Every year, PioneerRx sponsors a pharmacy software survey from Direct Opinions, an independent market research firm. Pharmacy Software Reviews compiles the results of the survey, show here.
Powered by PioneerRx and Direct Opinions
Every year, PioneerRx sponsors a pharmacy software survey from Direct Opinions, an independent market research firm. Pharmacy Software Reviews compiles the results of the survey, show here.
Powered by PioneerRx and Direct Opinions
How to Open a Pharmacy
In today's dynamic healthcare sector, over 21,000 independent community pharmacies across the U.S. are not just participating, but spearheading entrepreneurial endeavors. Pharmacists are breaking away from large chains, instead opting to launch their own practices, and paving their distinctive routes towards success. Our comprehensive guide simplifies the process of opening a pharmacy. It provides detailed, step-by-step guidance on the necessary actions and timings, equipping you with essential information and resources. This guide is designed to help you open a pharmacy that not only meets your patients' needs but also supports your financial goals.
pharmacy career, start here.
Our guide to opening a pharmacy breaks down into 3 overarching phases:
Build the foundation of your business
- Make a business plan
- Secure funding
- Find a location
- Get licensed and registered
Get your pharmacy up and running
- Choose a pharmacy software
- Purchase supplies and equipment
- Hire a team
- Market your business
- Open your pharmacy
1. Do Your Research
Thinking of starting a pharmacy? First start with your research. Take a moment to reflect: are you truly prepared for everything ownership brings? Ask yourself these questions:
- Do I have the experience for pharmacy ownership?
- Do I have the necessary finances?
- Am I prepared to handle the business side of pharmacy?
- How much time do I have to dedicate to it?
- What resources can I use to help me get started?
Once you determine your personal readiness, you should consider your financial readiness.
On average, it costs between $400,000-$600,000 to open a pharmacy business.
You should also consider the time commitment involved in the process, which can take anywhere from 1-2 years from start to finish.
Despite the high start-up costs and time investment, you should keep in mind that independent pharmacies have a high-profit margin, with an average of profit margin of 21.8%. This makes owning a pharmacy a potentially lucrative business venture.
If you decide you'd like to open a pharmacy business, you can move to the planning phase. Research the demand for pharmacies in your area and the demographics of its patients. Also, look into small business data and trends to get a better understanding of the industry.
Read articles, watch videos online, and reach out to pharmacy owners in your area for advice. By thoroughly researching the details of how to open a pharmacy, you can set yourself up for success.
2. Get Some Advice
When you decide to open a pharmacy business, you should have a team of people who can support and guide you in the process. Consider consulting the following:
Pharmacy associations — Organizations like the National Community Pharmacists Association (NCPA) can connect you to a network of other retail pharmacy owners.
Financial advisor — A financial advisor can help you determine how to fund your pharmacy business, including loans, credit, and more.
Insurance agent — An insurance agent can help you understand which policies and protections you need to open a pharmacy, such as general liability coverage, business property coverage, and data compromise coverage.
Legal advisor — An attorney with experience in health or pharmacy care can help you understand the rules and regulations for owning a small business and ensure that you are in compliance with local ordinances.
Other community pharmacists — Other pharmacists in your area or online can provide you with personalized advice and mentorship.
Pharmacy consultant — A pharmacy consultant can help you meet federal and state requirements, obtain necessary licensing and accreditation, and provide customized solutions for your pharmacy's needs.
"Having knowledgeable pharmacy advisors on your team before starting or buying a pharmacy is paramount to optimize your success. The right team will consist of a knowledgeable CPA and bank with experience in pharmacy, a healthcare attorney, and a wholesaler. The downside risks are too great to go down the path of ownership without the right team."
EXPERT ADVICE
3. Make a Business Plan
With the help of your advisors, begin to draft a comprehensive business plan.
Your business plan should lay the foundation for your pharmacy and help you to establish your long-term trajectory. Make sure to include the following details:
Executive summary — A brief overview of your pharmacy, including your mission statement, products and services, location, and team structure.
Company description — Detailed information about your pharmacy, including the problems it aims to solve and its unique advantages.
Market analysis — An analysis of your target market, competitors, and trends in the industry.
Organization and management — An outline of pharmacy managers, partners, or leadership investing in your business.
Service or product line — A list of the specific goods and services your pharmacy will offer.
Marketing and sales — A plan for attracting and retaining customers, including strategies for closing deals and making a profit.
Funding request — If seeking financial support from a bank or other third party, outline the amount of funding needed for the next five years and how it will be used.
Financial projections — Forecasted income statements, balance sheets, and budgets for the next five years, matching the funding request if applicable.
Appendix — Supplementary information not included elsewhere, such as legal documents, contracts, credit histories, and letters of reference.
4. Secure Funding
Starting your own pharmacy is an expensive venture, but it is also a valuable investment. There are several options for funding your pharmacy:
Self-funding — Using your own financial resources, such as savings, loans from friends and family, or 401(k) funds. This option provides the most freedom and independence, but can also be risky.
Investors — Obtaining venture capital from investors in exchange for a share in your pharmacy and input on business decisions. This option reduces the chance of debt but requires giving up some control.
Small business loans — Obtaining funding from third-party bankers without giving up ownership of your business. This is the most common way to open a pharmacy, but it can be difficult to get approved. Make sure to have a business plan when seeking a loan.
5. Find a Location
With your financial matters out of the way, turn your attention to finding the right location for your pharmacy. Here’s what you should consider:
Demographics — Age and socioeconomic standing can help determine if your services are needed and if your pharmacy will be profitable. Pick a location that reaches your target market and generates enough traffic.
Physical location — Choose a location that meets your needs but leaves you room to grow. You can pick from several types of locations, including a stand-alone building, a shop in a strip mall, or an office in a medical setting.
Visibility and ease of access — Your location should be easy to see for people passing by. Avoid hidden corners, obstructed views, and heavy construction.
Traffic — Aim for easy access to your pharmacy. Choose a location that’s well-populated but doesn’t have too much traffic to get through.
Competition — Instead of staying away from competitors, experts agree that you should pick a location near them. Areas that have several pharmacies nearby already have the demand and traffic necessary to stay in business. You just have to provide better business to start converting their patients to yours.
6. Get Licensed and Registered
Before you can open a pharmacy, you will have to meet your fair share of licensing requirements and legal checkboxes. Here are just a few you should expect:
Licensing Requirements
State pharmacy license — Your pharmacy license grants you all of the rights and responsibilities needed to treat patients. Every state pharmacy board has different requirements, so find out what yours requires.
National Provider Identifier (NPI) number — An NPI number is a 10-digit code used by the federal government for identification purposes. Every pharmacy practice has a unique NPI number. Apply for your NPI number here.
Drug Enforcement Agency (DEA) number —
A DEA number allows you to handle controlled substances and ensure you follow the proper regulations. You can fill out a DEA form on the Administration’s website.
National Council for Prescription Drug Programs (NCPDP) Provider Identification Number —An NCPDP Identification Number is a 6-digit code used for your transactions with third-party providers. Apply here.
Medicare Provider Enrollment — To treat patients with Medicare, you must complete Medicare Provider Enrollment. Upon completing enrollment, you will receive a Provider Transaction Access Number (PTAN).
Any additional licensing requirements in your state — Some states require additional licensing before allowing you to open your pharmacy. Consult your state’s requirements to ensure you’ve met them all.
Legal Requirements
Employer Identification Number (EIN) — The EIN is a 9-digit number assigned to businesses for the purpose of identification. Apply from the IRS website.
Get insurance coverage — To protect your pharmacy from unforeseen circumstances, it is necessary to get insurance. Many types of coverage are available, including general liability, professional liability, and employment practice liability insurance. Talk to your insurance agent to find out which policy is right for you.
Get a pharmacy bank account — In order to process direct funds and reimbursements, you must open a pharmacy bank account. Make sure that all of your account information matches that of the EIN.
Any additional legal requirements in your state, county, or city — Different areas maintain different business requirements, so contact your local ordinances to make sure you have met them all.
7. Choose a Pharmacy Software
The most important piece of technology you can buy is a pharmacy software.
Your software system manages every aspect of your business, so it should be as innovative and industry-changing as your new pharmacy.
Above all else, your pharmacy software should simplify your work while allowing you to provide the most comprehensive patient care possible.
For more information, read our blog on How to Choose a Pharmacy Software.
8. Purchase Supplies and Equipment
Once you have finalized your business plans, picked and purchased your ideal location, and met all of the necessary licensing requirements, you can begin the hands-on work needed to open a pharmacy.
Buy all the supplies and equipment you’ll need to get your pharmacy up and running. Here’s what you’ll need:
Inventory — Most of the supplies in your pharmacy will be medications. Partner with a wholesaler who can get you discounted rates, flexible payment options, and fast delivery.
Furniture and fixtures — Personalize your pharmacy and help your patients feel at home with furniture and fixtures that match your style.
Technology — Purchase an automated dispensing system, a mobile app for ordering and inventory, and a point-of-sale system. Check what technology integrates with your pharmacy software system.
Equipment — Stock up on tablet counting machines, liquid dispensers, autoclaves, mortars and pestles, compounding slabs, and testing equipment. On the front end, don’t forget cash registers, credit card processors, printers, and scanners.
“Choosing the right pharmaceutical distributor is critical to your pharmacy’s success. Here are 10 essentials you should expect from your primary drug wholesaler:
1. Fully licensed to serve your state(s).
2. “Full-line” distribution at competitive pricing across all drug classes of brand and generic pharmaceuticals, OTC, and Home Health Care products.
3. Authorized Distributor of Record (ADR) with the pharma manufacturers or authorized entities.
4. NABP-accredited to verify good standing, meeting best practices criteria for pharma distributors.
5. Capable of meeting upcoming regulatory requirements of the Drug Supply Chain Security Act (DSCSA).
6. Providing control-drug compliance monitoring and auditing for today’s regulatory environment.
7. Offering guidance and solutions for 340b pharmacy.
8. Personalized account management – having a dedicated, experienced, field professional assigned to you who understands your objectives and cares about your pharmacy’s success.
9. Personalized customer service – having immediate phone access to experienced in-house support-professionals to help with ordering or other issues.
10. Providing other programs or services to enhance pharmacy profitability and competitiveness.
Beyond the essentials, which primary drug wholesaler you partner with will much depend on your ownership / management style and how much control you want over your drug spend and operations. There are several reasons Morris & Dickson can be a great match for independent pharmacy owners. Because we’re independently owned, we answer only to our customers, not to investors or shareholders. We can be nimble and flexible, addressing issues quickly by empowering our unmatched field professionals to make on-the-spot decisions, without bureaucratic red tape and delays. We’re easy to work with and respect your independence. And we’re a trustworthy partner — free of contracts, GCR requirements, and restrictive group affiliations.”
EXPERT ADVICE
9. Hire A Team
One of your final — but most important — tasks is to hire a team of pharmacists, pharmacy technicians, and other pharmacy staff who can help you create the pharmacy you dream of.
Think about how many team members you want in your pharmacy, how much you are willing to pay them, and how you can attract them to the positions.
Post your job listings on LinkedIn, Indeed, and Glassdoor; advertise on social media; contact local pharmacy schools; and spread the word in your network.
When you interview candidates, don’t just look at their education and experience — but consider their knowledge, their warmth, and their passion for advancing the field of pharmacy.
What does community pharmacy mean to you?
What is your strategy for treating patients?
What is the biggest challenge pharmacists face?
Where do you see the future of pharmacy?
What sets you apart from other candidates?
As you put together your team, set aside a few weeks for training and use that time to connect with your team and strengthen your pharmacy.
Hiring the right people for the right seats in the pharmacy isn’t just important…it’s EVERYTHING! While we’d all love for hiring to be a ‘science,’ the hard truth is that it’s more an ‘art.’ However, when owners, leaders, and managers get clear on the mission, vision, and values of the business, it becomes easier to hire for alignment. When you have alignment, the team can be unstoppable, performance accelerated, and business results exponentially improved. Leading then becomes joyful… what a gift!”
EXPERT ADVICE
10. Market Your Business
With all of the decisions made, the details decided, and the team assembled, the final step to open a pharmacy is marketing to your community. As you work to create buzz around your business, try incorporating a few marketing tips:
Use traditional advertising methods — Consider purchasing billboards, putting out signs, and sending out flyers that promote your pharmacy.
Use social media — Post routinely, engage with followers, and promote your business accordingly. As you gain traction online, you will gain customers in real life.
Make a website — Create your website before you open your business. It will help future patients learn more about you and what you can offer them.
Use local directories — Online directories are a powerful way to help people in your community find you. Set up a Google Business profile to get started.
Talk to people — Get into your community and have conversations with the people around you. It’s a great way to start making relationships with prospective patients.
"One of the biggest marketing struggles any new pharmacy faces is findability. It is crucial that your marketing be focused on helping people first find you - then learn about your offerings. Especially since you are competing against established pharmacies that have been around for years and have built both an online and community presence."
EXPERT ADVICE
11. Open Your Pharmacy
After many months (or even years) of hard work, your pharmacy is finally ready to open. Congratulations! Take the time to recognize your accomplishments and celebrate with your team — and then get ready for opening day. For best results, host both a soft opening and a grand opening.
Soft Opening
Host a soft opening several weeks before you officially open your doors. This can help you work out any kinks in the system and ensure that your grand opening goes smoothly.
Advertise your soft opening to the community and operate as you will on day one. Fill prescriptions, offer clinical services, and sell OTC products. Get to know your patients, answer questions, and most importantly, ask for feedback.
Use the suggestions that customers give you to help prepare for your official opening.
Grand Opening
It's finally time to open your doors!
Up to this point, you have done your fair share of preparation: preparing your business, preparing your team, and preparing your customers. Now, though, it is time to prepare yourself to be an owner.
For your patients, prepare to give high-quality, personalized care. For your team, prepare to offer leadership and encouragement.
And, for yourself, prepare to have the day — and run the pharmacy — you have always imagined.
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