Emergence of the “opportunity market” for independent pharmacies
As in all industries, entrepreneurs have stepped up to provide new opportunities to independent community pharmacies with innovative, customer-focused technology based platforms.
TRxADE, and companies that attempt to follow its lead, provide independent pharmacies with “opportunity markets” – ways to save money by purchasing pharmaceuticals from sources other than their primary or backup suppliers.
Does that mean these services are trying to replace your primary supplier? Not at all.
My view is that by augmenting your primary supplier purchases with exceptional money savings, you could save a substantial amount of money. The numbers support my view.
The story is in the numbers
The chart below shows how much an independent pharmacy can save each month/year by purchasing 80%-90% of its pharmaceutical inventory from their primary supplier and 10%-20% in one or more opportunity markets.
I’ve also broken down the numbers to show the savings for pharmacies that spend from $50,000 to $250,000 per month on their drug inventory. This is a suitable range to consider, given that:
- Numerous business startup websites suggest that a new independent pharmacy can be opened with a planned expenditure of $50,000 per month on inventory
- The 2013 NCPA Digest Financial Summary reports that in 2012 the average community pharmacy had a prescription inventory of $232,118 with an average annual turnover rate of 10.8. Using those figures, the average survey respondent spent $208,906 on drug purchases each month.
As you can see, the greatest savings — $7,000/month — are generated by a pharmacy that spends an average of $250,000 on prescription drugs, purchases 80% of them from their primary supplier, and saves an average of 14% on the balance of their purchases, which they make on the opportunity market.
But what if the pharmacy saves only 10% on the opportunity market? In that case their savings will be $5,000/month. And even at 6% they are saving $3,000/month. That’s still $36,000 per year.
If you’re not saving it, you’re wasting it
To save that $36,000/year, the pharmacy might have to spend an average of 15 minutes a day comparing prices and ordering on TRxADE. Using these figures, over the course of a year, that 15 minutes a day would produce savings at a rate of $553/ hour.
For the smaller store spending $50,000 per month on prescriptions drugs, every dollar saved is even more critical. In the least money saved example shown above, that store would still save $3,600/year, but they likely would need to spend only 30 minutes a week shopping on the opportunity market.
Saving $3,600/year while devoting 30 minutes per week translates to a savings rate of $138/hour.
Where do these savings come from?
I know that the savings percentages shown in the chart are real, because this is what our members tell us. They are earned by purchasing from two sources:
- Suppliers who compete for your business
- Other pharmacies (where permitted by law)
(TRxADE is the only online pharmaceuticals marketplace that provides opportunity markets connecting independent pharmacies with both suppliers and other pharmacies.)
Update your ordering routine and start saving now
Every order you place without first comparing prices has the potential of costing you substantially. Some pharmacies sign up for an opportunity market but don’t take full advantage of it.
Perhaps the breakdown comes between the person who joins and those doing the ordering. The key is to establish a routine for comparing costs and sticking to that routine. The more frequently you compare, the more efficiently and effectively you will do it. That’s when the savings really emerge.
If you are already a TRxADE member and would like to learn how to be more efficient using our online marketplace, call our Membership Assistance Team at 800-261-0281.
If you are not yet a TRxADE member, please note that membership if free and there is no charge for making a purchase on TRxADE. So that we can comply with all federal and state regulations, you are required to join TRxADE before placing an order.