COVER STORY

Independents still see half-full glass

There are plenty of reasons to be pessimistic—Medicaid reimbursement cuts, Rx discount cards, a Medicare drug benefit, an economy limping along, gathering war clouds—and yet the vast majority of independent pharmacy owners are upbeat about their business prospects in the year ahead.

Seventy-seven percent of our independent respondents predicted that 2003 will be a good-to-excellent business year. Nearly half (47%) think their prospects are good; while 25% anticipate very good news; and 5% think 2003 will be excellent. On the downside, 21% think the economic winds will blow up only fair results and 2% are anticipating poor returns.

In spite of a so-so economy, the majority of independents think Americans will continue to engage in their favorite contact sport—shopping. Sales will go up next year said 66% of our respondents, who pegged the average increase at 11%. One-quarter of independents think sales will stagnate, and 9% foresee sales cooling off an average of 8%.

Most independents don't see any big sales bounce. The best prospect for large sales growth is behind the prescription counter, said 16% of our respondents. Moderate or small sales growth will be generated by the front-end and Rxs, according to about three-quarters of our respondents. Sales of Rx data to market research firms or drug companies and on-line sales were cited as sources of moderate to small growth by about 30%.

What the gods of capitalism giveth in the form of more sales, they also taketh in the guise of rising overhead. Fifty-nine percent of independents think their cost of doing business will increase next year, up an average of 7%. Another 39% think they can hold the line on operating expenses, while only 2% foresee a dip, down an average of 8%.

As the biggest single cost center, pharmacist salaries will continue to push overhead upward next year, by an average of 7%, according to 83% of our independent respondents. Eastern independents pegged pharmacist pay raises at 8%, compared with about 5% in the West.

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