shop remodeling (construction of security tight safes, racks and shelves) – $10,000.
- Cost for Computer Software (Accounting Software, Payroll Software, CRM Software, Microsoft Office, QuickBooks Pro, drug interaction software, Physician Desk Reference software) – $7,000
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500) – $3,000
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
- The cost for start-up inventory (stocking with a wide range of drugs, medical devices and related products and packaging materials) – $50,000
- The cost for counter area equipment – $9,500
- The cost for store equipment (cash register, security, ventilation, signage) – $3,750
- The cost of purchase and installation of CCTVs – $2,500
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $6,000.
- The cost of launching a website – $600
- Miscellaneous – $5,000
From the rough estimate as listed above, you would need a minimum of two hundred and six -thousand, eight hundred and eighty USD ($206,880) to establish a small – scale but standard independent pharmacy business in any city in the United States of America.
Please note that this is a rough estimate and we usually advise our readers to directly contact suppliers of the items (the types of drugs, medical devices and related products) they would need to get the real time prices of these items. The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.
Factors That Will Influence The Cost Of Opening An Independent Pharmacy Business
Table of Content
- The Size of The Independent Pharmacy Store
- The Choice of Location
- The Required Licenses and Permits
- The Type of Facility
- Additional Service Offerings
- The Cost of Hiring and Paying a Business Consultant and Attorney
- The Cost for Branding, Promotion and Marketing of the Independent Pharmacy Store
- The Cost for Furnishing and Equipping the Store
- The Cost for Insurance
- The Cost of Registering the Business
- Source of Your Supplies and Ongoing Expenses
- Cost of Recruiting and Training Your Staff
- The Cost for the Purchase and Customizing of Uniforms
The Size of The Independent Pharmacy Store
A major factor that will determine the overall cost of opening an independent pharmacy store in the United States of America is the size of the pharmacy store. The optimal size of a pharmacy with a front store section should be 1800 square feet.
But the minimum area of 10 square meters is required to start a medical shop or pharmacy or wholesale outlet. In case the pharmacy business combines retail and wholesale, a minimum of 15 square meters is required. The implication is that they also come with different cost implications when starting the business.
The Choice of Location
Another major factor that will determine the cost of opening an independent pharmacy store in the United States of America is the location.
In business, location is key part of what determine the success of the business. As a matter of fact, there are business consultants cum realtors who are specialized in helping people choose an ideal location for their type of business; a location that will guarantee them to profitability within the shortest time frame.
The truth is that the location you choose to open your independent pharmacy store determines if you will be issued the required license and permits.
Please note that in the United States of America and in most countries of the world, zoning violations and citations can be very costly for a business. It is always preferable to make sure you comply with all the zoning and land use laws before you choose a location for your business or you stand the risk of having the business closed down before it gets started.
The Required Licenses and Permits
In the United States of America, you cannot open an independent pharmacy store without first applying for the mandatory license and permits.
You would need State Board of Pharmacy Permit, Drug Enforcement Administration (DEA) Number, drug license, building license, zonal permits, and signage permits amongst others. These license and permits cost money and it will influence the overall cost of opening your pharmacy store in the United States.
Please note that there may be several inspections you must pass before you can be issued your licenses and permits, and this will also cost you money.
In order to get the overall cost of licensing and permits associated with opening a new independent pharmacy store in the United States, we will advise that you reach out to your city government. You also need to consider state and federal requirements.
The Type of Facility
The type of facility you want to run your independent pharmacy store business from is also a major factor that will determine the overall cost of opening the business in the United States of America. As regards the facility, you have the options of renting, leasing or designing and constructing your own store facility from the scratch.
With renting and leasing a facility, you may need to spend extra to modify the facility to fit into what you have in mind, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants. Let us assume that you want to construct your store facility from the scratch.
It means that you will buy the land or a property, bring up your design, construct and equip the facility to fit into what you have in mind. With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility.
Additional Service Offerings
Another key factor that will determine the cost of opening and operating an independent pharmacy store in the United States of America is the additional service offerings of the store.
The fact that independent pharmacy store offer different types of additional services (patient services and niche practicing) means that they will all have different startup cost. For example, an independent pharmacy may offer some of the following niche services;
The most commonly offered services by independent pharmacies are delivery services.
Durable Medical Goods
Most independent pharmacies provide durable medical equipment (DME), such as diabetes testing supplies, therapeutic shoes for diabetics, prosthetics, orthotics and other supplies to meet essential health needs.
Compounding pharmacists provide customized medications ordered by prescribers, sometimes when all other options will not work.
Compounded medications are prepared by pharmacists for individual patients, often with special needs, and/or as a result of relationships with medical specialists, such as Dermatologists, Oncologists, Pediatricians, and Veterinarians who are unable to take medication in its originally manufactured form.
Independent pharmacists provide diabetes care and management to help patients achieve therapeutic and lifestyle goals. Pharmacists screen patients at high risk for diabetes, assess patient health status, educate patients to care for themselves, monitor outcomes, and when appropriate, refer patients to other health care professionals.
Medication Therapy Management
Medication therapy management (MTM) programs are designed to optimize the benefits of prescribed drugs, improve medication use, reduce the risk of adverse drug events and drug interactions, and increase patient adherence to prescribed regimens.
Pharmacists are approved to administer vaccinations in all 50 states. In 2009, pharmacists throughout the nation administered hundreds of thousands of doses of H1N1 influenza vaccine and demonstrated the critical role pharmacists play in public health and the value they deliver to their patients.
Independent pharmacies may also offer routine and travel vaccines, including vaccines for pneumococcal, meningococcal, Hepatitis B, human papillomavirus (HPV), herpes zoster (shingles), typhoid, and yellow fever.
Medicare Plan Comparisons
Many pharmacies offer Medicare plan comparisons. Pharmacists help patients/enrollees navigate their options, but must beware of steering. Many pharmacies use plan comparison software available to consumers through the Medicare website.
Independent pharmacies provide tobacco cessation counseling including recommendations for over-the-counter nicotine replacement products, advice, and continuous counseling.
Independent pharmacists assist patients to manage and maintain asthma control.
Independent pharmacists provide care for the nation’s 40.2 million seniors in nursing homes, assisted living facilities, hospice, and home-based care.
Sale of Front End Products
Independent pharmacies not only provide prescription products and services, but also offer an array of nonprescription products and services, including cough and cold medications, antacids, vitamins, herbal supplements, ear and eye products, and other health-related products.
Some independent pharmacies offer an assortment of gifts and greeting cards. These additional offerings vary from pharmacy to pharmacy.
Some independent pharmacies offer medication disposal programs to help their patients safely dispose of unused and expired medicines that may be dangerous to others and to the environment.
The Cost of Hiring and Paying a Business Consultant and Attorney
As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney.
A business consultant will help with drafting a workable business plan document for the independent pharmacy store, a marketing plan and strategy, comprehensive SWOT analysis, and other advisory services. An attorney will help you with registering the business, drafting contract documents and offer you all the legal expertise that will help you start the business on the right foundation.
Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening the business in the United States of America.
The Cost for Branding, Promotion and Marketing of the Independent Pharmacy Store
The cost for branding, promoting and marketing the independent pharmacy store is yet another key factor that will determine the overall cost of opening an independent pharmacy store in the United States of America.
Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new independent pharmacy store.
As a matter of fact, it is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction of the independent pharmacy store industry in your city.
So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your independent pharmacy store.
The Cost for Furnishing and Equipping the Store
Another very important factor that will determine the cost of opening an independent pharmacy store is the cost for furnishing and equipping the independent pharmacy store. Before you can open an independent pharmacy store, you should budget and buy fridge, deep freezer, flat screen TVs, sound system,
DVD players, Satellite dish and decoder, office furniture (table, stools and sofas), drawers and cabinets, telephones, filing cabinets, office equipment (cash register, security and fire alarm and protection gadgets, CCTV, ventilation, signage), amongst others.
All these will cost money and it will influence the overall cost of opening an independent pharmacy store in the United States of America.
The Cost for Insurance
The cost of insurance is yet another important factor that will determine the overall cost of opening an independent pharmacy store in the United States of America. Interestingly, in the United States, you can’t operate a business without having some form of insurance.
Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own independent pharmacy store business.
The Cost of Registering the Business
The cost for registering the independent pharmacy store business is yet another cost that will influence the overall cost of opening an independent pharmacy store in the United States of America. Although the cost of registering a business is affordable, but it will no doubt add to the overall cost of opening an independent pharmacy store in the United States of America.
Source of Your Supplies and Ongoing Expenses
Another major factor that will determine the cost of opening an independent pharmacy store in the United States of America is the source of your supplies such as drugs, medical devices and related goods et al. For example, if you have access to manufacturers of the type of products that you would need, it will cut down the cost of running the independent pharmacy store as against buying your supplies or stocks from third party suppliers.
Cost of Recruiting and Training Your Staff
The fact that you are opening your independent pharmacy store as a new business means that you are expected to recruit and train your staff. The training will help you sell the corporate culture of your organization to your new employees.
As expected, it will cost you money to hire expert trainers that will help you train and bring your new hires up to speed and that will add to the overall cost of opening an independent pharmacy store.
The Cost for the Purchase and Customizing of Uniforms
Another factor that will determine the overall cost of opening an independent pharmacy store in the United States is the cost for the purchase and customizing of uniforms. Your staff are expected to have different uniforms and they are expected to put on these uniforms when they are on duty.
All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening an independent pharmacy store in the United States of America.
Please note that there are other factors not listed above that will influence the overall cost of opening your independent pharmacy store which is why we will advise that you work with a result driven business consultant in your city to give you the needed guide and info as it relates to the unique factors in your location.