Strategies For a Flourishing Retail Pharmacy Business

pharmacy

By Ihekoronye, Romanus Maduabuchi

A community pharmacy is a healthcare facility, under the legal supervision of a registered pharmacist that provides professional pharmacy services in a local community.

The World Health Organisation (WHO) affirms the community pharmacist as the health professional most accessible to the public (WHO, 1997). According to the International Pharmaceutical Federation (FIP), the community pharmacist is an expert in pharmaceutical care, health promotion and pharmacotherapy. He is a professional communicator with patients, other healthcare professionals and decision makers. He delivers high quality products, services and communication. The community pharmacist equally documents his actions and communicates outcomes with professional colleagues (FIP, 2014).

Community pharmacists have also earned themselves the reputation of the most trusted healthcare professionals (APHA, 2009). These global reputations stem from the fact that community pharmacies are located close to where the people live, work and play, stay open for long hours and require no previous appointment bookings to see the pharmacist. However, operating and managing retail pharmacies in a developing economy like Nigeria is fraught with a myriad of challenges, from over-regulation, chaotic distribution channels and unpredictable policy environment, to hyper-competition and deficient public infrastructure. Yet, the activities of community pharmacies are so vital to the lives of the communities that they are classified as essential services by most governments. Most retail pharmacies provide not just essential, safe, quality and efficacious medicines but also sound professional services by the pharmacists.

In Nigeria, there are about 4500 retail pharmacies serving over 170 million citizens. This means almost 40,000 individuals being served by one community pharmacy.  Moreover, in view of the poor economic indices with the attendant high prevalence of diseases, one could be tempted to assume that every community pharmacist would have his hands full with the sick in need of good health and that retail pharmacy business in Nigeria would easily flourish. However, this assumption has never found a place in the operations of many retail pharmacies in Nigeria.

Salient realities

Business success requires an entirely different set of dynamics. Studies have shown that many pharmacy graduates have an enormous array of technical skills but do not necessarily have the business skills to leverage them for competitive advantage and business success (Alston and Waitzman, 2013). The critical building blocks for a flourishing business are essentially the same across different sectors of human endeavor. These business practices are not usually part of the academic curricula of the conventional educational institutions.  They are taught in a different kind of school, the school of the real world, the University of the Streets.

Business success happens on the streets. The best business modules from all the business schools in the world cannot guarantee business success till the time-tested principles are translated from paper to the real world. However, a consistent application of these principles will guarantee business success, always. This explains why many non-pharmacists in Nigeria have managed to contrive very successful pharmaceutical business empires while the real pharmacists only tend to hang onto the crumbs that occasionally fall from the tables of the masters. The present article addresses itself to some of these salient determinants of business success as taught in the University of the Streets.

Success secrets

Retail pharmacy business is not for all pharmacists

My dear pharmacist, the Pharmacists Council of Nigeria (PCN) may have told you that your license to practice empowers you to run a retail pharmacy business. That is the truth, but not the whole truth. The PCN forgot to tell you that success in retail pharmacy business requires passion for community pharmacy, so strong that it drives you to take personal responsibility for doing whatever is necessary for the business to thrive.

If you cannot work for long hours, answer many ‘stupid’ questions from customers, listen patiently to endless complaints, manage relationships with staff, landlords, regulatory agencies, suppliers and still keep your personal and family life together, all at the same time, you may find retail pharmacy business a nightmare.

While pharmacists may retire into community practice from other practice settings such as hospital, industrial, academic, social and administrative pharmacy, it must be noted that our emphasis here is on full-time endeavour in retail pharmacy. So the first strategy for a flourishing retail pharmacy business is not about what you do. It is to think. Think to find if you have the mindset, the passion, the energy, the drive to play in the retail pharmacy field.

To vision, add passion.

Every retail pharmacy business should be founded on a vision by the business owner. This vision should be so clear and compelling it can be captured in words. It is called a vision statement. It encapsulates the reason for the pharmacy business. How this compelling reason is to be achieved should be articulated in a mission statement.

However, the pursuit of the vision and mission must be guided by a set of values. So the retail pharmacy should have on display (much like the pharmacist’s and premises licenses), a statement of the vision, mission and core values.

These are not mere clichés but driving forces and guiding lights. They must flow from the top. The ownership and management must so believe in these guiding lights that their passion exudes and infects the staff and even customers. This contagion in most cases gives birth to a mantra, a by-word that creates a positive culture and climate at the pharmacy. So we have a team made up of ownership, management and staff, chasing a common passion (not cash), having fun and making everybody happy.

The question is, what are the vision, mission and values of your retail pharmacy business?

To vision and passion, add a plan.

A detailed business plan is necessary for a successful retail pharmacy business. Even existing businesses need periodic plans in the form of annual budgets. These plans help assess performance and measure progress. Many pharmacists who managed to pass the course on pharmaceutical calculations during training are scared stiff in real life whenever the conversation gets to spreadsheets, profit and loss accounts, return on investments, balance sheets and cash flow analysis.  Yet, cash remains the lifeblood of business and if the pharmacy business runs out of cash, it simply expires.

For the business to flourish, it may require the injection of ‘other peoples’ money ’. This may come from partners, equity investors, bank loans, venture capitalists, family and friends and so on. These investors will need to see the numbers in order to be convinced that the business is profitable.

Even if the funds come entirely from the savings of the business owner, it is important to have an understanding of financial analysis. How long will it take for the business to recover cost? How does the pharmacist know it’s time to expand? How many employees are ideal for the size of business? Which customer segments should the pharmacy focus on? How does the business owner separate family expenses from business spending? What level of savings is tolerable? Which suppliers should qualify for which categories of transactions, how does the business get out of debt, and what debt-equity ratio is tolerable before the business gets over-leveraged?

These are some of the questions that financial intelligence on the part of the pharmacist seeks to answer. While experts may be invited to guide the pharmacist, some basic rules may suffice: sales minus costs equals profit; savings culture always wins despite the level of practice; separating family and friends from business always helps; more employees should only be hired when current hands are so overloaded that they may snap if more  workload is added.

So my dear pharmacist, get money-wise, get street-wise, do the math, and do it yourself.

(Continues next edition)