The Cost of Starting a Pharmacy

How Much Does It Cost to Start a Pharmacy?

Article Summary:

• The average cost to open a pharmacy varies but could be $400,000 to $600,000 or more.
• Pharmacy lending options exist such as small business loans and lines of credit.
• To find the best online pharmacy loans, compare multiple lenders.

If you want ownership of your career, you might consider starting an independent pharmacy. The cost of starting a pharmacy can cost an average of $400,000 to $600,000, according to PioneerRx, one of the best online pharmacy software platforms.

While opening a pharmacy can come with substantial costs, there are pharmacy business loans that can bridge the gap. In this guide, learn more about starting an independent pharmacy and different pharmacy lending options.

Why It Can Be a Good Idea to Start an Independent Pharmacy

According to the National Community Pharmacists Association (NCPA), the estimated number of independent community pharmacies was 18,984 as of June 2024. While that number is declining , it can still be a good idea to start an independent pharmacy if you want to start your own business and be in the driver’s seat of your career.

While the competition is stiff with big names like CVS and Walgreens, and the rise of pharmacy websites, there is a place for independent pharmacies. Here’s why it can make sense to open your own pharmacy:

• Serve community. As an independent pharmacy owner, you can build relationships with your local community. You can be the go-to resource for people who need prescription medications and over-the-counter medicine. You get to support your community and be a healthcare advocate.
• Earn more. Starting a pharmacy can be a major endeavor. It’s risky, but can also come with rewards, like potentially earning more. If you have business acumen and have a profitable business, you may outearn other staff pharmacists. According to the Bureau of Labor Statistics (BLS), the median pay for pharmacists in 2023 was $136,030 per year. At the same time, it could take a while to get there first when starting your business, your earning potential may be higher.
• Provide low prices. Independent pharmacies play a big role in providing affordable prescription drugs to the community. According to the 2024 NCPA Digest, 83% of prescription medicines at independent pharmacies are generic. Additionally, 55% of all prescriptions were covered by Medicare Part D and Medicaid health insurance plans.

Costs to Consider

Whether you’re financing an independent pharmacy on your own or you need a pharmacy business loan, review all the potential costs. These can include:

• Rent for commercial real estate
• Inventory
• Employees’ wages
• Insurance
• Pharmacy’s license
• Permits
• Website and tools (such as purchasing some of the best online pharmacy software)
• Marketing
• Business structure fees (such as creating an LLC)
• Utilities
• Taxes

Create a solid business plan and a budget. Once you have estimated costs, you can look into different pharmacy lending options to help you start your own pharmacy.

Look Into Pharmacy Lending Options

Launching your own independent pharmacy can be costly and a lot of work. On the other hand, it can be rewarding and give you more autonomy. To cover costs, consider the following pharmacy lending options:

• Small business loans for pharmacy owners: These may come from your local bank or credit union, online lenders, or the Small Business Administration (SBA). The SBA has different loan programs including 7(a), 504, and Microloans. Look into potential collateral requirements, fees, and compare rates and repayment terms.
• Business line of credit: Instead of a traditional pharmacy business loan with a lump sum upfront, you could get a business line of credit. Think of it like a lifeline of available credit you can use to pay expenses. You typically qualify for a specific amount and can draw what you need. Once you repay what you borrow, your available credit will increase, as it does with a credit card.

Be aware that as you start, your personal credit score may come into play during the approval process. Without any established business credit, lenders can only look at your personal credit score. To start building business credit, you can open a business bank account and business credit card. Charge expenses on the card and pay from your business account to begin building a credit history.

If you’re looking for cheap business loans, check your local credit union as they typically have competitive rates. To find the best online pharmacy loans, check out several lenders offering business financing. Some lenders allow you to get prequalified to see potential rates. Going through this process with multiple lenders can help you compare rates apples to apples, so you can see which is the most competitive offer. If you get approved for a lower rate, you can lower your overall borrowing costs. This can help you pay less and could improve your cash flow with lower monthly payments.

Competing with the Best Online Pharmacy Platforms and Big-Box Pharmacies

To succeed with your own independent pharmacy, you have to compete with the best online pharmacy platforms and other big-box pharmacies. It’s important to stay competitive and do the following, if possible:

• Offer free delivery or home delivery
• Streamline processes with automatic refills
• Have a caring and community-oriented licensed pharmacist
• Provide robust inventory with plenty of meds and supplements
• Have an online presence with an established website
• Give customers your phone number for questions

Where an independent pharmacy may be able to stand out is through one-on-one care. Pharmacists can talk to customers about their valid prescriptions, thoroughly explaining any side effects or warning signs to be aware of. Having a personalized touch and building relationships in the community can make all the difference.

Final Thoughts

Starting an independent pharmacy can be a way to support your career and your community. Though some people prefer to go online rather than a physical address, there are always people who want to talk to someone in person. Additionally, the Food and Drug Administration (FDA) notes that there are many unsafe online pharmacies on the market. As an independent pharmacy, you can be an antidote to this and serve your community. You can also focus on your web presence so that you can offer the best online pharmacy services and stay up to date with your technology.

FAQs about Best Online Pharmacy Loans and Starting a Pharmacy

What Are the Best Online Pharmacy Platforms?

Some of the best online pharmacy platforms include Amazon Pharmacy, HealthWarehouse, and Honeybee Health, which offers free standard shipping for orders over $40.

Are There Small Business Loans for Pharmacy Owners?

Pharmacy owners may be able to secure financing with a term loan, business line of credit, or an SBA loan.

Is Owning a Pharmacy Profitable?

Owning a local pharmacy may be profitable, but it depends on location, customer base, and other factors. According to the National Community Pharmacists Association, the gross profit margin in 2023 was 19.7%, a drop compared to other years.

What is the Biggest Problem in Pharmacy Management?

One of the main challenges for pharmacy services is a staffing shortage. Other issues include burnout and declining reimbursements.

Can You Take Out a Pharmacy Business Loan?

Pharmacy business loans may be available from banks, online lenders, and the Small Business Administration (SBA). You can compare some of the best online pharmacy loans and look at rates, terms, and fees before deciding on a lender.