5 Considerations for Setting Up a Pharmacy

If you’re looking to set up a pharmacy, you’re entering a growing industry. Pharmacy industry revenues in Canada were projected to reach US$53.37 billion in 2023 and grow by 5.39% to reach US$65.83 billion by 2027.¹

The expertise you acquired during pharmacy school, however, may not have fully prepared you for running a business. In the pharmacy industry, the competition is intense and demand for patient services, from vaccines and COVID-19 management to prescribing medications is steadily growing.¹ On top of that, customers now expect pharmacies to supply an increasing array of goods and services, as well as advice – including everything from groceries to cosmetics and expertise on health and medication questions.

Meeting all those demands can be daunting as you start down the path to ownership. But here are five steps you can take to help ensure your journey goes smoothly. 

A 2023 Scotiabank Insights on Pharmacists report found that hiring qualified employees, finding the right location and creating a business plan are considered the key factors while setting up a pharmacy.² From the outset, it’s important to surround yourself with an expert team that can help you cover all these bases.

“You’ll definitely need expert advice from day one,” explains Lia Donatelli, Director & Group Lead, Professional Banking, Toronto at Scotiabank. “This typically includes an accountant, a lawyer and a financial advisor who specialize in the healthcare industry. These are key partners who should go over all the solutions available to you. A lawyer can assist in reviewing lease agreements, agreements of purchase and sale and in drawing up contracts for employees. A review of these agreements and having contracts in place can avoid pitfalls before they occur. An accountant can ensure that you have tax efficiencies and that you structure your business and transactions in the most tax effect way. You want to make sure that when you’re starting out, you’re connected to advisors who have expertise in the pharmacy sector, so they can really help and advise you on challenges unique to pharmacists.”

Setting up a successful pharmacy requires a broad range of expertise covering everything from drug distribution and store location to staffing. So, before taking the plunge into ownership, consider working for an established pharmacy for a few years and having another pharmacist as a mentor.

This hands-on experience will prove invaluable when it comes to setting up your own pharmacy. “Working as an associate clearly offers great benefits in terms of mentorship and increasing your knowledge,” says Donatelli. “Then when you go out on your own, you already have experience in areas like marketing and technology that you can apply to your own pharmacy.” 

As patients coming from a doctor's office will often go to the nearest available pharmacy to fill their prescriptions, it’s wise to try to locate your pharmacy close to a doctor’s office or a medical clinic. You also want to consider foot traffic, so being located in a busy mall or retail area can be a great option. This will help ensure a greater flow of store visitors conveniently fulfilling they pharmacy needs at the same time and increase prescription revenue. “Without a flow of prescriptions, a pharmacy can’t really be viable,” adds Donatelli. “You should always be conscious of this when deciding on the location of your pharmacy.”

There are a variety of factors to consider when deciding whether to buy a pharmacy franchise or establish an independent company. While costs vary widely, a positive factor in either case is that Scotiabank provides approved applicants with up to 100% of the financing through our Scotia Professional® Plan.

Deciding whether to start on your own is therefore more a question of whether you would like to go independent or whether you’d prefer the security of operating under an established brand.

Operating on your own will give you greater independence when it comes to making decisions, but it will require you to do much of the market research and planning on your own. Not to mention recruiting staff and integrating into the medical community.

Alternatively, as a franchisee, you will benefit from having the market research done for you, including where your new store should be located – a key factor in opening a successful pharmacy. As well, in terms of drug pricing, the bigger chains have economies of scale over independent operators. Whether you are in a large city or rural location, may also affect your final decision of which way to go.

“As an independent operator you’ll have to worry about potentially higher costs and lower margins,” explains Donatelli. “That’s just one of the reasons why you should consider having an accountant and a Healthcare & Professional Specialist help you review the benefits of buying a franchise or going independent to find the right solution for you.”

After you’ve consulted with your team of experts and have financing in place, you still need to plan for contingencies to avert potential customer service challenges before you open the doors and have your staff go through multiple customer scenarios to prepare. Reinforce the fact that as well as filling prescriptions, you’re selling a great customer experience and providing additional goods and services your customers may need.

In fact, in one recent survey, 80% of customers said their shopping experience was as important as the products and services they purchase with 67% saying they would pay more for good customer service.³

Finally, continue to work with your team to improve your business. “Having a team of experts work with you from the beginning is very important,” says Donatelli. “But those relationships should also continue for years, both to help your business all along the way and fund opportunities as they arise.”

For customized advice and support on setting up a pharmacy, contact us today.