Starting a pharmacy can be a rewarding venture that offers you independence and the chance to build something of your own. And it’s true that starting one from scratch is typically faster and less expensive than buying an existing pharmacy.

But if you’re thinking of starting your own pharmacy, don’t go into it blindly: it takes a lot of hard work, determination and patience in today’s competitive market.

Luckily, we know a thing or two about the pharmacy business—and we’re here with a powerful guide to show you how to start a pharmacy the right way. We’ll start with some frequently asked questions to get you up to speed. We’ll conclude with a thorough checklist for starting your own pharmacy.

Follow along as we provide step-by-step advice to go from financial planning to ribbon cutting.

Table of Contents

Who is pharmacy ownership for?

What pharmacy licensing requirements should I know about?

How long does it take to start a pharmacy?

How much does it cost to start a pharmacy?

How to start a pharmacy checklist

FAQs About Starting a Pharmacy

1. Who is pharmacy ownership for?

Pharmacy ownership isn’t a one-size-fits-all activity. Perhaps you’ve dreamed of running your own pharmacy business one day. Or maybe you have pharmacy ownership in your blood. Maybe you’ve struggled to find a pharmacist position in your current town, or you’ve recently graduated and want to create your own job.

Whatever path has led you here, if you have the drive to do it, you can transition from working for someone else to owning your own pharmacy. You’ll just need to have a solid plan, which we’ll get to in a bit.

2. What are the licensing requirements for pharmacy owners?

Knowing what licenses and permits you need is essential to starting a pharmacy—and there are plenty of requirements at both state and federal levels. The specific requirements depend upon where you live. But here are the basics:

  • Pharmacy license
  • Association of Boards of Pharmacy/National Council for Prescription Drug Programs (NABP/NCPDP) number
  • Drug Enforcement Agency (DEA) number
  • Employer Identification Number (EIN)
  • National Provider Identifier (NPI) number

Learn more about licensing requirements for pharmacy owners in your state.

3. How long does it take to start a pharmacy?

Theoretically, you could move from signing a lease to the grand opening in just six months. (But you’ll probably need to operate seven to nine months before you see a positive cash flow.) That timeline assumes you’ve already done up to a year of thorough planning.

4. How much does it cost to start a pharmacy?

Independent pharmacy start-up costs can vary based on location, inventory, and staffing costs. On estimate, you’ll need between $350–450K to start your pharmacy. That amount may sound daunting, but think about what goes into that number. Three big contributors are:

  • Rent for the physical location
  • Staffing costs (including any necessary training to get your employees up to speed)
  • Inventory (both prescription drugs and other retail products)

There are also many other details that go into independent pharmacy start-up costs, so you’ll need the help of a financial planner to cover all your bases. (More on this in our Checklist section.)

How to Start a Pharmacy Checklist

Now that you have some background information on what it takes to start a pharmacy, let’s get down to the details. Based on our experience, here are the five essential steps to starting a pharmacy.

1. Assemble a team of advisors

Starting your own pharmacy may feel like a solitary venture, but you don’t have to—and shouldn’t—go it alone. The first step to starting a pharmacy is to create your own team of expert advisors. Here’s who you’ll need in your corner:

  • Mentors. Starting your own pharmacy can feel like a daunting task. That’s why it helps to talk to peers who have started their own pharmacies. They know firsthand the challenges you’ll face and will have tips and hard-earned advice to share. Consult with your peers or join a group like the National Community Pharmacists Association.
  • Legal counsel. Hire a lawyer who can help you navigate the many rules and regulations of starting your own business. Ideally, find one who understands healthcare and employment law. Bonus points if they also have experience in the independent retail business. The first thing your lawyer should help you do is set up your pharmacy’s legal status. Will it be a sole proprietorship, partnership, limited liability corporation, “C” corporation or “S” corporation? This choice will affect your pharmacy’s finances and operations.
  • Professional resources. You should also enlist the help of professionals, including an accountant, financial advisor, insurance agent/broker and franchise representative (optional).

As you start this process, you may also want to consult experts in other fields, including real estate, technology, and human services professionals. And as soon as you negotiate a lease or buy a lot to build on, you’ll need a pharmacy designer to create the plan you’ll use to apply for your state license.

Just remember: You may be going into business for yourself, but you’ll need to build a team of advisors that can help you make your dream a reality.

2. Find the right location

This step is more complex than you might realize. The most important question to ask is if your chosen location can sustain another pharmacy. To determine this, ask the following questions:

  • Are there other pharmacies in the market?
  • Are they chains or independents? It’s often easier to pull business away from a busy chain site than an independent pharmacy with loyal customers.
  • Is there a sufficient prescription base to sustain another pharmacy?

Other things to consider when choosing a pharmacy site:

  • Traffic. Do your ideal pharmacy customers regularly travel through this area?
  • Opportunity. Are there nearby businesses, such as medical offices, that will provide a constant flow of potential customers?
  • Access. Can people easily enter and exit? Is there plenty of parking? How about room for a drive-thru window or curbside service?
  • Size. Can your pharmacy grow in this location?

You should also do some sleuthing. Did an independent pharmacy recently close in the area? Understand the reasons why. You may be able to capture customers who value the service that independent pharmacies provide. But act fast—you’ll have only about a six-month window to save that customer base.

Finally, think about how close other sources of business are. For example, opening in or near a medical clinic can give you ready access to customers as they leave a doctor’s office. This can bring opportunities for refill business, too.

3. Create a business plan

Now that you’ve assembled your team and settled on a location, it’s time to get down to the details: drafting a preliminary business plan. A business plan is essential not just to help guide the direction of your pharmacy from the start, but to secure funding from investors or financial institutions.

Consult your lawyer, financial advisors, and more members of your team to help flesh it out in detail. And let them have a final look after you’re done to make sure it feels cohesive, realistic and complete.

4. Select financing options

With your business plan in tow, it’s time to get financing for your pharmacy business. Like any small business owner, you need to pick the financing mechanism that’s best for you. That’s why having a financial advisor is crucial as you begin this process. There are many financing options available, including loans from traditional lenders like commercial bank lenders, a Small Business Administration lender, and suppliers and wholesalers.

But across the board, lenders are looking for:

  • an initial upfront investment from the potential owner
  • a good credit score
  • sufficient working capital

When preparing to ask for a loan, include three types of funding in your business plan and financial statements:

  • Build-out capital. This will pay for building the store, renovations, fixtures and other fixed assets. You may need roughly $300,000 in start-up capital, separate from working capital. Lenders typically want to see a minimum of 20-25% percent investment from you before they finance the other 75-80% of the loan. That 20-25% down can’t be tied up in an investment vehicle or IRA. Those funds need to be liquid and available.
  • Opening inventory financing. This will pay for initial products to stock your store. While wholesalers usually provide favorable terms, remember that you are unlikely to have a positive cash flow for at least six months. To plan your opening inventory, your wholesaler can give you a sample prescription medication order for a pharmacy of your size that you can tweak. It can also create a sample over-the-counter (OTC) order with planograms based on the size of your pharmacy’s departments.
  • Working capital. This will pay for day-to-day operations such as payroll, utilities, etc.

Keep in mind that one of the biggest reasons new independent pharmacies fail is cash flow. When you fill a prescription, the customer pays only a portion of the cost, and you may have to wait 30 to 45 days to receive the rest of the money from payers. So, it’s important to plan for that delay in cash flow.

Understanding your financial needs will determine who you should approach for a loan: a commercial lender, a Small Business Administration lender or a wholesaler.

5. Do a test run

You’ve assembled your team. You’ve created a business plan and shown your investors or financial institution. You’ve secured funding and a physical location for your pharmacy. Now is the time to get everything up and running. But first, you need to test out your operations before you open your doors.

Here are some steps to take while you’re in test mode:

  • Have test-runs with your staff. During these trial runs, go through various customer scenarios to work out potential kinks in your workflows.
  • Set up and organize your inventory. Experiment with different inventory placement and ask friends or mentors for their feedback on different inventory set-ups.
  • Announce your business with “Coming Soon” ads. Strive to do this a month or two before your grand opening. Talk to businesses in the area that might be able to use your services, such as workplaces, long-term care facilities or prisons.
  • Plan events that will bring in your target customers. For example, if you are aiming for young parents, offer fingerprinting of children with the local police department. Or you could attract older customers by offering a free diabetes screening and education program.
  • Get involved in the community. Consider joining the local Chamber of Commerce. Invite the mayor to do the ribbon cutting for the grand opening. Tell the local newspaper or website about your event. Local minor league and semiprofessional sports teams also may be available for grand-opening events.

It’s likely been a long road, but all the hard work you’ve put into this journey will be worth it when you help that first patient on their way to better health.

Running your own pharmacy can be an exciting, rewarding experience. While there’s a lot that goes into getting up and running, there are plenty of resources and friendly advisors to help you.

Related: Learn more about McKesson’s pharmacy ownership consulting services


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About the author

McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.


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