Independents making a comeback, survey finds

Independent pharmacies continue to hold their own financially, according to preliminary data from NCPA.



Independents making a comeback, survey finds

After a decade of dramatically falling store counts, the number of independent pharmacies actually rose last year, according to preliminary data from the annual snapshot taken by the National Community Pharmacists Association and Pharmacia Corp.

There were 244 more independent pharmacies at the end of last year than when the new millennium was ushered in, as indicated by preliminary data from the 2000 NCPA Pharmacia Digest released at a recent press conference in New York. The upswing is a welcome change from the dismal, recessionary days of the early 1990s, when independents were being cut down at the rate of 1,884 stores per year. NCPA's current 24,811 independents include single-store pharmacies, independent chains, pharmacy franchises, and pharmacist-owner supermarket pharmacies.

The store count increase is due primarily to former independent owners returning to their roots and to young pharmacists scratching an entrepreneurial itch, NCPA executive v.p. Calvin Anthony told Drug Topics. He explained that after selling their original pharmacies to chain drugstores, some former pharmacist-owners become disenchanted and decide to go back into business for themselves.


Anthony finds that there is also renewed interest on pharmacy school campuses. "A few years ago when we would go to pharmacy schools and ask how many students wanted to own their own pharmacy, only two or three hands would go up. But now, when we ask the same question, about half of them raise their hands," he added.

The increased store count wasn't the only good news previewed in advance of NCPA's annual meeting in October. Independents racked up average total sales of $2.33 million per pharmacy in 2000, 18% higher than the previous year. The average number of prescriptions dispensed rose to 50,711 per pharmacy, up nearly 6% from the year before. All those scripts amounted to average Rx sales of $1.93 million, also an 18% hike. Prescription drugs accounted for 83% of all sales. Taken as a whole, the independent retail market segment dispensed 2.84 billion Rxs last year, sold $2.6 billion worth of over-the-counter remedies, and tallied total sales of $58 billion.

On the downside, poor reimbursements from managed care contracts continued to ratchet down gross margins, which dropped to 23.4% last year. However, higher script volume and greater efficiency helped independents maintain a net margin in the 3% range, Anthony said.

"In my own pharmacy, if anyone had said you could make a profit on a gross margin of 23%, I wouldn't have believed it," Anthony said. "Net profit is a fairly flat number in the 3% range. Independents are working harder against increased costs. They're probably treading water on net profits."

The digest tracked independents' use of technology, generic utilization, and use of technicians for the first time since its launch in 1933. Seventy percent of the respondents have access to e-mail, 76% can tap into the Internet, 47% have a Web site, and 49% of independents with a Web site conduct e-commerce via those sites. About half of the Rxs dispensed by independents were generics, and 89% of independents have technicians, with the average independents employing nearly three techs.

"The preliminary results of the digest survey firmly support our assertion that independent pharmacy is back," said NCPA president John Carson, owner of six pharmacies in San Antonio. "Our future looks bright as independent pharmacists ... continue to mold their practices to meet the individual needs of their communities."

Carol Ukens


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Carol Ukens. Independents making a comeback, survey finds.

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