Page 14 - P4304.1-V99_PS Magazine - July 24

REDUCING COSTS TO

MAINTAIN MARGIN

By Caroline Pond

Reducing profit margins are always concerning. They happen
for a number of reasons and they seem to happen more often in
recent years. I suppose the only good thing is that we are all in the
same boat and given some of you are able to sustain a 30% or
more margin even in these tricky times then it stands that we all
should be able to keep our heads above water. I think the answer
is to really understand your business and really run a tight ship.
Blaming your suppliers or the NHS just isn’t the answer.

LETS LOOK AT SOME OF THE GREATEST
AREAS OF LOSS; CAN YOU TIGHTEN UP HERE?

1. GENERIC PRICING

I cannot express strongly enough how important it is to have a handle
on your generic purchasing. All the main wholesalers have generic
schemes in place and in all honesty, they are all pretty similar, if you are
using them as your main supplier. Generic schemes are designed to give
you a healthy profit margin across the board and unless you have an
experienced buyer (and a big enough business to afford this capacity in
your team), then purchasing via your scheme as close to 100% of the
time is key to maximising on discounts and preferential pricing.

The one thing generic schemes do not accommodate well is shopping
around, and in all honesty, most 2 or 3 line wholesaler generic
rd
nd
purchases are made without so much as a thought to purchase price.
This is where your costs creep up.
My advice – look at this month’s invoices from suppliers other than your
main wholesaler. Are there many generics on them? If so you need to
understand why this is happening and help staff to understand in turn, the
consequences of these purchases. Whilst you are looking, test my theory.
What prices are you paying for these generics and how do those prices
compare with the Drug Tariff? It can be a shock, let me warn you now!

14 PS Magazine | Reducing costs to maintain margin

05/06/2024 16:21:51
P4304.1-V99_PS Magazine - July 24.indd 14
P4304.1-V99_PS Magazine - July 24.indd 14 05/06/2024 16:21:51