Ordering Pitfalls That Kill Your Gross Profit and Cash Flow

Drug sourcing is one of the most critical — and complex — parts of running a pharmacy. Unfortunately, it’s also one of the easiest to overlook. But ignoring it isn’t an option. Your cost of goods makes up the majority of your expenses, and just a couple of percentage points can mean the difference between thriving and shutting your doors.

Here are some common ordering pitfalls that silently eat away at your profit and cash flow — and how to avoid them.

1. Focusing Too Much on Branded Cost of Goods

Your branded cost of goods is only one piece of the inventory puzzle. Demanding a specific number here can set you up for failure elsewhere.

Here’s why: your wholesale partner only has so much flexibility. If they give on branded pricing, they often have to take away on the other side — typically generic pricing or volume commitments. Like staying healthy, drug sourcing requires balance. Focusing on one metric without a holistic view can weaken your overall performance.

Inventory management directly impacts your cash flow. If you’re waiting 14 to 45 days for reimbursement, every extra item on the shelf ties up cash you could be using elsewhere.

This is especially true for refrigerated inventory — expensive insulins, vaccines, and specialty drugs can quickly add up. Implementing a perpetual inventory system or strong checks and balances helps you stay lean and liquid without sacrificing patient service.

3. Falling Off the Rebate Cliff

It’s human nature to chase deals and feel like you’re making progress — until you’re not.

Drug sourcing agreements often include rebate thresholds. Miss those critical inflection points, and you lose valuable rebates, effectively undoing all your hard work. Stay aware of these cliffs as you approach the end of the month, and understand how every purchase impacts your aggregate rebate position.

4. Going Completely Transactional with Your Primary Wholesaler

Your relationship with your primary wholesaler is more than just a pricing agreement — it’s a partnership that impacts your access to controlled and hard-to-find items.

If you abandon your wholesaler completely outside of brands and controls, they’ll eventually rebalance the relationship — often by tightening narcotic thresholds or adjusting your economics. Maintaining this balance is key to long-term stability and continued access to critical medications.

Finding the Right Balance

If you find yourself frustrated or overwhelmed by these pitfalls, don’t be. Pharmacy Marketplace was designed to help independent pharmacies navigate the complexities of sourcing, pricing, and purchasing — all while protecting profit and cash flow.

Schedule a demo today and see how we can help you make smarter purchasing decisions: https://pharmacymarketplace.com/demo