Opening/buying a pharmacy

cubatahavana

Hi,

I am planning to buy/open a new pharmacy but do not know where to start. I have contacted the Irish Pharmacy Union a few times, but they are not answering my emails or voice mails.

Does anybody here have any advice? Should I contact some accountant firm first? Maybe the bank?

Regards

A new company opened up on the web recently called google!

http://www.thepsi.ie/gns/registration/pharmacies/first-time-registration.aspx

smcgiff

If you are not a pharmacist yourself you'll need to employ a supervisory pharmacist.

cubatahavana

I'm a pharmacist and have been working in Ireland for 10+ years now. That is one cost that I'll be able to save!

hfallada

The cost of setting up a pharmacy is huge. Like fitting it apparently is about €200-300k. This the main reason why there is so little competition, as so few people can enter the market place. Plus you will have a hard time trying to get customers of existing pharmacies to move yours, as if they have a medical card. They will gain nothing to move your pharmacy, as the medicine will be the same price.

Boots profit in Ireland is down a fair amount, as the Government is finally tightening up on spending in pharmacies. Pharmacies are no longer making the massive profits they used to.

cubatahavana

hfallada wrote: »

The cost of setting up a pharmacy is huge. Like fitting it apparently is about €200-300k. This the main reason why there is so little competition, as so few people can enter the market place. Plus you will have a hard time trying to get customers of existing pharmacies to move yours, as if they have a medical card. They will gain nothing to move your pharmacy, as the medicine will be the same price.

Boots profit in Ireland is down a fair amount, as the Government is finally tightening up on spending in pharmacies. Pharmacies are no longer making the massive profits they used to.

I think I am more interested in purchasing one that in opening from scratch. Thanks for the help, anyway

smcgiff

cubatahavana wrote: »

I think I am more interested in purchasing one that in opening from scratch. Thanks for the help, anyway

That would also be very expensive. How are you going to value the business?

delahuntv

hfallada wrote: »

The cost of setting up a pharmacy is huge. Like fitting it apparently is about €200-300k. This the main reason why there is so little competition, as so few people can enter the market place.

There's very little additional fit out cost for a pharmacy that a regular retail outlet. - There's TONS and TONS of competition, that's why some have closed down, because the sector since deregulation is overshopped.

Where it can be expensive is in shopping centres who will give a guarantee that no other pharmacy will be in the centre, and therefore they can charge excessive rent.

But for a normal street, the costs are the same as any other retail outlet. And like any other style of retail, you have to work out if the market is there for an extra pharmacy.

Ancona

I am not a pharmacist, my wife is.
I have opened opened a pharmacy in the last 12 months and my wife will be opening he own one before April. Margins are tight like any retail shop but still acceptable for our lifestyle. There used to be a gross margin of close to 70% across the board in pharmacy it's now around 45%. My place had a 5% net profit in year 1, that was me paying two pharmacists and other staff.

The Psi are no help. The opposite in fact.

Simple things you need to get it working.
Good business plan
Good location with parking
Good footfall

There is very little customer loyalty and convenience is key. Locate where the customer wants the pharmacy.

I will Pm you.

delahuntv

Ancona wrote: »

I am not a pharmacist, my wife is.
I have opened opened a pharmacy in the last 12 months and my wife will be opening he own one before April. Margins are tight like any retail shop but still acceptable for our lifestyle. There used to be a gross margin of close to 70% across the board in pharmacy it's now around 45%.

I presume you mean gross mark-up.

A 70% margin is unheard of in retail, especially pharmacy.

Eg for 70% margin a product selling for €20 and which does not have vat would have to be purchased at €6.

However if it was 70% mark-up, then the €20 item would be purchased for €11.72.

I'm not been pedantic, but if you make a comment to a lay person, they'll assume you are ripping them off.

A 45% mark-up (quite low, but seems to be what the pharmacy industry has at present) is a 30% margin.

collegeme

delahuntv wrote: »

I presume you mean gross mark-up.

A 70% margin is unheard of in retail, especially pharmacy.

Eg for 70% margin a product selling for €20 and which does not have vat would have to be purchased at €6.

However if it was 70% mark-up, then the €20 item would be purchased for €11.72.

I'm not been pedantic, but if you make a comment to a lay person, they'll assume you are ripping them off.

A 45% mark-up (quite low, but seems to be what the pharmacy industry has at present) is a 30% margin.

I would have thought margin was correct!

3sixty

cubatahavana wrote: »

Hi,

I am planning to buy/open a new pharmacy but do not know where to start. I have contacted the Irish Pharmacy Union a few times, but they are not answering my emails or voice mails.

Does anybody here have any advice? Should I contact some accountant firm first? Maybe the bank?

Regards

Give the wholesalers a ring they will be able to advise you on setting up. Pharmacy business was lucrative years ago now it is tough. Front of shop stuff your competing with the multiples. With the dispensary your dealing with NI purchases etc. Reimbursement prices are being cut the whole time too. So your relying on getting the big discount deals from the big pharma and the generic companies- and pushing these out to your customer base.

delahuntv

collegeme wrote: »

I would have thought margin was correct!

margin is the percentage of the net selling price (retail net of vat) that you hold onto for costs.

Mark-up is the percentage of the purchasing price you add to get to your selling price.

reminds me...

Argument with publican about margin and mark-up. Publican in small country village saying he gets 100% margin from his vending machine. Accountant says he must mean mark-up. Publican says no, its 100% margin. After 20 minutes arguing, the publican takes the accountant into the ladies toilets and shows him a condom vending machine. Tells him to put a euro in - accountants does so and no condoms come out.

See says the publican, €1 - no product, no complaints, 100% margin.

collegeme

delahuntv wrote: »

margin is the percentage of the net selling price (retail net of vat) that you hold onto for costs.

Mark-up is the percentage of the purchasing price you add to get to your selling price.

reminds me...

Argument with publican about margin and mark-up. Publican in small country village saying he gets 100% margin from his vending machine. Accountant says he must mean mark-up. Publican says no, its 100% margin. After 20 minutes arguing, the publican takes the accountant into the ladies toilets and shows him a condom vending machine. Tells him to put a euro in - accountants does so and no condoms come out.

See says the publican, €1 - no product, no complaints, 100% margin.

I'm an accountant. I think I know the difference between margin and mark up. .
My main seller has a 69% Margin or about 300% mark up.

Love the joke btw

jimmii

collegeme wrote: »

I'm an accountant. I think I know the difference between margin and mark up. .
My main seller has a 69% Margin or about 300% mark up.

Love the joke btw

Thats insane! I'm in the wrong bit of retail by the looks of it!!

collegeme

jimmii wrote: »

Thats insane! I'm in the wrong bit of retail by the looks of it!!

It's all relevant as it's niche so less in my target market than yours I imagine.

My business is fairly new and other products would have a fraction of the margin of others.

My pricing strategy is based on market price rather than cost + mark up.

edited to say I'd love to know your business . Thanks for the help a few weeks ago.

jimmii

collegeme wrote: »

It's all relevant as it's niche so less in my target market than yours I imagine.

My business is fairly new and other products would have a fraction of the margin of others.

My pricing strategy is based on market price rather than cost + mark up.

edited to say I'd love to know your business . Thanks for the help a few weeks ago.

Yeh we do the same make the price right then the margin is the margin. Unfortunately our main product is a low margin one which is strange considering <40 places have it in the country! Seen a few examples of insane margins on a few products around Dublin one of the chain stores sells a watch at 1700% mark up! Seen a place in Temple Bar selling a necklace and they marked it up about 3000% I guess part of the job is getting the best price you can for something but I would feel guilty charging that much for something I knew was worth so little.

We sell a lot of craft products and the margin on that is really low. Its a good thing to combine with gifts as craft stuff sells really well January-November then gifts obviously explodes in December.

collegeme

jimmii wrote: »

Yeh we do the same make the price right then the margin is the margin. Unfortunately our main product is a low margin one which is strange considering <40 places have it in the country! Seen a few examples of insane margins on a few products around Dublin one of the chain stores sells a watch at 1700% mark up! Seen a place in Temple Bar selling a necklace and they marked it up about 3000% I guess part of the job is getting the best price you can for something but I would feel guilty charging that much for something I knew was worth so little.

We sell a lot of craft products and the margin on that is really low. Its a good thing to combine with gifts as craft stuff sells really well January-November then gifts obviously explodes in December.

We all like to give our customers value for money (well some of us) as people need to feel happy with the purchase. Sometimes even marking up 300% or possibly 3,000% is worth it to the customer.
You have a good business head on you from what I have read lately.

jimmii

collegeme wrote: »

We all like to give our customers value for money (well some of us) as people need to feel happy with the purchase. Sometimes even marking up 300% or possibly 3,000% is worth it to the customer.
You have a good business head on you from what I have read lately.

Good at waffling I guess! I think no matter who you are you are always pretty much learning it all as you go along!

locum-motion

Ancona wrote: »

... There used to be a gross margin of close to 70% across the board in pharmacy it's now around 45%...

Absolute horse5hit!

locum-motion

cubatahavana wrote: »

... I have contacted the Irish Pharmacy Union a few times, but they are not answering my emails or voice mails...

Are you a member of the IPU?

If you're a member, they should be willing to offer you some assistance.
If you're not, they won't. End of.

ohallod

Ancona wrote: »

I am not a pharmacist, my wife is.
I have opened opened a pharmacy in the last 12 months and my wife will be opening he own one before April. Margins are tight like any retail shop but still acceptable for our lifestyle. There used to be a gross margin of close to 70% across the board in pharmacy it's now around 45%. My place had a 5% net profit in year 1, that was me paying two pharmacists and other staff.

The Psi are no help. The opposite in fact.

Simple things you need to get it working.
Good business plan
Good location with parking
Good footfall

There is very little customer loyalty and convenience is key. Locate where the customer wants the pharmacy.

I will Pm you.

Hi there,

I know that it’s a long time since you wrote this post, however I would be keen to know how your pharmacies are performing? Myself and a colleague have just started looking at locations for our first pharmacy ( which we hope to open in Dublin). Any information that you could impart would be much appreciated!

Kind regards,
D