Cost to Start a Pharmacy

Of course, there is never a set price. Financial projections are variable. Small Business Chron estimates between $880,000 and $1,765,000. They get this number from adding estimated pricing of the location, licenses, inventory, and a good computer system. Plus, they predict a negative total revenue for the first six months. After six months, a positive profit margin is not guaranteed.

McKesson, an American organization that helps distribute pharmaceuticals, medical supplies and technology, and expertise in healthcare management, acknowledges a different perspective, estimating only $350,000 to $450,000 for a brick-and-mortar location, inventory, and staffing.

While the price of an independent pharmacy may be variable, there is one thing that is set: the need for independent pharmacies in the country, post-pandemic shock.

Why An Independent Pharmacy Post COVID-19?

The nation’s recovery from the COVID-19 put independent pharmacies in a unique position. Perhaps counterintuitively, independent pharmacies were hurting at the beginning of the pandemic, as people grew wearier to go to a doctor’s office, missing their annual checkups and neglecting their medication refills. Now, as our country continues to recover, we have begun to acknowledge the importance of staying on top of our healthcare.

In May 2021, NPR interviewed Dr. Shantanu Nundy, a Washington D.C.-based primary care physician whose ideas align with the community-oriented approach that independent pharmacies thrive on.

First of all, retail pharmacies are far more accessible than a doctor’s office. When pharmacies began to offer COVID-19 testing and later, vaccinations, they were recreating the one-on-one patient care that Dr. Nundy told NPR, was “meeting patients where they are.” And in turn, patients began to recognize the importance of individual attention.

And now that life is moving faster again, pharmacies are the best option for those looking to reprioritize their healthcare but are always on the go. The pandemic helped shake the mentality that being on top of your healthcare involved making an appointment at the local private practice or clinic.

Benefits of an Independent Pharmacy

The notion of trusting those who handle our medicines became very apparent during the height of the pandemic. This is a major benefit to an independent pharmacy. The National Community Pharmacists Association, or the NCPA, references independent pharmacies as places that will support their customers, whether through the crisis of the pandemic, or day-to-day life. And this specialized attention, according to the NCPA, has some benefits:

  • More affordable medication

    When independent pharmacists take the time to analyze their customer’s prescriptions, they can evaluate individual prescriptions in terms of affordability.

  • Better health of the customer

    During this evaluation of a customer’s prescription, pharmacists can also assess how the medications may be affecting the customer’s wellbeing. These one-on-one evaluations can help the pharmacist determine whether dosages need to be expanded or reduced, or even changed altogether.

  • Supporting the community

    An independent pharmacy can greatly give back to the community. And this is a benefit both to the community, but also to the owner. This type of business is both personable and fulfilling, in many ways attributing to the mom and pop portrayal we see in media.

These benefits, noted by the NCPA, are the reasons why customers opt to send their scripts to an independent pharmacy. It is important to note that your customer service is just as vital as your inventory when it comes to attracting customers. Here, staffing proves to be a worthy investment.

Challenges of Competing Against Chain Pharmacies

Competition against chain businesses is no new problem for small business owners, and independent pharmacy owners are no exception. According to a recent post on Community Pharmacy, CVS and Walgreens alone make up 40 percent of the prescription pharmaceutical market. These chains have continued to grow over the past years, with brick-and-mortar locations popping up practically around every street corner.

Within the same post, Community Pharmacy lists convenience, efficiency, and affordability as two primary reasons why customers are drawn to chain pharmacies. However, the article then goes on to debunk these.

As a small business owner interested in starting an independent pharmacy, it is important to implement and emphasize your business’s convenience, efficiency, and affordability.

Independent Pharmacies Are Convenient

True, the amount of Walgreen or CVS locations can be convenient, especially for those who live in large cities. However, independent pharmacies have the ability to provide convenience by:

  • Having a method of prescription delivery to your customers
  • Offering free or affordable delivery
  • Creating flexible hours, if at all possible

Independent Pharmacies Are Efficient

People who believe in the convenience of chain pharmacies also believe that size equals efficiency. However, more cash registers and pharmacists do not always make for a more efficient customer experience.

The article also states that independent pharmacies were able to administer more doses of the COVID-19 vaccination, despite the federal government partnering with CVS and Walgreens. Pharmacy Community references a Washington Post article headlined “Small pharmacies beat big chains at delivering vaccines. Don’t look so shocked.” This article, published in February 2021, discusses how independent pharmacies were able to administer all of the vaccines provided to them, while big chains struggled to do so.

The article also leans into the fact that independent pharmacies have been doing well all along, with shorter wait times and same-day delivery. Pharmacists working in these independent businesses also have much more time to interact with the customers.

The article also attributes these successes to the values of the company. Independent pharmacies value the health of their community, rather than their corporation’s financial success.

Independent Pharmacies Are Affordable

According to a 2018 Consumer Report study, prescription prices are often cheaper at local pharmacies. While some customers don’t acknowledge their prescription price, as it is covered by their private insurance, independent pharmacies can sometimes present such competitive prices, it may be cheaper to pay out of pocket than with insurance.


Independent pharmacies have the potential to be convenient, efficient, and affordable, and even compete with big chain pharmacies in terms of convenience, efficiency, and affordability.

It is important to leverage the customer experience when analyzing the cost of starting your new independent pharmacy.

Challenges in the Pharmacy Business

Despite its praise for independent pharmacies, the Washington Post article does not hold back from presenting readers with real challenges for these small business owners. It attributes the expansiveness of large pharmacy chains to those involved in policymaking, like the Federal Trade Commission, which has often blocked the regulation of large chain pharmacies.

Without any regulation, big chains like CVS and Walgreens can often work with insurance companies, and in some states, this results in some insurance companies restricting their customers to only one big chain pharmacy.

Analysis of Costs

PBA Health, a pharmacy services organization aimed at helping independent pharmacy owners, came out with a detailed, step-by-step plan to start your own pharmacy. It is important to consider every step as a cost, whether it be a fiscal cost or a time-consuming task.

The plan includes ten vital steps: a business plan, funding, business structure, location, registering the business, opening a bank account, insurance, staffing, inventory, and marketing.

The Business Plan

Unexclusive to just a pharmacy, the business plan is a fundamental beginning to the start of every business. PBA Health recommends that the plan includes:

  • A vision statement, defined as a short statement that summates the reason for your business’s existence.
  • A mission statement, defined as a longer statement that lists the goals of your business.
  • A name for your business, something that is original, catchy, and easy to spell and pronounce
  • A list of goals, like where you would like to see your sales in a set time, or how many prescriptions you would like to be filling.

Getting Funding

Small businesses thrive on loans from places like the Small Business Administration (SBA) or Biz2credit.

Visit our financing tab for more information on options we offer to small business owners, such as working capital, CRE loans, and term loans.

Find Your Business Structure

PBA Health quotes the 2019 NCPA Digest stating that 59% of independent pharmacies are S corporations. S corporations do not have corporate-level federal taxes, while also offering protection of the business owner’s personal capital.

While you can also choose to make your business a C corporation, PBA Health states that 29 percent of independent pharmacies choose the LLC structure, which can also protect the owner’s personal assets, but they are limited under the definition of self-employment and self-employment taxes that the owner must pay.

Location Is Key

There are a few things that a business owner should consider when choosing an area to start a pharmacy, as recommended by PBA Health:

  • Find a place near big chain pharmacies

    In a separate article, called “How to Select the Best Pharmacy Location,” PBA Health points to two vital reasons why independent pharmacies should consider real estate right next to big chain pharmacies.

    For one, big chain pharmacies do a ton of research before moving into a location, so choosing a location near them means that you are also choosing a well-researched location. Secondly, they attribute the reason that many customers go to a big chain pharmacy is to feel better. If an independent pharmacy were to move in next to one, customers would begin to notice a pharmacy concerned with trustworthy customer service and patient-centered health and begin to think about the benefits of using this independent pharmacy when they are not feeling well.

  • Look for a busy area

    PBA Health indicates that this can mean busy in terms of car and foot traffic

  • Locate an area that has a strong older demographic

    As we age, we are prone to not only needing more medication, but we come to a better, more comprehensive understanding of our healthcare system. In many cases, older demographics will favor the pharmacist willing to have a one-on-one conversation.

Make Your Pharmacy Official

When you register your pharmacy’s name with both the local and federal government, you are blocking any other business owner from opening an independent pharmacy with the same name.

PBA Health offers a list of other licensures and titles you will need to obtain for your business. This may include:

  • An Employer Identification Number (EIN)
  • A state tax identification
  • A pharmacy retailer license
  • Drug Enforcement Agency
  • NCPHP Provider ID
  • National Provider ID

Open a Bank Account for Your Business

As to separate your personal and business finances.

Get Insurance

In the case of a small business, getting insurance is practically necessary in order to protect your personal assets. Business, as we know, is a revenue risk.

The types of insurance you choose to invest in will affect the overlaying question: how much does it cost to start a pharmacy?

PBA Health recommends professional liability insurance especially for a pharmacist, as it can protect the business owner from being liable for any pharmaceutical mistake, such as giving a customer the wrong medication or dosage. Also recommended is property insurance for your brick-and-mortar location.

With a business comes employees, which also means that you, as a business owner, must protect them with worker’s compensation.

Get Your Team

PBA Health quotes NCPA Digest with the vital fact that most independent pharmacies hire about eight employees.

Of course, you will want to look for qualified candidates with proper licensures, but also take this opportunity as a chance to explore what you value in employees, and how potential candidates can represent and better your business as a whole.

Get Inventory

Staffing is a weighty cost, as is inventory, and PBA Health emphasizes the importance of investing in a primary wholesaler that offers quick delivery and frequent discounts, as well as a secondary supplier that does the same.

In order to minimize your spending, PBA Health invites business owners to join a purchasing organization like ProfitGuard, which can offer ways for you to get better deals from your primary wholesaler and therefore save you, as the business owner, a lot of money. BuyLine does the same for secondary suppliers.

Spread the News

Marketing is the last step of PBA Health’s checklist. Although this should not be a long-term investment, building a customer base is integral to the start of a new business and successful pharmacy. Know your audience, and work to capture their attention accordingly: Use the internet, social media, local newspapers, and radio stations.

Then, it’s time for the grand opening.

Final Analysis

While determining the cost of an independent pharmacy store may be at the whim of many variables, an analysis should help narrow your thinking. Of course, start-up costs are ultimately the decision of business owners, as they consider how much they need to spend on location and reliable employees, how much they want to advertise, and how many deals can they find on inventory.

All in all, business is a risk, but with a smart analysis of the pharmacy market, you can create your own success story.

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