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7 Ideas Guaranteed to Boost Your Pharmacy’s Bottom Line 

7 Ideas Guaranteed to Boost Your Pharmacy’s Bottom Line 

December 1, 2020

Inside: Increase your annual profit with these business ideas for your retail community pharmacy.

Last year, gross profit per pharmacy location fell by an average of $10,975, according to the most recent NCPA Digest, with below-cost reimbursement and unpredictable DIR fees being the main culprits.

Facing such a discouraging statistic, a path to profitability might seem impossible to find. But with some creativity and business savvy, independent pharmacies can still improve their profit margins.

These seven tactics will consistently help you improve your pharmacy’s bottom line, even in an industry that’s always changing.

1. Diversify your offerings

The average independent pharmacy makes 92 percent of its profit from prescription sales. But with unpredictable DIR fees and decreasing PBM reimbursements, those prescription sales aren’t as reliably profitable as they used to be.

As an owner, you have to look beyond the pharmacy counter to ensure revenue keeps coming in. By offering products and services that don’t involve third parties or mostly result in out-of-pocket payments, you can offset the DIR fees and PBM reimbursements that are squeezing your pharmacy budget.

Here are a few ideas for lucrative services and products that generate high-profit returns:


2. Reduce overhead

Overhead costs eat up independent pharmacy profit. Every cent you spend on overhead is one cent less you get to take home. This may be an obvious point, but many pharmacy owners don’t invest time on overhead reduction because the activity doesn’t generate revenue. But a few changes across the board can actually free up thousands of dollars in profit.

Look at your rent, utilities, and insurance to find areas where you can reduce costs and increase efficiency.

Other examples of pharmacy overhead costs include:


Small changes, like the lightbulbs you use, surprisingly make a difference.  

Revisit your payroll — is your pharmacy efficiently scheduled so you aren’t overpaying in salaries unnecessarily?

More articles on overhead savings

10 Simple Ways to Reduce Pharmacy Costs


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20 Ways to Lower Your Pharmacy’s Utility Bills


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10 Tricks to Cut Your Pharmacy’s A/C Bill in Half



3. Mine your data

With all the data in your pharmacy’s computers, you can use data to make better business decisions and make your pharmacy more profitable.

If you have a loyalty program, use that information to figure out what your patients are buying, how often, and how much. Then, you can target patients with coupons specific to their buying habits and use your marketing to encourage them to buy more frequently.

Your point-of-sale system is also a goldmine for data. It can help you identify trends for what products are popular, which you can then promote even further with bestseller displays. You may even learn about trends you weren’t aware of. If you look closely, you could discover products patients are buying together and identify a new opportunity for cross-selling.

4. Offer immunizations

About half of all Americans get the flu shot, and by offering them at your independent pharmacy, you can tap into the billions of dollars of revenue they bring in every year.

But there is a whole world of immunizations beyond the flu shot. Your pharmacy can stand out from the rest by offer vaccinations for other conditions, like HPV, shingles, and pneumonia, as well as offering vaccines required for travel. Flu shots bring in roughly $20 of profit per vaccination. Compare that to meningococcal group B vaccine at $48, human papillomavirus at $50, and hepatitis B at $80, according to one estimate. An independent pharmacy in Louisiana earned nearly $6,000 in profit from only 70 shots of hep B in the first year of offering the vaccine.

The opportunity to make a profit offering immunizations has only expanded because of the pandemic. New expanded guidelines from the Department of Health and Human Services allow pharmacies to administer childhood vaccines, and in the next few months, patients will be clamoring to get vaccinated against COVID-19. If you haven’t made immunizations a priority in your independent pharmacy yet, now is the time to jump on the wagon.

Editor’s picks

How to Maximize Wholesaler Rebates and Profitability on Pharmacy Inventory by Elements magazine |

The Best (and Only) Way to Maximize Wholesaler Rebates 


Offset Pharmacy DIR Fees and PBM Reimbursements With These Alternative Revenue Ideas

Here’s How to Overcome Pharmacy DIR Fees and PBM Reimbursements


Is Owning a Pharmacy Profitable? by Elements magazine |

Is Owning a Pharmacy Profitable?



5. Get a better cost of goods

Given the lack of control on the sell-side of your business, the most effective way to increase margins is on the buy-side. Your cost of goods determines your profit. But when it comes to negotiating generous terms with wholesalers, independent pharmacies lack the leverage to get the deal they deserve. All the while, the national chains get rock-bottom pricing because of their volume.

But independents can secure chain-like pricing, too. The only way to do that is to join a buying group, like ProfitGuard®. By uniting with other independent pharmacies, you’ll have more negotiating power than you would all on your own. When pharmacies team up, wholesalers will work harder to win your business.

ProfitGuard increases its members’ margins up to six percent on average – that’s $166,096 a year in pure profit for the average pharmacy. (It also guarantees a better contract than you have now.)

ProfitGuard has expert negotiators that know the ins and outs of pharmacy contracts, meaning you don’t have to sort through all the jargon and complex incentive structures by yourself. And ProfitGuard is one of the only GPOs that isn’t tied to a single wholesaler. That means your pharmacy gets bids from multiple wholesalers who compete to win your business, getting you a deal that can’t be matched by a GPO tied to one wholesaler.

6. Max out your wholesaler rebates

Once you’ve signed your contract, maxing out the rebates you get for your generic compliance and other incentives is one of the best ways to make sure your pharmacy stays profitable.

Typically, wholesalers have a tiered system that says the more generics you purchase, the higher your rebate will be. If you reach the highest tier every month, that can add up to hundreds of thousands of extra dollars for your pharmacy over a single year.

Keeping track of your generic compliance and other incentives — and knowing when and what to buy to maximize those incentives — what is no simple task, though. That’s why, in addition to group purchasing services, ProfitGuard provides a proprietary tool to help pharmacies maximize wholesaler rebates and savings on their inventory every day. The tool automatically analyzes every purchase in light of every contract incentive to ensure every drug you buy from your primary or secondary wholesaler results in maximal rebates and savings – giving you the lowest net cost of goods for your pharmacy.

7. Find a reliable secondary supplier

There are hundreds of secondary suppliers, some of which offer dirt-cheap pharmaceuticals, and getting the bargain barrel price might seem like a great way to increase your profit margins.

But there are risks: Counterfeit drugs, long shipping times, limited product availability. Searching for the absolute lowest price every time also isn’t the best use of your time.

Instead, having a single, reliable secondary supplier that offers everything you need at an affordable price will save you time and money. BuyLine® from PBA Health offers pharmaceuticals from an NABP-accredited distributor at the lowest prices in the secondary market. It also offers a one-of-a-kind cash rebate program that gives up to 10 percent back on generics and up to a 4 percent discount on all brands.

Not only do you save money on competitively priced drugs, but you also save time and can have peace of mind that you are getting top-quality products.


An Independently Owned Organization Serving Independent Pharmacies

PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The member-owned company serves independent pharmacies with group purchasing services, expert contract negotiations, proprietary purchasing tools, distribution services, and more.

An HDA member, PBA Health operates its own NABP-accredited (formerly VAWD) warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.

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