COMPOUNDING PHARMACEUTICAL STORE
TABLE OF CONTENTS
Executive Summary
Products
Retail Pharmacy Business Overview
Our products
Value Proposition
Vision Statement
Mission Statement
Company and the management team
Roles and Responsibilities
Pharmacist (Manager):
Merchandize Manager
Pharmacy Technician
Sales Agents
Information Technologist
Cashier (Counter Agent):
Cleaners:
SWOT Analysis
Strength
Weakness
Opportunities
Threats
Market analysis
Market Trends
Market segmentation
Competitive Advantage
Sales and marketing strategy
Income
Sales Forecast
Marketing and Sales Strategy
Competition and Buying Patterns
Publicity and Advertising Strategy
Our Pricing Strategy
Payment Options
Start – Up Expenditure (Budget)
Generating Funding
Sustainability and Expansion Strategy
Business operations
Structures
Equipment
Human resource/Employees
Registration
Website
Appendices
Appendix I: Questionnaire
Appendix II: Organizational flow chart
Appendix III: Start – Up Expenditure (Budget)
Appendix IV: Sales forecast pro forma and profit/loss
Executive summary
A Compounding Pharmaceutical Store which involves tailoring pharmaceutical products to fit the unique needs of its patients. In order to maximise exposure to customers, the location will be on the busier streets of Puerto Rico. With the success of the initial store, there are plans to open additional stores around the country. In addition to selling pharmaceutical drugs there will also be additional sales of beauty products.
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Furthermore, the prices of the products will be affordable in conjunction to the standard of living of customers in the surrounding areas to the stores. The products will be lower not just online but also instore. The main target market will be consumers in the surrounding areas with a postal option. Aside from this, there will be qualified staff on hand in order to make sure customers are satisfied with their products.
The management team will comprise of a pharmacist (manager), merchandize manager, technicians, IT technician, tales’ agents, cashier and cleaners. The pharmacist will be the point employee since he understands all operations of a pharmacy. The business will operate as walk in as well as mail order operations to increase the clientele base. Our finances are expected to come from savings, personal loans and bank loans. Operating capital with then be developed through sales.
Products
Retail Pharmacy Business Overview
This industry is known for the development, production, and medicine sales. Pharmacies are involved in selling generic or branded medications where some big pharmacies engage in selling medical devices.
The pharmaceutical industry works under very tough regulations throughout the world and this is due to emergence of fake drugs. There thus are various universal regulations governing patenting, safety, efficacy, testing and drug marketing. For instance, in the US, all drugs are approved by the Food and Drug Administration (FDA) for safety and affectivity before they are allowed into the market (Sasich, 2009: 126; Barlas, 2015: 351).
Every investor planning on starting a retail pharmacy store should comply with these regulations. Anyone looking to establish a retail pharmacy store is obliged to follow the regulations guiding sourcing, sale, storage, supply and record keeping as pertains medicinal products. There are other requirements to be met relating to staff, premises, equipment and procedures.
It is very true that retail pharmaceuticals are profitable businesses. Studies show that global spending on drugs has grown to $960 billion in 2015with the US accounting for a third of the market, with an estimated $340 billion sale every year (Statistica, 2016). This is an indication that the industry has grown at a rate of 2 percent per year over the last few years.
Our products
Our Compounding Pharmacy will be retailing a variety of drugs from renowned manufacturers to Puerto Ricans. We will also engage in sales of beauty products, cosmetics and baby products. The company will be located at Puerto Rico. The product will not only be sold in the Puerto Rico. The aim of the company will not only be to make profit, but also to contribute in improving the health status of the nation, offer ideal cosmetics and baby products and at the same time give our customers value for their money.
In order to make a purchase a customer will be required to physically come to our stores and make the purchase or order the product that will be delivered to the customer. The customer must first contact us through the phone then mail, email or fax their prescription. Once the order is made, the customer will pay using the provided payment platforms and once the payment is made, the product will be sent to the customer using courier delivery. In future we plan to setup a website that will allow live chats with our staff to enhance placing of orders. Local customer may receive the drugs from our store.
Value Proposition
Value preposition is an important aspect in business. A look at the current market has established that the industry of generic medicines has become extremely competitive and one must be creative to survive in the market. Our business has identified various competitive advantages that will make the company stand out. One of the main strategies is that the management team comprises of people who understand the pharmaceutical drugs, cosmetics and baby products based on their biological knowledge of drugs. It will be easier for a person to sell the products and at the same time give a brief description of the product to the customers in a language that will understand. The aim will be to establish an excellent customer relation and culture that will lead to long term cooperation. Our team will also be visiting the pharmaceutical production plant where we will be sourcing our drugs to ensure that we source our products from only companies that have state of art machineries. We also intend to employ freelancers who will make the drugs available to the customer on order without subjecting the client to travel to get the drugs.
Vision Statement
Becoming the most renowned retail pharmaceutical store that will provide high standard products in Puerto Rico
Mission Statement
Establishing a high class compounding pharmaceutical store providing drugs from top notch manufacturers at a fair price to Puerto Ricans; we want to build an outlet that will be ranked among top 20 companies in Puerto Rico.
Company and the management team
Our compounding Pharmacy will be built on a strong foundation. We will recruit only qualified personnel to undertake the different jobs in the company. We acknowledge all rules and regulations governing the industry. As such, we resolved to hire very experienced and qualified personnel for the organization leveraging on their skill and expertise in building success.
We are not only seeking experienced applicants, but also honest and those who are ready to work towards a successful business for the benefit of all stake holders. These will be the job positions available for our Pharmacy Store;
Pharmacist (Manager)
Merchandize Manager
Technicians
IT Technician
Sales agents
Cashier
Cleaners
Roles and Responsibilities
The staff will have distinct role and responsibilities. Organization hierarchy is presented in Appendix II.
Pharmacist (Manager)
Joe Lee will act the pharmacist/ manager. Pharmacist will be a knowledgeable person with an experience in pharmacy operations. The major qualification will be a degree in pharmacy and knowledge in various drugs. Joe Lee has vast experience in running pharmacies and he has worked as a sale representative with several drug manufacturing industries.
Managing daily undertakings in the pharmacy
Recruit, management and training of staff
Prescriptions processing and dispensing drugs
Order, sell and control stock
Keep and prepare the budgets
Financial record keeping
Prepare publicity materials
Control sales
Supervising of the entire workforce
Merchandize Manager
Managing vendor relations
Doing market visits
Purchasing goods and products.
Planning sales.
Ensuring that the pharmacy runs on planned budget.
Pharmacy Technician
Ensuring the store is welcoming to customers.
Ensuring proper goods and products arrangement.
Processing prescriptions
Sterilizing every device related to medication.
General bookkeeping and data entry.
Performing stock counts and recording.
Handling other duties as assigned by manager.
Sales Agents
Managing external market research and attract new customers.
Modeling demographic information.
Sources new clients for the organization
Promoting the image of the organization
Formulating sales and marketing strategies
Any other responsibilities as required by the Pharmacist
Information Technologist
Website management.
Ecommerce handling.
Computer software installations.
Computer maintenance
Managing logistics and supply chain software.
Managing the CCTV
Handling any other IT related duties.
Cashier (Counter Agent)
Receiving payments.
Customer receipt issuance
Preparation of weekly financial reports.
Handling fiscal transactions for the company.
Interfacing with bankers
Taxes, levies and bills payment.
Other duties as allocated.
Cleaners
Ensuring a good stock of toiletries.
Cleaning in and out of the premises.
Other duties as allocated.
In spite of the overall manager being experienced in pharmaceutical business, we have conducted a SWOT analysis to help in structuring the business. SWOT analysis is an important aspect before starting the business as it informs on what to expect when the business start operating (Blayney, 2008: 53; Von et al, 2015:99). Here is the SWOT analysis conducted.
Strength
A strategic location is one of our strengths. There will be various payment methods, a wide range of drugs as well as drugs delivery services.
Since we are at the starting point, we may not have the finance to facilitate the publicity intended for the business. We also do not have the trust of the customers on the online purchasing. Developing the culture may take some years.
Opportunities
There are uncountable opportunities available and all we need to do is to position our business to take the best out of the available opportunities. Opportunities are available to establish a business in area with few pharmacies and more so offering mailing services.
Like any other retail store, we may face economic downturn as well as unfavorable health care reforms. These may affect the purchasing power. Other threats may include the arrival of new pharmaceutical outlets in the same location. There are also strict regulations demanding for requirements that might not be cost effective as a result of increased expense.
Market trends in retail pharmaceuticals are influenced by a country’s healthcare policies. This is to mean that any investor intending to put up a pharmacy should be willing to go by the policies. The most successful way of building a retail pharmaceutical line is by investing in opening branches of the same. A concise study of the market of pharmacies showed that there is an increasing demand for the drugs in Puerto Rico. This is due to the increasing population and improved life expectancy that has seen more aging population increase. The aging populations are prone to chronic diseases that demand for life-taking of drug (Parekh et al, 2011: 460).
In addition, the regulatory availability and intervention of the patient protection and enactment of affordable care act has led to an increased access to prescription drugs leading to increased demand for the generic drugs. The trend shows that the demand for generic drugs is slowly overtaking the demand for Brand name pharmaceuticals.
There have been reports of shortage of pharmaceutical drugs in Puerto Rico and thus presents an ideal business opportunity (Dayen, 2017). The low supply of drugs in most health facilities means that people will result in buying prescription drugs from pharmacies.
Target Market
We have already planned onreceiving a wide range of customers and this will not by any means stop us from following regulations as required by pharmaceutical policies. Our customers will be categorized as households, corporates, the elderly, mothers, sports persons, children and young adults. Our target involves a wide range of customers. The target market will not be restricted to specific groups but rather will focus on all potential clients residing at the area of our target market. In that view, we have carried out market research and identified the target market we would be expecting to take our products.
Further market research will be conducted through interview questions (Appendix I). Such knowledge will help us in stocking the products for the benefit of our customers as well as to increase our sales.
Market Segmentation
The market will be divided into two major sections of walk in customers and mail order customers. The walks in customers are the ones walking around looking for specific drugs probably comparing prices. There is no specific demographic aspect in this group. Most of the groups pay for the products from their pocket while some submit insurance claim from their insurers. Mail order customers order the products through various means without physically presenting themselves to the premises. They request the product to be mailed to their location. This group mainly comprises the elderly who do not prefer walking to make purchase. They are also user of the drug hence regular order will be expected after a specific duration such as after every month.
Based on the available information, walk in customers are expected to be higher than the mail order customers. About 32.5% prefer shopping online, 29.7% prefer walk in while 37.8% use both methods (Imprint plus, 2017). The same is expected in our business.
Figure 2: Market Analysis pie
Competitive Advantage
The industry is very competitive all over the world. Growth of the industry is being witnessed all over and there is need for the adoption ofother ways of drugs delivery to patients.These may include mail-order, dollar stores among others.
We will make sure we have a wide range of drugs as beauty products, cosmetic, and other related products in our store every time. We will make sure that every customer who visits our store will always have a solution to whatever they need. We will also corroborate with manufacturers who will be delivering their products to our store instead of going to their premises to get the products. This will highly reduce the cost of operation. We will also collaborate with international pharmaceutical manufacturers who will be providing commodities that are not produced locally to ensure we stock all products that are preferred by our customers.
Our major source of income will be from the sale of all the medications and products on our store racks.
Sales forecast will be from a collection of data from market survey and studies as well as some assumptions available on the field. Below are the first three years’ sales projections. A more sale projection is presented in appendix IV.
Table 1: sales forecast for three years
Year
Amount In ($)
First Fiscal Year
12000
Second Fiscal Year
24000
Third Fiscal Year
45000
It is worth noting that these projections are based on the assumption that there will be no major economic meltdown or economic recession or emergence of a major competitor in the surrounding selling the same products as our business.
Our marketing and sales strategiesis meant to generatelasting relationships with clients. To achieve this, we need to make sure we offerevery medication at subsidized pricesin comparison to other pharmacies. We will also ensure that we have adequate stock of the customer’s most preferred medications.
Our staff will be trained to offer excellentservice to customers. We understand that having consistency in offering authentic drugs and quality service to the customer service, we are able to increase the customers’ number by around30% in the first year and the first fewyears. We are hoping to introduce ourselves by advertising our business in local mass media. We will also list our organization on yellow pages adverts. We will also leverage on the internet for business promotions. We also look forward to doing direct marketing and referrals. We will partner with hospitals and health care provider.
Competition and Buying Patterns
Competition occurs in several forms in pharmacy business.
Chain pharmacies: These are franchises that are distributed all over the country. They have outlets all over Puerto Rican. These pharmacies offer considerable competition due to their appealing prices derived from the economics of scale meaning that they buy their products in bulk and get ideal discounts. Their documentation of data and good networking allows storage of patients’ data such as allergies making them one of the preferred outlets. Good prices and proper record keeping of our patients will allow our business to favorably compete with the chain pharmacies.
Local pharmacies: These are pharmacies that have long history in the locality. They have known pharmacists to the locals. Our business will aim in developing good relationship and culture with the locals to compete with these pharmacies.
International pharmacies: these pharmacies are outside the country and offer online ordering and delivery. Their main advantage is that they may have products that are not available locally. Collaboration with manufacturers outside the country will put our business at a better position to acquire these medications.
To achieve the desired publicity, we will need to place adverts onnewspapers, magazines and otherprintable media platforms. We will engage in sponsor community programs. We will also rely on Instagram, Twitter andFacebook among others. We will need to put up bill boards on strategic locations throughout Puerto Rico as well as perform road shows from time to time.
Our Pricing Strategy
We will need to make sure that our organizations offer high quality products at the most affordable price for Puerto Ricans. Selling our products at a subsidized price means that we have todecrease our markup rather than selling substandard items.
Our customers will be free to pay through cash, Point of Sale Machine, bank transfers, mobile money and check only for the royal customers.
Our starting cost will be about $ 5000 (Appendix III)
Generating Funding
We intend to generate our capital from savings, soft loans and bank loan.
So far we have raised $150,000 from savings and other investments, $50,000 as a soft loan, and we are finalizing the process of getting a $300,000 loan from our local bank.
We entrust the future of our organization to our loyal customers since they possess the capacity to make us get to where we desire, staffcompetence and the entire business. If one of these factors are missing, that is the assurance if the business closure.
We aim at building a business that is able to survive off its own cash flow without external financial injections. We acknowledge the fact that one way we are going to gain approval from customers is by selling our products at a slightly lower price as compared to other stores and by this we are ready to survive on a low profit margin.
The corporate culture of our company has been designed to elevate the business to high heights and training our workforce is a top priority. We understand that by putting into place the best incentive programs for all our staff, we will be assured of hiring and retaining the choicest of hands from the industry and as such this will increase their dedication and commitment towards helping us accomplish our dream business.
Business operations
Various aspects will be required for starting a pharmacy business.
Key Resources
Some resources are essential to start a pharmacy business. They include structures, basic equipment and human resources in terms of employees.
Structures
There will be a rented house enough to hold all the facilities.
Equipment
Measuring cylinders calibrated from 0-100 ml
Refrigerator
Weighing balance
Spatula
Slab
Mortar and pestle
Storage
Supply equipment
Furniture
CCTV Cameras
Store Equipment
Human resource/Employees
Pharmacist (Manager)
Merchandize Manager
Pharmacy Technician
Sales Agents
Information Technologist
Cashier (Counter Agent)
Cleaners
Registration
All pharmacies in Puerto Rico must be licensed (NABP, 2018). License will be sought from the National Association Board of Pharmacy in Puerto Rico.
Website
Virtually all modern pharmacies have websites that increases their visibility and thus it will be important to develop a website for our business. The business will hire an information technology student to develop a simple website with basic features. The idea of hiring a student will be crucial to keep the cost down. The website will have emailing platform; however, it will not be expected to be used by the customers since they might have fear for ordering through a website for a new business. Our phone numbers as well as our physical location will be clearly indicated as well as other information such as the license number from the board. This will consequently increase customer’s trust on our business.
Appendices
Appendix 1: Questionnaire
Instruction
1) All the information from the respondent will be treated with confidentiality.
2) Put a tick on the spaces where you fill the answer is correct and fill the information where necessary.
3) You are requested to answer all the questions.
Questions Socio- Demographic Data
1) Date
2) Gender a) male b) female
3) Age a) 22-28
b) 29 -35
c) 36 – 41
d) 42 – 49
e) Above 50 yrs
4) How frequent do you buy pharmacy drugs
a) Once per week
b) Once per month
c) Once in every six months
d) Others
5) What is your preferred mode of buying
a) Walk in
b) Online
c) Others (specify)
6) What is your preferred mode of payment
a) Cash
b) Point of Sale Machine
c) Bank transfers
d) Mobile money
7) Residence _________________
8) Religion ___________________
9) What is the most common drug you buy ___________________
10) Do you have medical insurance covering prescription drug
Yes
No
Appendix II: Organizational flow chart
PARTICULARS
AMOUNT IN ($)
Registration Fee
75
Legal Expenses and License Fee
150
Marketing Expenses
350
Flyer printing
358
Consultant Hiring
250
Computer software
700
Insurance
340
12 Months’ rent payment
10560
Shop Modeling
2000
Stationery and utility deposits
250
3 Months’ Operational Costs
10000
Start Up Inventory
15000
Ice machine and counter modeling
950
Storage
372
Supply equipment
300
Store Equipment
1375
CCTV Installations
700
Furniture
400
Website Launching
70
Opening Party
700
Miscellaneous
1000
Total (Estimate)
50000
First year Second year Third year
Sales $12000 $24000 $45000
Direct cost of sales
Other production expenses $0 $0 $0
TOTAL COST OF SALES $4800 $9600 42300
Gross Margin $7200 $14400 $27000
Gross Margin % 60% 60% 60%
Expenses
Payroll $ 3000 3120 5000
Marketing expenses $350 350 350
Depreciation $175 175 175
Leased equipments $0 $0 $0
Utilities $750 $750 $750
Insurance $500 $500 $500
Rent $560 $560 $560
Payroll Taxes $140 $156 $200
Others $0 $0 $0
Total operating Expenses $5475 $5611 $20110
Profit $1725 $8789 $6890
References
Barlas, S. (2015). The FDA may change pharmacists’ access to prescribing information: a website would replace paper package inserts. P & T: a peer-reviewed journal for formulary management, 40(6), pp.351.
Blayney, D.W. (2008). Strengths, weaknesses, opportunities, and threats. Journal of oncology practice, 4(2), p.53.
Dayen, D. Puerto Rico Devastation Could Lead to National Public Health Crisis. The American prospect. [online]. Available at: http://prospect.org/article/puerto-rico-devastation-could-lead-national-public-health-crisis [Accessed 5 Oct. 2018].
El Burai F.S., Mack, K. A., & Jones, C. M. (2016). Trends in the Distribution of Opioids in Puerto Rico, 1999-2013. Puerto Rico health sciences journal, 35(3), pp.165-169.
Imprint plus. (2017). The Shopping Habits Of Today’s Consumers: Ecommerce vs. In-Store. [online]. Available at: https://www.prnewswire.com/news-releases/the-shopping-habits-of-todays-consumers-ecommerce-vs-in-store-300535550.html [Accessed 5 Oct. 2018].
National Association Board of Pharmacy (NABP), 2018. [online]. Available at: https://nabp.pharmacy/member-services/ [Accessed 5 Oct. 2018].
Parekh, A. K, Goodman, R. A, Gordon, C, Koh, H. K. (2011). HHS Interagency Workgroup on Multiple Chronic Conditions: Managing multiple chronic conditions: a strategic framework for improving health outcomes and quality of life. Public health reports (Washington, D.C: 1974), 126(4), pp.460-471.
Sasich, L. D, Sukkari, S. R, Cook, G. E, & Tuttle, D. A. (2009). The importance of FDA approval packages and briefing documents in pharmacy education. American journal of pharmaceutical education, 73(7), p.126.
Statistica. (2016). U.S. Pharmaceutical Industry – Statistics & Facts. [online]. Available at: https://www.statista.com/topics/1719/pharmaceutical-industry/ [Accessed 5 Oct. 2018].
Von K.Y, Bernhardt, A. M, Robinson, P. N, Kölbel, T, Reichenspurner, H, Debus, S, & Detter, C. (2015). Analysis of Strengths, Weaknesses, Opportunities, and Threats as a Tool for Translating Evidence into Individualized Medical Strategies (I-SWOT). Aorta (Stamford, Conn.), 3(3), pp.98-107.
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