Running a retail pharmacy (drug store) business in Nigeria is a profitable business venture. Although, the market survey shows that the business is highly competitive and capital intensive but there is still a decent net profit margin of up to 40% on many products and annual return on investment of over 65%.
What is retail pharmacy?
A retail pharmacy store is a place where you can buy genuine drugs and other health based products approved by NAFDAC as safe for public use and available for sale. Pharmacy sells drugs in retails basically. They are of two types of pharmacy: hospital Pharmacy and Community Pharmacy. Community Pharmacy represents those pharmacies you see around outside the hospital premises and they are what most people referred to as Pharmacy. That’s the one I’m talking about how to start.
Okay, now that we understand what a retail pharmacy is, what are the basic steps required to start a Pharmacy business in Nigeria?
How to start Pharmacy business in Nigeria
How can I own a Pharmacy Shop in Nigeria? Apart from meeting up with the professional and legal requirements which I’ll discuss below you’ll need to come up with adequate Start-up capital or just don’t bother starting at all except if you want to operate as a ‘Chemist’
To start pharmacy business in Nigeria, you must either be a fully registered pharmacist or your partner with a fully registered pharmacist.
Technically, only a Pharmacist can own a Pharmacy drug store in Nigeria. Non Pharmacists can however deal in Wholesale though you will still need a Superintendent Pharmacist to register the Pharmacy with the Pharmacists Council of Nigeria (PCN). To start the pharmacy business proper;
- Carry out a feasibility study – You have to carry out your feasibility studies before investing in pharmacy business. Undertake the necessary research by browsing the internet to get the knowledge needed, as well as read books by various pharmacist authors on how you too might get started
2. Register your company with Corporate Affairs Commission (CAC) – In terms of share of the company, the Pharmacist must have like 60% shares in the company if you’re partnering with a pharmacist otherwise you may not be able to proceed later. Your forms must be clear about who owns the Pharmacy (the Pharmacist) and who is/ are the other Director(s).
- Find a good location – if you have a good location you with your 40% share in the company, you can make money in the long run than many other retail businesses. One Pharmacy store can make sales of 1million in just a single day. This is not common anyway; it can only happen with excellent locations and great customer care service. In moderately good locations, a pharmacy can make nothing less than 300000-500000/day; this is the commonest sales/day of most pharmacy in moderately good locations. You can agree with me that this is not bad sales volume though. It’s all about location and managerial skills. Most Pharmacies shut down mostly because of bad location and poor management. They assume they don’t need expert advice- especially true for pharmacists- and end up wasting their investment.
- Acquire a business premises (store) – If you have your own shop that fantastic but if not, you will need to find a way of tying down the location to go through the process of approval.
6. Employ A Superintendent Pharmacist if you are not a Pharmacist– You need a superintendent pharmacist to register your pharmacy if you’re not a pharmacist. Otherwise, you will be able operate the pharmacy business effectively in Nigeria. This is because of the rules and regulations governing the operation of pharmacy in Nigeria. To save yourself from stress, let your Superintendent Pharmacist be the same as the Pharmacist who is your partner. The payment for this role is however different you have to note that. In fact, it’s in two phases: you will pay for the License to register the Pharmacy with PCN and then the monthly salary based on agreement. It is the Superintendent Pharmacist that will register the Pharmacy with Pharmacists Council of Nigeria (PCN).
The following are the necessary steps to be taken with the assistance of the Superintendent Pharmacist;
a) Location Inspection: The Superintendent Pharmacist (SP) will write to the PCN Registrar through the state office requesting for inspection location. Payment is then made to the bank. The Superintendent Pharmacist should be able to find out current charge from your state PCN office. It is advisable you start this process around June or early in December or seek local advice through the Superintendent Pharmacist from the state Pharmacists Council of Nigeria office. I said you should start the process in December because the plan for inspection will be in the following year so you can be among the first to be inspected in your own locality. This is not always so anyway; a lot of politics are involved. Then, June because it may take 6months or more to complete the process. It can save you paying for License twice before starting real business. You can’t be so sure how fast or slow the process will be as at now.
b) Collect and fill necessary forms and return them to the PCN office: Your Superintendent Pharmacist can help you collect and fill necessary form.
c) Set up the Premises but DON’T STOCK THE STORE YET: Once your location is approved, you may be asked to start setting up the Premises for business. You should be given some requirements- things to put in place like your shelves, fire extinguisher, Pharmacist office, A/C, Poison Box and some books. You may be asked to pay some fees at this stage to collect the requirements.
d) Apply for Registration of Pharmacy Premises: Your premises will be inspected to see if you met the requirements and you will also be asked to pay for the license and registration.
The SP is the one that is involved in all this. In fact, PCN doesn’t want to deal with you if you are not a Pharmacist. You don’t even need to be there during all the inspections. Only the Superintendent Pharmacist and the Pharmacist on the Board of Directors (if different) are expected to be seen.
e) Start the business proper: Once registered you will be given a copy of all the documents and then you can go ahead with stocking and the business proper.
f) Put a strong advertising and promotional strategies: Produce handbills, calendars and brochures to share to people. Also, tell people about your new pharmacy and the quality of your products. You can consider giving out free drugs to a sect of persons.
Please, note that each year’s registration usually ends December. If you start too early and the inspection was made, and you commence the next step, you may need to pay for registration of premises twice before commencing real business. But like I said, the process is not so predictable. It is better to prepare to wait for 6-8months approval. This means that if the Superintendent Pharmacist is not the same as the Pharmacist on Board of Director, you need to be ready to keep paying the Pharmacist “salary” to “tie her/him down” till the process is completed otherwise the SP may not be available for the inspections.
The short cut to all these is to buy a Pharmacy that is on sale when you are sure you’re ready but it comes with its own challenges too.
What are the Challenges involved in starting and running a Pharmacy Store in Nigeria?
- DIFFICULTY IN REGISTRATION, LICENSING AND GETTING LEGAL REQUIREMENTS: With regard to setting up pharmacy store, some of the challenges you can likely face is mostly with registration, licensing and legal requirements.
- PROBLEM OF FINANCING: Financing can also be a challenge however if you can overcome the other challenges you are more than half way there.
- FAKE AND LOW QUALITY DRUGS IN CIRCULATION: The other type of challenge involved occurs during the business itself namely the rise in fake and low quality drugs in circulation despite NAFDAC’s best efforts at curbing them.
- STIFF COMPETITION: There is the problem of over competition as well what the average Nigerian would call “Chemist” – a local drug dispensing shop often manned by an unqualified druggist or in some cases uneducated trader.
- SOCIAL PRACTICES: There are also social practices which can also interfere with smooth running of the business such as patronage of local medicine practitioners by people who should naturally be seeking medical care from a good hospital.
Recession or no recession pharmacy business will always thrive very well. Please, note that a Chemist store (patent medicine dealer) is different from a Pharmacy store.
The Chemist store also has to register with their association too – National Association of Proprietary Patent Medicine Dealers. We have plenty kiosk in Nigeria popularly known as ‘chemist’ that lay claim to be a pharmacy, most of them didn’t go through procedures you explained.
How to make your pharmacy business profitable and successful?
To speed up the success of your pharmacy business, you need to brand your pharmacy. Doing all the registrations and starting is not enough.
- Begin with a bang.
- Design or Get a professional to design your logo
- Get a good mobile friendly website
- Go on social media and Get a blog where you discuss health related matters.
- Put up strong marketing strategies
- Respond fast to your customers complaints and there you are; boom!
What makes Pharmacy business profitable in Nigeria?
Health is wealth! Everybody wants to be healthy but only few stays healthy. Many Nigerians live unhealthy life style which predisposes them to diseases and infections. There is high level poor hygiene leading to attraction of disease carrying vectors which cause various kinds of fevers and illnesses. In Lagos for instance more than 12 million people live in slums and unhygienic surroundings. Less than 8% of Nigerians eat balanced diet. Most people are exposed to stressful conditions which often have negative impact on their health.
On daily bases, people buy and take pain killers, multivitamin supplements, high blood pressure drugs, diabetic medications and a host of other drugs to stay healthy. When people become ill or sick; they resort to taking drugs. The pharmaceutical market continues to flourish. An average Nigerian pharmacy store is just a middle man between the pharmaceutical companies that produce these drugs and the people who use these drugs with just a few overhead costs besides rent, salaries and levies/dues/taxes to deal with. In most cases, the individual pharmacy fixes the price of each of their drug. So, an investment of N7 million could yield over N5.5 million as Profit after tax within 12 months. The good thing about this business is that you can combine it with several complementary businesses like retailing of groceries.
How much will it cost to open new pharmacy store in Nigeria
It is might cost over five million naira to open a new standard pharmacy store in Nigeria. Here is the breakdown for the cost of starting new pharmacy store in Nigeria;
- POS retail system – N180,000
- 2 Fridges – N250,000
- Pharmacy Shelves – N600,000
- Inventory – N1,800,000
- Rent – N600,000
- Contingency – N300,000
- Cash at hand – N400,000
- Other expenses – N900,000
Total = N5, 030,000
I wish you all the best as you start Pharmacy drug store business!