More margin, not more price

Turnover is not yet margin

A busy pharmacy can achieve high turnover and still be under economic pressure. What is decisive is not how much passes through the till, but how much is left after cost of goods, staff, logistics, write-downs and other operating costs.

With medicines in particular, this distinction can be deceptive. A high-priced medicine generates a lot of turnover but need not automatically be especially profitable. Conversely, a comparatively cheap product with good purchasing, a high turnover rate and little counselling effort can achieve an attractive contribution margin.

For the pharmacist as an entrepreneur, the classic percentage margin should therefore not be the sole focus. At least as interesting are the absolute gross profit in francs, the gross profit per franc of stock, the gross profit per shelf area and, for services, the contribution margin per hour of labour deployed.

That changes the perspective. The question is no longer «Where do I have the highest margin?» but «Where do my capital, my floor space and my team work most profitably?»

In the Rx business you cannot simply raise the price

This way of thinking is particularly important in the prescription-only area. For medicines on the Specialities List, a pharmacy cannot set its selling price freely according to business considerations. The Federal Office of Public Health sets the prices relevant for compulsory health insurance and regularly reviews the conditions for including medicines. A further round of the periodic review is running in 2026 as well.¹

The public price is composed in principle of the ex-factory price, the distribution share and value added tax. The distribution share is intended to remunerate the logistical services of the service providers. Since the reform of 1 July 2024 it consists, for prescription-only medicines, of a price-related and a pack-related component. Up to a relevant ex-factory price of CHF 4,720.99 the price-related supplement is six per cent; above that it no longer applies. For the fixed pack supplement, CHF 9 currently applies with an ex-factory price of up to CHF 7.99, CHF 16 between CHF 8 and CHF 4,720.99 and CHF 300 from CHF 4,721.²

Added to this is a further change of entrepreneurial significance: for original preparations, generics and biosimilars containing the same active substance, a uniform distribution share is used, which for the relevant groups is based on the average ex-factory price of the generics or biosimilars. This was intended, among other things, to reduce the former financial misincentive to favour more expensive preparations over cheaper alternatives.²

For the pharmacist as an entrepreneur this means: in the regulated Rx business, the decisive lever on results does not lie in a freely chosen selling price.

The optimisation has to take place elsewhere.

Purchasing remains important, but discounts are not free profit

One obvious lever is purchasing. Larger order volumes, better terms, reduced logistics costs and bundled negotiations can improve profitability. This is precisely why many independent pharmacies join purchasing groups and groupings.

At the end of 2024, around two thirds of the owner-managed pharmaSuisse member pharmacies were already organised in groupings or purchasing associations. pharmaSuisse expressly names as a key advantage the use of synergies and the reduction of costs. Of a total of 1,830 Swiss pharmacies, 1,164 continued to be independently managed, while 666 belonged to pharmacy chains.³

One example is Rotpunkt. Rotpunkt Pharma AG supports more than 100 independently managed pharmacies and drugstores in areas including purchasing, marketing, continuing education, services and digitalisation. Through central purchasing, an owner-managed pharmacy can use part of the economies of scale of a chain without entirely giving up its entrepreneurial independence.⁴

However, «buying better» must not become the simplified formula «more discount equals more profit».

For medicines, clear integrity, transparency and pass-on rules apply in Switzerland. Discounts and rebates on purchasing must be transparent and documentable. For services charged to compulsory health insurance there is in principle an obligation to pass corresponding discounts on to the insured or the insurers. Under defined conditions, agreements can be made whereby discounts are not passed on in full and are instead used for quality improvements. In addition, financial advantages must not improperly influence the choice of treatment with prescription-only medicines.⁵

The consequence for the pharmacist is therefore: optimise purchasing professionally, but never automatically calculate Rx discounts as freely available additional margin.

Purchasing optimisation becomes far more interesting where products are not reimbursed by compulsory health insurance and the pharmacy has more commercial room for manoeuvre.

Strategic room for manoeuvre often lies next to the Rx prescription

In 2024, almost 133 million packs of medicines were sold in public pharmacies and mail-order pharmacies in Switzerland. 53 per cent of them were prescription-only. Of the non-prescription packs, 31 per cent of total volume was accounted for by OTC medicines that were not on the Specialities List and were therefore not reimbursed by compulsory health insurance.⁶

It is precisely here that a decisive part of entrepreneurial freedom begins.

Added to this are dermocosmetics, food supplements, medical devices, personal care, health products and further self-pay segments. In these areas the pharmacist can influence assortment, suppliers, price positioning and own-brand strategy considerably more strongly.

The answer should not, however, be to put as many high-margin products on the shelf as possible. A high percentage margin is of little use if a product sits in stock for twelve months and then has to be written off.

Assortment margin and stock turnover must be considered together.

Stock is one of the most underestimated margin reserves

In many pharmacies a considerable part of the capital tied up lies a few metres behind the sales counter. Every pack that is bought but not sold for months ties up liquidity. If it expires, apparent assets turn into a direct loss.

A pharmacy should therefore optimise its stock not primarily by the number of items, but by economic significance, demand and relevance to supply.

An established concept is the ABC analysis. Products are classified according to their share of the tied-up purchase value or consumption value. It can be complemented by an analysis of movement frequency as well as a clinical prioritisation. Studies on pharmaceutical logistics show that combined ABC and VED or FNS models can help to identify those products where particularly close stock control makes economic and supply-related sense.⁷

For a public pharmacy this can be translated pragmatically. Expensive products with low turnover need a different stock strategy from frequently sold standard items. Slow movers should be regularly questioned. Seasonal products need adjusted ordering cycles. Products with a short expiry date must be consistently managed on the «first expired, first out» principle.

At the same time, a blanket stock reduction would be dangerous. Supply shortages have become part of everyday life. For medically important or hard-to-obtain medicines, a consciously defined safety stock can make more sense than a maximally lean inventory.

The goal is therefore not the smallest stock.

It is the economically most intelligent stock.

One of the most interesting key figures for this is the gross margin return on inventory investment, GMROI for short. Put simply, it relates the gross profit achieved to the average stock value tied up. This makes visible whether a supposed «margin product» actually earns money or merely blocks capital.

Less assortment can mean more result

Pharmacies are traditionally proud of the breadth of their assortment. From the customer’s perspective that is understandable. In business terms, however, it can become expensive.

Does the seventh almost identical magnesium preparation really have to be in stock? Does the pharmacy need twelve different protein powders when three of them generate most of the turnover? Is every skincare product strategically necessary, or is only shelf width being created without economic benefit?

Consistent category management can release considerable reserves here. For each product group it should be clarified what role it fulfils. Some categories bring footfall. Others generate gross profit. Yet others create competence and customer loyalty.

Not every product has to fulfil all three functions.

What is decisive, though, is that the pharmacy knows why it is on the shelf.

The strongest margin often arises through differentiation

Anyone selling exactly the same products as five online retailers, two drugstore chains and the pharmacy in the next neighbourhood is inevitably in a price comparison.

Specialisation can therefore be a considerably stronger margin lever than classic purchasing optimisation.

A niche must be large enough to become economically relevant, but specific enough for the pharmacy to build a credible lead in competence.

Interesting fields are opening up here right now.

Pet care: when the pharmacy also thinks of four-legged customers

Switzerland is an attractive pet market. The Identitas database alone currently records around 548,000 registered, living dogs with a keeper’s address in Switzerland. Identitas emphasises at the same time that the pet sector continues to gain in importance and in 2025 even set up its own subsidiary with a new pet platform for it.⁸

An interesting specialisation can arise from this for a pharmacy. Conceivable is a visibly positioned pet care section with dermatological care, wound care, dental care, selected nutritional products, a travel medicine kit for animals, tick and parasite advice within the legally permissible framework, and professional handling of veterinary prescriptions.

The boundary with veterinary practice must remain clear. Prescription-only veterinary medicines are subject to their own regulations. The Federal Food Safety and Veterinary Office expressly points out that prescription-only medicines for animals may be prescribed and dispensed only under the legally defined conditions. Formula medicines for animals likewise move within the framework of veterinary medicines law.⁹

For that very reason, cooperation rather than competition could be the most interesting model. A pharmacy could network with veterinary practices in the area, provide professional support for compounding and medicine procurement, and at the same time build a complementary over-the-counter pet care assortment.

The customer then does not come because of a single animal product.

They come because the pharmacy is perceived as a centre of competence for animal health.

Sport and performance: a growing but fiercely contested segment

A second attractive field is sports and performance nutrition. Creatine, protein, electrolytes, energy gels, collagen and numerous supplements have long ceased to be used only by elite athletes.

How dynamic demand can be is shown by sales data from Galaxus. The retailer reported for 2025 an increase in turnover of between 50 and 90 per cent over the previous year, depending on the category, for vitamins, food supplements, sports nutrition and sports drinks. Particularly in demand were creatine, collagen and energy gels, among others. These figures do not represent the entire Swiss market, but they clearly show how strongly a large Swiss retailer is developing in this segment.¹⁰

Competing with an online retailer on the price of protein powder would, however, hardly be a convincing strategy for a pharmacy.

The segment only becomes interesting through counselling.

A specialised performance pharmacy could combine sports nutrition with pharmaceutical knowledge. Which supplements actually have robust evidence at all? Which dosage makes sense? Which products are relevant for endurance athletes and which for strength athletes? Are there interactions with medicines? Is supposed poor performance perhaps iron deficiency? What role do vitamin D, electrolytes or energy intake actually play?

Swiss Olympic likewise emphasises that sports nutrition encompasses numerous individual aspects and refers for in-depth advice to specialised professionals and the Swiss Sports Nutrition Society.¹¹

Precisely here lies an opportunity for pharmacies. The differentiation is not «more supplements», but better decisions about supplements.

A structured counselling concept, a high-quality product selection and cooperations with fitness studios, running clubs, physiotherapy practices and sports physicians can turn a shelf into a genuine business unit.

Own brands increase not only the margin but customer loyalty

A further strategic lever is own products and private label assortments.

With dermocosmetics, care products or selected health products in particular, an own brand can combine several economic advantages. The product is not directly comparable with the price of an identical article at an online retailer. The pharmacy controls positioning and brand presence more strongly and can link the assortment closely with its counselling.

The most important advantage is, however, a longer-term one: the pharmacy builds up its own brand value.

Anyone who can obtain their favourite cream exclusively at a particular pharmacy has an additional reason to come back. A strong own brand can thus influence not only the product margin but also the repeat purchase rate, the basket and customer loyalty.

The precondition is that the pharmacy does not simply put its own label on an arbitrary standard product. An own brand becomes strategically valuable only when it supports a clear competence positioning, for example sensitive skin, menopause, sports recovery or a specialised pet care line.

Services have to be costed like a business unit

A further paradigm shift concerns pharmaceutical services.

Since 1 January 2026 a new tariff structure, RBP V, applies to the remuneration of pharmaceutical services under compulsory health insurance. It replaced the previous RBP IV/1.¹²

Beyond this, pharmacies increasingly offer vaccinations, consultations, checks and further health services. From a business perspective, however, a service should not be offered simply because it is pharmaceutically interesting.

Here too the numbers have to be done.

How long does the service take, including preparation and documentation? What qualification of staff member is needed? What consumables are involved? How heavily is a consultation room blocked? How many appointments can realistically be sold per week? Does the counselling generate follow-on sales or long-term customer relationships?

A service with CHF 40 in turnover and 35 minutes of highly qualified working time can be economically worse than a service with a lower selling price that can be delivered in a standardised way in ten minutes.

Every pharmacy should therefore develop, alongside the gross profit from goods, a second view of the gross profit from time.

Counselling must become an economic system

That does not mean the pharmacist should now only sell. On the contrary.

Good pharmaceutical counselling can be particularly valuable economically when it is systematically organised. A skin check can lead to a suitable skincare routine. A sports consultation can encompass several sensibly combined products. A blood pressure check can trigger longer-term support. Travel advice can combine vaccination, a travel medicine kit and further preventive products.

This differs fundamentally from aggressive add-on selling.

Cross-selling makes sense when the additional products or services solve a real customer problem.

The decisive question is not: «What else can we sell?»

But: «What else does this customer sensibly need?»

If that question is answered consistently in pharmaceutical terms, customer benefit and economic benefit can rise at the same time.

The margin cockpit for the pharmacy

Anyone wanting to optimise margins should not look only at total turnover. A simple monthly cockpit can show far more quickly where money is actually earned or lost.

The pharmacy does not need a hundred margin measures

In practice the temptation is great to change purchasing, assortment, staff, marketing and services all at once. That often leads to many projects and little measurable effect.

A clear sequence makes more sense.

First, transparency should be created. Which ten categories generate the largest gross profit? Which products tie up the most capital? Where do write-downs arise? Which items have barely moved for six or twelve months? Which services require a lot of working time but achieve little contribution margin?

Then comes the clean-up. Ordering parameters are adjusted, slow movers reduced, expiry dates managed more consistently and supplier terms reviewed. Purchasing groups can provide additional leverage here.

Only in the third step should growth follow. A specialised segment is tested, an own brand expanded or a new service introduced. What is decisive is to start with a clearly defined pilot and to measure its economic effect.

In this way margin optimisation moves from an annual «cost exercise» to an ongoing management instrument.

Not every customer has to buy more

The economically most successful pharmacy of the future will probably not be the one that sells as many products as possible on as little floor space as possible.

It will rather understand where it has a genuine advantage.

In the regulated Rx business, prices and reimbursement mechanisms lie largely outside direct entrepreneurial control. At the same time, however, a pharmacy has numerous levers that it very much can influence: purchasing, assortment, stock levels, processes, specialisation, own brands, services and customer loyalty.

Independent pharmacies in particular should not try to copy the assortment breadth of large chains or the prices of international online retailers. Their strength can lie in the opposite strategy.

Less interchangeability. More competence.

A pharmacy that becomes the first address for a particular topic can reduce its assortment breadth and at the same time increase its relevance. That can be dermocosmetics. Women’s health. Pet care. Sport and performance. Travel health. Prevention, or another field that suits the location and the clientele.

The niche alone, however, guarantees no margin. It must be built up consistently, with competent staff, a curated assortment, matching services and clear communication.

Conclusion

Margin optimisation in the pharmacy does not mean buying medicines as expensively as possible and selling them on even more expensively. In the Swiss Rx market in particular, the entrepreneurial possibilities in pricing are deliberately limited.

The real margin therefore arises increasingly from better decisions.

Buy better. Tie up less capital in the wrong stock. Reduce expiry. Manage categories according to their actual contribution to the result. Assess services by time and contribution margin. Build up own brands. And specialise where pharmaceutical knowledge makes price comparison difficult and generates genuine customer benefit.

This shifts the role of the pharmacy owner.

From the administrator of a medicine store to the active entrepreneur of a health business.

And possibly that is the greatest margin lever of all.