New Data: Pharmacy Owners’ Profits Fall As Industry Competition Rises

Time for my annual look at independent pharmacy owners’ business economics, drawn from the recently released 2017 National Community Pharmacists Association (NCPA) Digest, Sponsored by Cardinal Health. Here’s the press release: NCPA Releases 2017 Digest.

Below, I review our latest estimates on pharmacy economics and margins. Our analysis reveals that independent pharmacy owners are now performing poorly. In 2016, we estimate that the average pharmacy owner saw their salary decline by more than 20%, to about $156,000. The number of independent pharmacies and gross margins also are trending downwards.

It’s the third consecutive year in which owner’s compensation declined. Read on for my look at pharmacy profits, comments on the industry’s competitive dynamics, and advice to pharmacy owners.

When times were good, pharmacy owners and their lobbyists complained bitterly about low pharmacy profits. Now that the endgame is truly beginning and reality matches the rhetoric, don’t be surprised that policymakers and others are skeptical.
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Drug Channels is written by Adam J. Fein, Ph.D. Dr. Fein is President of Pembroke Consulting, Inc. and CEO of Drug Channels Institute.