3 Ways to Increase Pharmacy Profits
A typical independent pharmacy will generate more than 90 percent of its revenue from prescription sales. In an industry that is seeing lower reimbursements and higher back-end fees, pharmacies must look for ways to diversify revenue streams and increase profit margins.
Below are three strategies to increase revenue in your independent pharmacy.
Lower Acquisition Costs
With generics comprising 82 percent of all prescriptions dispensed, lowering the cost your pharmacy pays wholesalers for generics can make a big impact on your bottom line. Pharmacies that deal one-on-one with wholesalers must take the time to negotiate themselves and may miss volume incentives.
Independent pharmacies that are part of a buying group, like EPIC Pharmacies, have two things working for them. First, EPIC Pharmacies can negotiate based on the volume of more than 1,500 stores. This allows member pharmacies to realize the benefit of larger volume-based discounts than they could ever see individually. Second, EPIC Pharmacies has dedicated staff who negotiate with wholesalers. They stay informed of drug price changes and use their years of experience to negotiate on behalf of member pharmacies.
In addition to off-invoice discounts, independent pharmacies can negotiate rebates on wholesaler purchases based on market share or volume sales. Again, pharmacies that negotiate directly with wholesalers must devote the time and resources to fighting for rebates, and they only have their sales volume as a negotiating tactic.
EPIC Pharmacies members profit from a collective negotiating power. In addition to monthly rebates on wholesaler and generic purchases, millions of dollars in rebates are returned each quarter to members. As a cooperative, all money after paying corporate expenses is rebated to members.
Introduce New Products
While the bulk of your revenue will come from prescription sales, research suggests that 11 percent of an independent pharmacy’s total sales come from front-end business. Add on a gross margin of 38 percent for front-end sales, compared to 23 percent for total store average, and sales of personal care and over-the-counter items offer a real opportunity to grow sales.
With limited shelf space and budgets, EPIC Pharmacies members use a vendor program to find diabetes care items, vitamins, cards, gifts, and other ancillary items. Each vendor has been vetted and negotiated with before they are added to our vendor catalog. Members choose the vendors they want to work with and what products are best for their store.
From dating and other cost-savings programs to diversifying revenue through clinical services, learn how EPIC Pharmacies helps independent pharmacies stay profitable in today’s quickly changing pharmacy landscape. To learn more, contact EPIC Pharmacies.