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Basic Metrics to Measure Your Pharmacy Business

When you have patients that appreciate what you do as an independent pharmacist will surely make you feel like a success. But using hard data to look for indicators of how your pharmacy business is doing is vital. Metrics like average number of prescriptions you fill every day, Inventory turnover, and how much profit you’re bringing in can mean the difference between a thriving business and just staying afloat. Learning these formulas to calculate these crucial metrics and discovering what you can do to improve them is a must in every pharmacy.


1. Average Prescriptions Filled Per Day

According to The National Community Pharmacists Association 92 percent of independent pharmacy sales are made up of prescription sales. Because the amount of profit you make for each prescription mostly controlled by payors, increasing the number of prescriptions you dispense is the key to improving your pharmacy’s revenue and profitability.


How to Calculate Prescriptions Filled Per Day

Prescriptions Filled Per Day = Total Prescriptions Filled Last Year ÷ Number of Business Days Last Year


If you don’t know precisely how many business days you were open last year, base that number on a 6-day business week, or 312 business days a year. Once you calculate the answer for your pharmacy, see how it stacks up against other independents. In 2018 average pharmacy dispensed 59,137 prescriptions or 190 prescriptions per day.


How do I Improve Total Prescriptions Filled

There is a direct relationship between the number of patients coming into your pharmacy and total number of prescriptions filled. Physician referrals are one of the most effective ways to recruit new patients. Build relationships with local physicians so they will refer their patients to you. You can also encourage your current patients to refer their friends and family by rewarding them with coupons or discounts. Utilizing dispensing data from inside and outside of your store is an effective way to analyze your high value prescribers and patients. Prescription Discount Cards such as BonaRx® provides pharmacists with vital resources to gain access to intelligent data to be able to offer special discounts or programs for a specific drug group, patients or physicians which can be a an effective way to bring new customers to your pharmacy.


2. Gross Profit Margin Rate

Gross profit margin is the percentage of every dollar that’s available to cover fixed costs, operating expenses, and taxes. This metric is used as a measure of your pharmacy’s financial health. Low gross margin rate means you won’t have enough money to pay for operating expenses. If it’s high, it means your pharmacy will not only be able to keep the business running but also invest in new opportunities to grow the business and to take some extra money home.

How to Calculate Gross Profit Margin

Gross Profit Margin Rate = (Total Sales – Cost of Goods Sold) ÷ Total Sales

By subtracting your cost of goods sold from total sales, the number you get is a dollar figure that equals your gross profit. When you divide that gross profit by total sales, you will find your gross profit margin rate. According to the latest study performed by NCPA the average gross profit margin rate is 21.8% which has continued it’s down trend for the past decade.

How to Improve Your Gross Profit Margin

Since pharmacies have very little control over the sell-side of the business. PBMs pay what they want, sometimes even reimbursing less than you paid for the product, you need to focus on the buy-side. Pharmacies need to reevaluate their wholesalers contract annually to ensure they are receiving the best cost of goods. By improving the gross profit margin by juts 1% can mean thousand of dollars.


3. Payroll Expenses as a Percentage of Sales

Payroll expenses are one of the largest sources of overhead for independent pharmacies.

Calculating this metric can tell you a lot about your business, like if you have too many or too few employees and if you are scheduling your employees in the most cost-efficient way.


Payroll Expenses as a Percentage of Sales = (Salaries + Healthcare Stipends + Bonuses) ÷ Total Sales


If there are as many employees working at the end of the day as there are during the busiest part of the afternoon, you’re probably paying for labor you don’t need.


4. Inventory Turnover

This metric is the number of times your inventory has been sold and replaced annually. Knowing this number can help you make better decisions when it comes to inventory management and purchasing. Low turnover means that medications are sitting on your pharmacy’s shelves too long. Every bottle on the shelf is money on the shelf. It slows your cash flow and, if the products end up expiring, reduces your profits even further.



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