Business, Management and Accounting
2 years ago

Alabama Pharmacies Boost Profits by Monitoring Inventory Efficiency, Study Finds.

Journal of Pharmaceutical Marketing & Management
The Relationships Between Profitability, Inventory Efficiency, and Gross Margin Return on Investment in Alabama Community Pharmacies
Richard H. Parrish

Paper Summary

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The study looked at how profitable Alabama community pharmacies were in 1983 by analyzing their inventory turnover and gross margin return on investment. They found that a high gross margin return on investment (GMROI) was linked to higher profits, with a GMROI of at least 193% being necessary for profitability. Specifically, the GMROI for the prescription department, pharmacy gross margin, and prescription inventory turnover were the most important factors in predicting net profit. This suggests that focusing on these areas can help pharmacy managers improve their profitability.