Pharmacy Gross Margins 2011

Published Fri, June 10 2011 9:02am

Pharmacy Gross Margins 2011

Hi Medici, I am a 4th year pharmacy student, currently participating in a business plan competition. I just wanted to know the current industry average for Gross Profit for a community pharmacy. The information provided on your website (updated 2009) indicates an average of 32-33%. Is this value still current? Any help would be greatly appreciated. Monnette Samo

The typical gross margin for a community pharmacy will vary by location and by business model and an average is sometimes not the most representative. The gross margin achieved by a pharmacy will be influenced by a number of factors including:

  • Sales mix - proportion of dispensary income vs retail income;
  • Generic sales, substitution rates and deals;
  • Buying power - the purchasing deal negotiated with your preferred supplier;
  • Competition - whether you are located close to a discounter or in a one pharmacy location;
  • Local area demographic - your specific clientele may be wealthy, may be concession card holders etc.;
  • Business model - whether you intend to operate a brand at your pharmacy or specialty practice; and
  • Other - any ancillary professional services, methadone, nursing home suppliers, webster packs.

Your final gross margin will be a result of each of these factors and possibly more. As a guide only, for the 2010/11 financial year, an acceptable range is between 32% and 36% (however we see many pharmacies with both lower and much higher rates).

We are currently updating our statistics but have not published a more recent estimate. For the purpose of your business plan, it would be best to use the information provided on our website.

Best wishes in your quest to win the competition.

If you would like further details on Pharmacy Benchmarks in Australia, contact Medici Capital.

7 years ago

I'm out of lauege here. Too much brain power on display!

7 years ago

You know what, I'm very much ilnncied to agree.

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