Pharmaceutical Business Plan Template
Written by Dave Lavinsky
Pharmaceutical Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their pharmaceutical companies.
If you’re unfamiliar with creating a pharmaceutical business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a pharmaceutical business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your pharmaceutical business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a pharmaceutical business or grow your existing company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your pharmaceutical company to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Pharmaceutical Businesses
With regards to funding, the main sources of funding for a pharmaceutical business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for pharmaceutical businesses.
How to Write a Business Plan for a Pharmaceutical Company
If you want to start a pharmaceutical company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your pharmaceutical business plan.
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of pharmaceutical business you are running and the status. For example, are you a startup, do you have a company that you would like to grow, or are you operating pharmaceutical companies in multiple markets?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the pharmaceutical industry.
- Discuss the type of pharmaceutical business you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of pharmaceutical company you are operating.
For example, you might specialize in one of the following types of pharmaceutical businesses:
- Generic Pharmaceutical Manufacturing : this type of pharmaceutical business develops prescription or over-the-counter drugs products that do not have patent protection.
- Vitamin & Supplement Manufacturing: this type of pharmaceutical company primarily develops products that contain ingredients intended to supplement the diet.
- Brand Name Pharmaceutical Manufacturing: this type of pharmaceutical business engages in significant research and development of patent-protected prescription and over-the-counter medications.
In addition to explaining the type of pharmaceutical business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of patents awarded, the extent of your product portfolio, reaching X number of distributors under contract, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the pharmaceutical industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the pharmaceutical industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section:
- How big is the pharmaceutical industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your pharmaceutical company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: healthcare providers, chain pharmacies, independent retailers, and consumers.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of pharmaceutical business you operate. Clearly, individuals would respond to different marketing promotions than hospitals, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other pharmaceutical businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes imported alternatives, herbal remedies, or customers’ nutritional self-care. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of products do they manufacture?
- What are their research and development capabilities?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide product development?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a pharmaceutical company, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of pharmaceutical business that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you manufacture patent-protected prescription medications, or a range of vitamins?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your pharmaceutical business. Document where your company is situated and mention how the site will impact your success. For example, is your pharmaceutical company located in an industrial district, near a major medical and/or scientific hub, or near input markets? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your pharmaceutical marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Advertise in trade publications
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your pharmaceutical company, including meeting with potential customers, creating and distributing product information, developing and manufacturing products, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to produce your Xth product, or when you hope to reach $X in revenue. It could also be when you expect to expand your pharmaceutical business to a new city.
Management Team
To demonstrate your pharmaceutical company’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing pharmaceutical businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a pharmaceutical business or successfully running a R&D company.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions including your sales projections. For example, will you manufacture a line of general sales products, or will you specialize in manufacturing controlled drugs? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your pharmaceutical company, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a pharmaceutical company:
- Cost of equipment and supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your facility blueprint or a list of products you manufacture.
Writing a business plan for your pharmaceutical business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the pharmaceutical company industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful pharmaceutical company.
Pharmaceutical Business Plan Template FAQs
What is the easiest way to complete my pharmaceutical business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your pharmaceutical business plan.
How Do You Start a Pharmaceutical Business?
Starting a pharmaceutical business is easy with these 14 steps:
- Choose the Name for Your Pharmaceutical Business
- Create Your Pharmaceutical Business Plan
- Choose the Legal Structure for Your Pharmaceutical Business
- Secure Startup Funding for Your Pharmaceutical Business (If Needed)
- Secure a Location for Your Business
- Register Your Pharmaceutical Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Pharmaceutical Business
- Buy or Lease the Right Pharmaceutical Business Equipment
- Develop Your Pharmaceutical Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Pharmaceutical Business
- Open for Business
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Other Helpful Business Plan Articles & Templates
- Business Plans Handbook
- Business Plans - Volume 03
- Pharmaceutical Company Business Plan
Pharmaceutical Company
BUSINESS PLAN
PAIN AWAY LTD.
1117 High St. Poughkeepsie, NY 13495
The company described in this plan has moved beyond the initial start-up phase and is now seeking investors to finance its growth. Much of the plan, therefore, is geared toward persuading, explaining, and reassuring potential investors that the company (which produces a therapeutic, topical pain cream), is well-managed and stable. The in-depth analysis of the company's competitors is an outstanding feature of this plan, as is its market research.
EXECUTIVE SUMMARY/OVERVIEW
Competition.
- PROPERTY & FACILITIES
- PATENTS & TRADEMARKS
- RESEARCH & DEVELOPMENT
GOVERNMENT REGULATIONS
Insurance and taxes, corporate structure, risk factors.
- RETURN ON INVESTMENT AND EXIT
- ANALYSIS OF OPERATIONS & PROJECTIONS
FINANCIAL STATEMENTS
Type of business.
Non-prescription drug wholesalers; US SIC Code - 2834 Pharmaceutical Preparations.
Company Summary
Pain Away Ltd. is a going concern, a Delaware corporation formed in January 1995 to manufacture and sell its premier launch product Pain Away, a topical pain remedy using FDA-approved homeopathic ingredients developed for the simple purpose of relieving pain. The company was formed by its parent S-corporation, Peale, Inc. in order to market products nationally and internationally. Peale, Inc. was formed in February 1994 to complete the development of the launch product. The formation of the company was a significant step in a 9-year process of refining and testing a homeopathic formula first used by company founder and CEO Robert Peale to alleviate his pain from carpal tunnel syndrome. The R&D phase of this product began when Mr. Peale purchased the original formula, did a thorough study of homeopathy, and refined the formula to its present marketable state. From the beginning of R&D, Mr. Peale worked within FDA guidelines in order to secure FDA registration. Then, in February 1994, the company was formed to finally manufacture and sell the product. Starting with only a handful of customers, including some professionals, chiropractors, physical therapists, etc., only 19 months of operation have yielded 12,000 individual customers with an 80% reorder rate. The current customer base now includes medical doctors from different specialties, sports trainers, and athletes, both professional and amateur. The company expects to show a profit in 1996 and estimates that it will be very profitable in 3 years.
Mr. Peale is 49 years old and has a 25-year history in sales, sales management, and marketing for a tool distribution company. His deep study of homeopathic medicines started in 1985 and included studies in nutritional supplements. Mr. Peale has been invited to sit on a newly-formed FDA committee addressing the growing national interest in natural medicines.
Curtis Company president, Ms. Alana has 25 years of experience in retail and direct sales. She has been a senior sales director and sales trainer for Beautiful You Cosmetics, has owned and operated a retail sporting goods store, and has managed a 15 person, $1 million department for a major chain retailer. She also has some banking experience.
Vice-president of marketing, Ryan Lemon has 32 years of experience as production manager, buyer, sales manager, and marketing manager. He was director of marketing for Pilgrim Health and was responsible for their first launch into New Jersey which led to their first $18MM in sales (in 3 years). He has a BS degree in textile engineering and has also done independent marketing consulting.
Product and Competition
The R&D mission was to develop a greaseless, odorless, topical cream which was measurably more effective at relieving pain than any other OTC (over the counter) topical product. This mission has been accomplished. The company has collected anecdotal, testimonial, and uncontrolled medical study evidence that Pain Away is more effective than the leading topical analgesics such as Arthritin and others. The product's effectiveness in relieving pain is its most powerful benefit, besides the added benefits of it being greaseless and odorless. What distinguishes Pain Away from any other topical analgesic in this still-growing $402.1MM market is its advanced homeopathic formula - a refined blend of 11 FDA approved pure and natural ingredients. The typical OTC topical analgesic works to either block the sensation of pain or distract perception of deep pain by "counterirritating" another localized area near the pain. Pain Away's formula is different. Pain Away treats pain at its source. It stimulates improved circulation in the micro-capillary system in the ligaments and tendons, where most pain is felt. Pain-relief from Pain Away is the result of the body's own self-healing. It also can be applied several times a day because it is odorless and greaseless. The US pain management market ($15.2 billion by 1997) is a mature market with intense, established competition ("The Market for Pain Management Products in the US - Introduction, Drugs, Devices, Trends, and Market Structure," in FIND-SVP). With future pharmaceutical market growth dependent upon new and innovative product additions, Pain Away is entering the field at the right time. The company will distinguish itself and its market position by dedication to the development of only natural-ingredient products. Since its unique formula of ingredients already has FDA approval, the company aims to penetrate the OTC pharmaceutical market, where new products traditionally find success. Here Pain Away will compete with topical as well as internal analgesics, including aspirin, acetaminophin and ibuprofen. An estimated 4,000 people a year die from aspirin overdose. A condition known as "analgesic neuropathy" can result from extended or inappropriate use of analgesics. Medical studies linking heavy usage to health problems have affected aspirin, acetaminophin, and ibuprofen. Pain Away can be marketed as a substitute for (reducing overdose risk with internal analgesics), or as a supplement to (using Pain Away can reduce needed dosage of internal analgesics) internal analgesics when used for certain pain relief. Furthermore, Pain Away is not contraindicated for use with any other medication. This broad-based appeal is built upon the reliability of Pain Away's effectiveness in relieving pain, inflammation, and spasm associated with arthritis, bursitis, sciatic spasm, neck/back pain, tendonitis, tennis elbow, tension headache, achilles tendonitis, and carpal tunnel syndrome.
A second product, a natural anti-inflammatory nutritional support system formula known as "Pain Away Plus," will soon be marketed as a companion product to Pain Away. This multistaged formula is a combination of trace minerals, herbs, and a natural cartilage-derived substance. The company has long-term plans to develop more health-related products.
Funds Requested
Company principals have invested all available personal assets into the product development and operations to date. The need for capital is in the context of the readiness of the product for mass marketing. Management is seeking a $1,500,000 equity investment in exchange for a suggested 30% ownership of the company. All terms of financing are negotiable in order to meet the financial requirements of the investor.
Use of Proceeds
Advertising & promotion campaign - $1,200,000 (see below); Market research - $300,000. The company anticipates the need for follow-on financing after 24 months of business.
Financial History
Sales were first made in 5/94 under Peale Inc. ($143,881). As sales expanded nationally, Pain Away Ltd was formed in January 1995. All sales since then have been under Pain Away Ltd.
Financial Projections
With capital request accomodated, the company believes that Pain Away will jump in sales starting in 1996.
The company will attempt a public offering based on year 2000 earnings. If there is no public market and no prospect for a public market in the near future, then the company will offer to buy back the stock owned by the venture capitalist. A predetermined price could be set ahead of time, if desired by the venture capitalist.
The product effectiveness, evidenced largely through anecdotal evidence, personal testimonials, and repeat sales, has formed the basis for the future growth of the company. Together with a second, complementary product (nearly ready for market), the launch product will be aggressively mass marketed as a pain management system for the next five to ten years. Past and current sales have been to end-users, health professionals, and to some retail chains. The company and product are now poised for first stage expansion. Over 30 target wholesale markets have been identified. While the company uses its marketing strategy to enter these wholesale markets, simultaneous efforts will be made to develop research protocols. Management is confident that the anecdotal evidence and personal testimonials will be strengthened by controlled studies, designed to test the effectiveness of the product and demonstrate the physiological healing activity stimulated by the formula. With scientific credibility, the product will not only build its position in the $150 million homeopathic product category but will also strengthen its transition into the formidable mainstream topical analgesic category.
Future research is planned, based upon inquiry, in order to adapt the formula for animal use (Pain Away currently being tested on thoroughbred horses).
At the end of five years, the company intends to have at least one additional health product and should be able to go public off its revenues. The long-term goal for the company is to become an entrepreneurial leader in the development of natural products for various segments of the health care market. The company plans to capture enough share of the topical analgesic market to become either a viable joint venture partner or an acquisition candidate.
The product formula and delivery system are proprietary. The formula is uniquely advanced and is nearly immediately effective in relieving pain. Homeopathy and immunization have much in common, namely the principle of similars, which states that whatever a substance causes in a large dose, it can stimulate an immune response to defend against it in a small dose. It works by the principles of stimulation to the body's own self-healing mechanism and by the scientific balancing of its natural active ingredients through a dilution process called micro-dosing. Micro-dosing has given homeopathy its 200-year history of safety with no known side effects or toxicity. This self-healing process is in contrast to the majority of commercially successful topical analgesics, which contain counter-irritants, including the newer capsaicin-based products. These ingredients cause a superficial inflammation on the skin which masks pain by deadening the sensation of pain in the epidermal nerve endings only, or by distracting from the perception of pain by irritating an area near the pain source. The Pain Away formula has been developed with precision and balance and is a product that is effective and safe for use on all skin types. Pain Away's eleven active ingredients stimulate improved circulation in the micro-capillary system to ligaments and tendons, where most pain is felt. Pain relief is the result of the body's self-healing.
The manufacturing is sub-contracted out to a highly respected FDA-licensed manufacturer of homeopathic products.
An important unique feature of Pain Away which distinguishes it from other homeopathic remedies is that Pain Away is a topical treatment and is not a systemic treatment. As such, it requires little knowledge to use and is conducive to cross-merchandising in the mainstream analgesic category. Furthermore, since Pain Away is a formula of ingredients, it provides a broad spectrum of effects as compared to single remedies.
The personal commitment of the founder to relieve his own pain also adds a unique value to the story of this product - a story which can enhance marketability - to anyone who is in pain or anyone who knows someone in pain.
Although Pain Away is an homeopathic product, the company will position itself as a natural ingredients company - not necessarily homeopathic. All the company principals plan to engage both septics and advocates of complementary medicine by applying rigorous scientific standards equally across the board, for both conventional and unconventional treatments. Contacts have already been made with the National Institute of Health regarding future research.
Product Description
The product is a specialty consumer good carrying a suggested retail price of $19.95 for a 3.7 oz. jar (1.9 oz. jar also available at $12.95). The jar is designed with a medical appearance. The jar is easy to ship in multiples, is easy to stack on a shelf, is aesthetically pleasing, and has an easy-to-handle screw cap. The actual cream is greaseless, easy and pleasant to apply, and is odorless. Pain Away has, to date, largely been sold directly to end-users, and wholesale to retailers, distributors, and catalogues. The markets have supported the suggested retail price, which was arrived at by surveying market research supporting the $19.95 price along with the perceived value of the product compared to similar products at about the same price. This price also yielded a gross profit of $3.75 per jar and allowed for 100% markup from wholesale.
The eleven ingredients are readily available through top-quality labs which control for purity and authenticity. The cream is compatible with any medication being taken. The product carries a money-back 30-day guarantee.
Purchasers of the Product
Preliminary studies done by independent treatment professionals (no control group used) have shown that Pain Away has been effective for relieving the pain, inflammation, and spasm associated with arthritis, bursitis, sciatic spasm, neck and back pain, tendonitis, tennis elbow, tension headache, achilles tendonitis, and carpal tunnel syndrome. Anyone suffering these ailments, treating these ailments, or caring about anyone suffering these ailments is a potential purchaser of the product. A New Jersey hockey team uses Pain Away prior to workouts, competition, and for pain relief. The head trainer for the team says, "There's no product better for contusion of the quadriceps." He has reported shorter recovery times as a result of using Pain Away. Reports from athletes are that using Pain Away before and after workouts yields less cramping, fatigue, and soreness.
Top purchasers of TPR to date:
The total market for OTC internal and topical analgesics is estimated at $3.6 billion for 1995 and is projected to be $4 billion by 1997. With over 400 brands saturating this mature market, growth is still occurring through new products and product innovations. Driving this growth are:
- increasing use of pain management products for the over-50 population segment, whose numbers are increasing
- increasing awareness that pain does not have to be tolerated and can be treated
- price increases
Body/Muscle Pain Market
The market is dominated by internal analgesics:
Pain Away is a new product to this sizable OTC pain-relief market. It will enter this large arena riding on its effectiveness and coming from the new and growing alternative health care market segment. As a new OTC product, Pain Away has such a broad-based appeal that it will be sold to a large portion of the total OTC pain-relief market (both internal & topical), estimated to be 84% of all US adults and growing as the baby boom population ages and concerns regarding age-related ailments, such as arthritis, increase. Of this 84%, about 25% alone use pain-relief products for body/muscle pain for which Pain Away is especially suited. Just this one type of ailment offers a substantial market potential:
If only 40.3 million Americans (25% of 84% of adults) use an OTC pain-relief product three times a week for body/muscle pain alone, then the market potential is 6.3 billion uses of a pain-relieving product per year. Past use of Pain Away has indicated that a minimum of 3 applications per week would use about one 3.7 oz. jar per month. A conservative yearly estimate would be 10 jars per year, with consistent use. In order to reach a five-year sales goal of $50 million (6.7 MM jars), 667 MM consistent purchasers (10 jars/yr.) are needed. Product history has indicated a consistent 80% reorder rate, so at this rate, 833,000 original purchasers are required. This figure is 2.07% of just this one market segment. The company is very confident that it can capture 2.07% of this market segment within five years, especially considering that the roughly 40 million Americans who exercise on a regular basis, and who are aging, are included in this segment. Anecdotal reports from athletes who use Pain Away are that it can prevent injuries by "warming up" vulnerable muscles and joints prior to a workout. The product has wide applicability within this segment. The table below shows the percentage of the body/muscle pain market segment required to meet the next 5 years of sales projections.
These numbers are based upon a wholesale price of $7.50 per jar and a usage rate of 10 jars/year with a segment population of 40.3 million potential purchasers.
The prescription pain relief market is a distinct market which Pain Away will not attempt to penetrate. Pain Away can, however, compete directly with nearly all pain-relief products because of its unique identity of being both a substitute and a supplement to ail competing products. This uniqueness fits a projected market shift from internal to topical analgesic use as the population ages, and derives from 2 factors: 1) Use of Pain Away can reduce the needed dosage of any pain-relieving medication and 2) Pain Away is already part of a rapidly growing segment (25%-30%/year) of consumers who use alternative health care because of a disenchantment with OTC drugs and a concern about side effects with adverse reactions. Use of Pain Away can reduce needed dosage of other pain-relieving medications. As stated earlier, Pain Away's effectiveness is based upon the homeopathic principle of microdosing. While it promotes self-healing by stimulating blood flow to micro-capillaries, it remains safe for all skin types and with use of any other medication. Anecdotal evidence (from hospitals, some doctors, and occupational rehab center) has indicated that use of Pain Away alone has yielded positive results and use of Pain Away, along with other treatments, has seemed to accelerate recovery. As always, this kind of evidence will be scientifically studied. The salient point is that Pain Away can be a substitute and/or a supplement in pain management, and thereby reduce needed dosages of other medications.
Alternative Health Care Segment
Homeopathy, being an established (officially recognized by UK National Health Service) and significant alternative mode of treatment, is gaining increasing acceptance in mainstream American health care. The National Institute of Health has even awarded grant money for research in alternative treatments, including homeopathy. Drug retailers report that homeopathy may be the fastest-growing category in the trade class of drug chains. Since homeopathy is gaining acceptance as an alternative treatment, the market segments which are already embracing these alternatives will continue to be targeted in the company's initial expansion. These segments include people ages 25-elderly, who seek improved quality in life, and whose lifestyle values involve "newness." This segment includes most of the "baby-boomer" population, estimated at over 75 million. The market of alternative health care seekers is characterized by patients who can and will pay for their own care. As much as 70% of alternative medical treatments are still paid for by patients themselves rather than insurers. This kind of purchasing indicates a willingness to try an alternative product and continue purchasing based upon perceived value of the product's effectiveness. Company management has been encouraged by the consistent 80% reorder rate and knows sales will be sustained once initial purchases are made. The alternative health care market is of respectable proportion. According to the New England Journal of Medicine (1/28/93), 34% of Americans spend $13 billion/year on alternative treatments such as chiropractic, acupuncture, massage, and homeopathy. Pain Away is already marketed to all of these treatment specialties so it will reach the spectrum of alternative treatment. This 34% of Americans are familiar with the term "homeopathic," so there's a consumer predisposition to being further educated about homeopathy as a value-added natural ingredient alternative.
The company will build an early market position on the alternative health-care market and will join the growth of the homeopathic segment as it moves from the fringes to the mainstream of the OTC pharmaceutical market.
Alternative Market Potential:
If only about one third of Americans use an an alternative pain-reliever just twice per month, then the market potential is 2 trillion uses of an alternative pain-relieving product per year. Market indicators are that both the number of users and the frequency of use will increase as the population ages. The use rate of 2 times per month converts to 2 jars of Pain Away per year with consistent use. Again, in order to reach the 6.7 million jar sales goal ($50 MM), at the re-order rate of 80%, Pain Away would have to make 4.2 million initial sales in order to sustain 3.3 million consistent purchasers. This size customer base comprises 4.71% of the growing alternative health care market. The company believes that this sales goal is attainable within the next five years. The table below shows the percentage of the alternative health care market segment required to meet projected sales.
These numbers are based upon a wholesale price of $7.50 per jar and a usage rate of 2 jars/year with a segment population of 89.1 million potential purchasers.
Narrowing the Market Focus 2X
The market potential for pain relief products is huge. By narrowing the focus to product category sales, the potential becomes more exact. Pain Away's product category is within the topical analgesic market, estimated at $402.1 MM annually with a projected $522.7 MM market in 1996 (30% growth) and $692.6 in 1997 (32.5% growth). Starting with $522.7 as the base market volume, and with 30% growth per year for the next 5 years, Pain Away would have to capture 3.33% of the year 2000 market volume to make its sales goal of $50MM. Management believes that these goals are attainable.
The table below shows what percentage of the topical analgesic market will meet Pain Away's sales projections.
The focus can be narrowed further to the homeopathic product category, which is growing at a rapid rate at this time. The dollar volume of this segment is estimated at present to be between $150 million and $215 million and expected to grow at a rate of 25% to 30% a year. Some market-trackers say that retail sales haven't grown enough to support the existing number of homeopathic manufacturers and that a shakeout will consolidate sales in the hands of fewer manufacturers. The forseeable trend, however, is progressive growth from the fringes to mainstream markets, and at a rapid rate. The table below again shows percentages of this dollar volume required to meet sales projections.
These numbers are based upon a 1996 volume mid-point between the projected volume range of $150 MM and $215 MM. Growth rate is 25% a year. At first glance these percentages may seem daunting. However, the manufacturers supplying this niche are relatively few in number and therefore hold significant market shares A new player can get a reasonable market share with the right product and marketing plan. The mainstream merchandising of homeopathic products started in the early '90's and has been tested as a lucrative direction. Company management is very confident that Pain Away will gain enough share points to capitalize on the rapid growth of this product category. Pain Away will not remain in the homeopathic niche. Its effectiveness will make it competitive with mainstream topical angalgesics.
International Markets
The company will also develop an international market. A 10,000-unit order has already been received from a distribution company in Hungary and is awaiting final approval from the Hungarian State Department of Pharmacy. A small order was also sent to well-known sports figure in Spain. Discussions are underway for this individual to start large-scale distribution. The homeopathy market in the UK is estimated at 18M pounds and in Germany at 120M pounds, so European marketing could be strengthened by the homeopathic identity alone. In Germany, an independent division of the German Federal Health Agency publishes monographs on the safety and efficacy of herbal medicines. The company believes that Pain Away would fare excellently under such review and will carefully research and plan when and how to reach such markets.
There are many companies competing for shares of the 3.6 billion dollar OTC analgesic market. The major players are the internal analgesic manufacturers:
The balance of the OTC internal analgesic market is held by private label companies and "others." The major strengths of this level of competition are obvious in comparison to Pain Away's present market position. The major players have:
- a manufacturing cost advantage,
- sophisticated market knowledge and access,
- established sales capability,
- strong R&D capacity,
- and of course, brand name loyalty.
An important competitive strength of Pain Away is that it is topical - pain relief is accomplished without risk of overdose and consequent risk of serious side effects. This competitive strength derives from a previously noted shift in the market from internal to topical analgesic use. This shift in consumer preference, along with Pain Away's effectiveness, can position the product as a substitute/supplement among these large competitors. Management is ever mindful that mainstream pharmaceutical companies are watchful of the homeopathic market and will act accordingly should market share be lost to homeopathic remedies. Becoming a viable acquisition candidate to any one of its major competitors is a realistic goal. Pain Away management is committed to quality product development and is also open to strategic alliances which would enhance its market capability.
The competition in the topical analgesic market is head-to-head. The top competitors are:
The basis for the competitive analysis is Pain Away's most competitive feature:
- It doesn't have any of the aforementioned advantages held by the major, well-known players in this market - yet.
- It doesn't have widespread brand name recognition - yet.
- It doesn't have appreciable market share in topical analgesics, alternative health, or homeopathy - yet.
- It does have a unique formula of safe and effective ingredients which none of the above products have.
All topical analgesics contain counter-irritants, including camphor, menthol, methyl salicylate, eucalyptus, wintergreen, and even the popular capsaicin. These ingredients, even when blended, act primarily to cause a superficial inflammation on the skin. This inflammation serves to hide the pain by deadening pain receptors in the skin.
What distinguishes Pain Away from all of the above products is that the eleven active homeopathic ingredients stimulate the blood flow in the body's micro-capillaries and act synergistically with the body tissue. This stimulates the body's own self-healing. Pain is treated at its source. Company management believes that the unique effectiveness of Pain Away will give it competitive clout. The issue then becomes how to compete.
Although Pepperub (Pepper) and Vapol (Athens) enjoy the largest market share, they are vulnerable to new product introductions. Menthol Plus (Lucia) held the top position in this category last year until Pepperub was re-packaged and relaunched with line extensions. That relaunch along with a relaunch of Zanprin boosted sales of both brands and put Pepperub back on top. Pepperub, Vapol, and Mentholplus are all menthol-based products. Zanprin is a capsaicin-based product and has boosted usage of its relatively new ingredient. Other relatively new capsaicin products are Capcreme (Bioderm) and Capthol (Men-Thol Co.).
Company management believes that Pain Away is generally more effective than Pepperub and Vapol. However, these venerated brand names, large advertising budgets, and consumer loyalty are formidable competitive advantages. Pain Away will focus on other competitors in order to gain a market position.
The key competitors are Menthol Plus, made by Lucia and Zanprin, made by Skin Care Corp.. Menthol Plus is a menthol-based product which Pain Away has encountered head to head in the sports market. Menthol Plus has a retail price advantage in the mass market, selling for $4 for a 2 oz. tube. This price difference is of little concern because Pain Away will promote itself as a high value product. The topical analgesic, alternative health, and homeopathic markets all support pricing based on perceived product value. Menthol Plus' manufacturer has reduced the advertising budget for this product (about $2 million) recognizing from a 21% decrease in 1994 sales that the product has matured. The company plans to acquire other brands (no topical analgesics) and extend its other lines in order to generate sales growth. The company sells another topical analgesic which is doing well in sales but has not reached the same position as Menthol Plus. Pain Away will monitor the life cycle of Menthol Plus and move to gain any market share it might lose.
Zanprin, made by Skin Care Corp., is gaining market share because Zanprin (.025%) and Zanprin- X (.075%) are capsaicin-based products. Capsaicin, derived from cayenne peppers, has created a new segment in the market and is very popular. Other companies are making capsaic in products but Skin Care Corp. attracted market attention by relaunching Zanprin as an OTC consumer product. It had been marketed for seven years to physicians and kept behind the counter, carrying the credibility of a prescription product. In early 1995, the product was re-packaged for shelf space and supported by TV ads. Despite commanding premium prices ($19.95/2oz of Zanprin-X), the product has done dramatically well.
Skin Care Corp. claims that Zanprin is the "only brand with physician endorsement and specific clinical support." This is a credible claim, cultivated for seven years, and obviously contributing to sales of the product.
Skin Care claims to be the first in the industry to develop their highly purified version of capsaicin for a pharmaceutical base. Zanprin distinguishes itself by promoting controlled clinical studies which have supported its effectiveness. Skin Care claims that such clinical trials don't apply to other, less pure, capsaicin formulas. This scientific feature enhances product credibility among physicians and pharmacists.
The management of Pain Away Ltd. recognizes the effective marketing strategy used by Skin Care because it is similar to their own strategy. Advertising and promotion expense is critical. With proper capitalization, Pain Away can compete because the Pain Away homeopathic formula is unique and effective. Many capsaicin users, including Zanprin users, have complained about the burning sensation caused by capsaicin. Pain Away will stand up to any topical analgesic on the market and do very well with comfort, safety, and effectiveness. The company needs to get this message out. The seven-year product life of Zanprin, supported by unique and heavy TV advertising, gives Zanprin quite an edge. Zanprin is now a "new" growth product and Pain Away can grow behind it, by comparing ingredients and effectiveness at every turn. Pain Away is also in the same price range as Zanprin, doing slightly better with $19.95 for a 3.7 oz. jar or $12.95 for a 1.9 oz. jar.
Zanprin is not the "only brand with physician endorsement and specific clinical support." Pain Away has been cultivating health professional support since the R&D phase. The product is heavily endorsed, and more medical support is developing. Many of Pain Away's sales to date have been to health professionals. Regarding clinical support, Skin Care's success with this strategy underscores the strategic importance of Pain Away's plans for controlled clinical studies.
Speaking of "highly purified" formulas, Pain Away can compete strongly with any formula on the market, especially capsaicin-based. The company wants to discuss purity of ingredients and formula and will do so in all promotional efforts.
The remainder of the products listed in the top competitor list have of course the same advantages that any established company with significant market share has. Beyond these immediate competitive advantages, Pain Away can compete, again, on the ingredient effectiveness basis.
Aspratin, an odorless rub which contains Salycin, sold well when it was introduced in 1992. It held third place among topical analgesics at the end of 1993. It has since been surpassed by capsaicin-based Zanprin. Bioderm developed Capcreme and lowered its price when Zanprin was relaunched.
Capthol was recently developed by the long-established Men-Thol Co. and is a capsaicin-menthol blend designed to compensate for the sometimes delayed pain relief when using capsaicin alone.
Salicreme is a methylsalicylate product which has shown flat growth and has lost market share.
Lyptum was a rapid-growth product in 1990-1991 but has since lost market share. Besides the well-established brands like Pepperub, the products which are gaining in this market are the capsaicin-based. This product category is known to be affected by product innovation and development. With proper support, Pain Away will take a respectable market share.
Homeopathic Competition
The competition takes place in the drug chain arena. Homeopathy may well be the fastest-growing category in the trade class of drug chains (20% of all homeopathic product sales). Among the growing number of drug chains which are giving shelf space to homeopathic products are: Walgreens, Medicine Shoppes International, Thrifty Payless, Eckerd Corp., Edgehill Drugs, Genovese and FEDCO, a California supermarket chain. Research published in the Journal of Clinical Pharmacy and Therapeutics states that 27% of US pharmacists consider homeopathic medicines helpful while only 18% consider them useless. The crossover of homeopathy from health food stores, where sales are still strong, to mass markets is gaining momentum.
As mentioned earlier, there are relatively few companies supplying homeopathic products to the mass market. There are five major producers/distributors of homeopathic products.
Health System, Homeopathic Co., and Life-Right pioneered the distribution of homeopathic products to chain drug stores in the early 1990's and are now market leaders, although more companies are entering this lucrative market. Health System Products now has about 40% market share. Homeopathic Co. and Del Sol are aggressively developing the crossover into mass marketing with line development and heavy TV advertising.
All the topical analgesics listed above are arnica-based, with few other ingredients. Arnica Montana is the premier homeopathic medicine for the treatment of shock and trauma to the muscle. These formulas come the closest to Pain Away's because they contain some of the essential homeopathic pain-reducing ingredients. Pain Away's formula, however, blends more ingredients than any other homeopathic topical analgesic on the market. This more inclusive formula gives the product wider applicability. Price-wise, Pain Away is more expensive than most of the competing homeopathic products, where prices are in the $5-$10 range for 2oz.-4oz. sizes. But, this is a value-priced market, so price is not a critical variable. Since Pain Away is very competitive on an ingredient/effectiveness basis, the critical factor is having the resources to promote the product.
Future Competition
As has been noted, the topical analgesic category, including natural ingredient, is rapidly influenced by new clinical studies and product innovations. There are three main sources of new competition:
- New ingredients and/or new innovations of existing ingredients. Examples are new products which employ the medicinal benefits of ammonium compounds. These products are designed to provide pain relief without the objectionable training room smells, burning sensations and stinging of abraded skin that are often caused by the majority of topical analgesics that contain menthol, methyl salicylate or capsaicin as active ingredients. Pain Away's formula has solved this sensation problem and is a less "high-tech" product, for which consumers are showing a preference.
- Companies currently in this market who could increase market share and become major players. Pain Away Ltd. is in this category.
- Chain drug companies may produce their own private label homeopathic products and corral a significant share of this growing market - much as they did in the non-homeopathic analgesic market. This scenario is more likely to happen as homeopathic companies expand the sales volume in this market and there are share points to be taken away by private labeling.
Pain Away Ltd. can be very competitive with the right promotional support.
Marketing Strategies
Increase market share by reducing market share of competitors. This strategy will capitalize on the market development to date and capture a share of markets held by existing pain-relieving topical applications. The key benefit is that conventional pain-relievers mask pain while Pain Away stimulates the body's own healing ability to directly battle an ailment. Another benefit is that homeopathic remedies have no known side effects while many pain-relievers, especially those ingested, have side effects. Neither will Pain Away interfere with any medication. This strategy requires extensive advertising in mainstream media, including infomercial, QVC (Pain Away already under review), 60 second commercial, cable TV, interactive TV, direct mail, independent sales reps, POP displays, and educational inserts/newsletters. One objective of planned controlled studies on the effectiveness of Pain Away is to use scientific evidence to help bridge the narrowing gap between natural and conventional medicine. Product studies will support this marketing strategy. In this context, the company will pursue preliminary inquiries from a favored vendor to use Pain Away in the workplace to study any reduction of lost work time and/or medical costs precipitated by repetitive stress injuries.
Expand a growing new market for alternative health care by positioning to lead this growing market. This strategy involves specialty catalogues (placed in 5 currently), placement on retail shelves of health food stores, educational product inserts/newsletters, media appearances discussing product, and independent sales reps. This strategy addresses the 89.1 million users of alternative health care.
The company has already been approached by two large Multi-Level Marketing companies. This strategy would involve creating private labels for a large customer. Of utmost consideration with this strategy is product identity and how this channel of distribution would affect it. This channel of distribution usually requires more price mark-up than the product would tolerate.
The company will create its own "competition" by developing private labels and/or separate companies to market to different niches.
Keep capital outlay to a minimum by licensing/franchising Pain Away to a brand-name company. This strategy would add value to the product in the form of brand name loyalty, manufacturing strength, and a strong sales/service force already in place. The company envisions its role in this type of strategic alliance as conducting scientific studies to increase the credibility of TPR and in developing new products. This strategy remains an option which could preclude other strategies under mutually acceptable terms.
Building on an initial order from a health product distribution company in Hungary, Pain Away Ltd. will penetrate the European market by targeting England and Germany, where homeopathy is an accepted form of treatment. This strategy would be developed only after a US market position was established.
Marketing Plan
The company is moving from start-up stage into its first growth stage. Market strategy to date can be succinctly described as selling "one jar at a time." Direct personal selling has been the mainstay in sales growth. This strategy has targeted any end-user willing to try the product. These early customers were reached through health care professionals and direct selling through state/county fairs, shopping mall space, health food store chains, and most recently lifestyle catalogues. As the company moves away from direct selling, a strategy which proved to be an excellent market test, into mass-marketing, identified market segments are being matched with appropriate distribution channels. The plan now is to expand and concentrate more on helping the consumer develop product preference by heavy advertising of the brand name, the benefits of the product, the ease of use, and the guarantee. Company expectations are that all advertising will be enhanced by results of controlled studies of product effectiveness.
The company intends to expand regionally, based on existing markets and consumer profiles (e.g., households from the South are likely heavy users of analgesics). The national market will only be tested by placement in catalogues with a distribution of 200 million. As regional sales grow and as the product gains recognition, then a national marketing strategy will take shape. Company management have begun discussions with a major marketing communications agency (Fortune 500 client list) who themselves approached Pain Away. The marketing and sales outline is as follows.
Marketing Function
- A complete review and analysis of the topical analgesic market.
- Utilization of Triad Groups conducted with the professional community and general consumers. Purpose is to identify professional and consumer preferences.
- Based on research, create a product identity.
- From product identity, establish professional and consumer strategic directions, which would affect product design, packaging, advertising, consumer promotion, and product publicity.
- Test both professional and consumer strategic direction via two more Triad Groups.
- Develop launch marketing plan with all elements and budget for both professional and consumer.
- Actual implementation of the plan to include product design changes, packaging, advertising, consumer promotion, display, and product publicity.
Sales Function
Utilize a sales organization enabling direct-call coverage on the top 25 customers, which generally account for 80% of retail sales, and broker-managed coverage for the remainder. Launch plan would include a national sales meeting and all necessary materials.
Professional
Concentrate on the pharmacist community via co-op direct mail. Pharmacist recommendation at the purchase counter does affect sales.
The production process takes place in a standard homeopathic laboratory where raw materials are blended. There are no significant health or safety risks involved. Production orders are processed by purchase order for finished product. Some raw materials are usually on hand but more are ordered against purchase order requirements. Jars are ordered from a separate manufacturer and sent to the homeopathic laboratory to be filled, packaged, and shipped to Pain Away Ltd., where fulfillment is done.
The homeopathic laboratory has the capacity to fill all projected orders. As orders increase, Pain Away management will consider using a fulfillment service and more drop-shipping to wholesale customers. Cost of goods is estimated at 18% of gross sales. This figure has been consistent throughout production to date and is based on the complete production cycle.
There is no backlog.
Production Characteristics
The production process does not require any specialized or proprietary machinery. The critical factors in the production process are the highest quality of raw materials and the incubation process, which assures a stable finished product. Water is added to a base of vegetable/plant emollients. The eleven active ingredients are then mixed into the emulsion, which incubates for about 48 hours in large vats, while monitored for any fungal invasion. The finished product is then lab-tested for potency, which is done by lot number (the company gets lot samples). Filling is currently done by gravity-feed. The manufacturer might advance to computerized filling. One batch is 500 gallons. Lead time from order to packaged product is 4 weeks. Only a skilled and experienced manufacturer can produce the formula. Even other homeopathic manufacturers not familiar with a cream-based product would have difficulty with the production process. General topical analgesic manufacturers would need to become familiar with the raw materials and the production process in order to blend Pain Away's eleven active and ten inert ingredients. The company currently has one back-up manufacturer, which has never been used.
Labor Force and Employees
The company administrative staff consists of 5 people (recently reduced by 3) including the 3 officers. The two employees are paid an hourly wage. The staff are not unionized and there is no expectation of such. The labor supply in the region is more than sufficient to meet all future staffing needs. The sales force is comprised of independent agents who are paid on commission.
Currently, the laboratory procures all production materials. There are no shortages of key components, and multiple sources are available.
Subcontractors
All production is sub contracted out. Only fulfillment and shipping are done in-house. The company has formed a strong working relationship with Herbal Laboratories, which is the key subcontractor. Although management has selected a back-up manufacturer, the existing relationship with Herbal Labs has been more than satisfactory, so no change is foreseen. Other subcontractors supplying jars, labels, and boxes are used based upon price and service and can be replaced.
Standard office equipment is used for administrative functions. All production equipment at Herbal Laboratories is new and there is nothing that would cause production to be stopped for any appreciable time.
PROPERTY AND FACILITIES
The company facility is a single-story 1,950 square foot, cement block structure on about a two-acre cleared lot that is leased in one-year increments. The facility is located in northern Dutchess County, NY. All necessary commercial and industrial infrastructure is in place. The facility is easily accessible from major thoroughfares. The general area has been and is recovering from the closing of 2 large industrial facilities, so there's been anoticeable decline in property values. There is, however, a regional effort to re-direct the area to rely more upon small and entrepreneurial business. Management plans to purchase the building in order to add an appreciable fixed asset and to reduce expenses. The structure is easily expandable, so the company will not have to move during its critical growth stage.
PATENTS AND TRADEMARKS
Active homeopathics are not patentable. Management is exploring establishing a trademark and a formula patent.
RESEARCH AND DEVELOPMENT
The three principals have invested collectively $100,000, which has been capitalized. Plans for the immediate future include forming a research alliance with a university, hospital, or research group in order to develop a protocol for applying the "rigorous scientific standards" against which the effectiveness of Pain Away can be proven. Management has projected R&D expenses at $ 30,000 for the next 12-month period. These expenditures are intended for controlled studies proving effectiveness, and for continuation of developing applications for animals. Management is sales-marketing oriented and does not want to develop only a research lab. Any R&D will be designed to enhance sales and profits. Company management is currently investigating an SBIR grant.
There are no particular federal, state or local laws/regulations that affect the conduct of business. The manufacturer meets OSHA requirements, as does the Pain Away administrative facility. The FDA regulates homeopathy as an OTC non-prescription medicine. Pain Away's ingredients are in total compliance with FDA standards. Mr. Peale cultivated a working relationship with FDA representatives during the initial research and wisely intends to sustain such.
Product liability insurance is underwritten. A buy-sell agreement among officers exists but is not yet backed by insurance. Key employee insurance is also yet to be written.
All taxes are current. The company pays standard payroll, Social Security, and corporate taxes. The product is sales tax exempt in many states.
Company principals first formed an S-corporation under the name Peale Inc. The realization of the likelihood of international sales prompted management to form Pain Away Ltd. as the operational company. Peale Inc. serves a limited partnership which was formed to attract investors. Both companies are run by the same management team. All R&D is done through Peale Inc. There is comingling of funds. This proposal seeks financing for Pain Away Ltd. Return on the investment will derive from the sale of the product Pain Away itself and any other products which the company sells.
Pain Away Ltd. is a member of the Homeopathic Manufacturers Association. The officers were invited to participate in an annual meeting of the newly formed FDA committee on natural medicines. This committee works on the bases for regulations, compliance, and claims for the natural ingredient industry, covering vitamins, herbs, and homeopathy.
Management subscribes to the following publications:
- Homeopathy Today
- Natural Foods Merchandiser
- American Health
- Prevention Magazine
- Let's Live
- New England Journal of Medicine letter
Directors and Officers
A board of directors will be developed in the near future. There is interest from the medical, nutritional, and professional sports communities, as well as from a local bank. Officers are:
Robert Peale - CEO Alana Curtis - President Ryan Lemon - Vice-President, Marketing
Profit and loss responsibilities are shared by the officers.
The officers are primary key employees (backgrounds in executive summary). Other key employees include:
Key Employees
Leslie Ottaviani - bookkeeper and office manager - known by management for 5 years and described as "a dedicated innovator with a true grasp for details." She has experience supervising 20 employees in the accounting department of Worldwide Airlines and has worked as an independent bookkeeper for several companies in Hudson Valley, NY.
Julia Allen - administrative assistant - known by management for 6 years and described as "having people and problem-solving skills and works incredibly well under pressure." Her background includes sales in a successful business which included business consulting.
Remuneration
Accountant and Banker
All other fees paid on an ad hoc basis. Different attorneys have been used on an ad hoc basis (finance closing fees will be paid by the company).
Principal Shareholders
Proposed Financing
Management is willing to negotiate any structure which suits the investor. The company is seeking an equity investor. Management will provide a seat on the company's board of directors. Ongoing reports of key ratios, profit-loss statements, balance sheets, and annual audits would be provided to the investor. It is management's intent that the investor will enjoy returns on investment in excess of that of alternative investments, as a privately held company, while providing investor liquidity of his investment by taking the company public at its earliest opportunity.
Capital Structure
The existing capital structure includes a $50,000 unsecured line of credit with Poughkeepsie National Savings Bank. This line of credit was just brought to maturity in 1/96 for a 30-day period, at which time the line was renewed. If the current financing proposal is accomodated, then the line of credit can be increased.
Additional financing to date has derived from the sale of limited partnerships offering $.01 per 3.7 oz. jar royalty for every $1,000 invested. Each limited partner has been given the right to convert his/her capital investment into common stock when the company goes public, or, to receive back his/her original capital investment when the company goes public. Total amount of financing raised through the limited partnership is $100,000.
As mentioned earlier, officers have collectively invested about $100,000 in the company, mostly through the R&D phase. Officers' "sweat equity" is immeasurable.
As stated in the executive summary: Advertising & promotion campaign - $1,200,000 (see below); Market research - $300,000. The company anticipates the need for follow-on financing after 24 months of business.
Management intends to preserve cash flow by factoring much of the receivables. With the current lead time of 4 weeks, however, some capital may be used to increase merchandising inventory in order to fulfill initial large orders. It is hoped that any follow-on financing can and will be debt financing, serviced by cash flow.
The following table sets forth the capitalization of Pain Away Ltd. as of 12/31/95 and as adjusted to reflect the proposed sale of common stock.
Dilution: The net tangible book value of the company as of 12/31/95 was minus $1,673 per share. Without taking into account any other changes in such net tangible book value after 12/31/96, other than to give effect to the sale of 60 shares (proposed 30% equity share) hereby, the pro forma net tangible book value of the company on 12/31/95 will be $5,827 per share, representing an immediate dilution of $13,597 per share to new investors.
Management recognizes that this proposed financing implies a large premium value on the existing equity and so will negotiate any other conditions which would induce the investor to make the investment.
At the time of the company's IPO, limited partners who opt for common stock will receive their shares from the officers' share of owned stock. The negotiated ownership held by the investor will not be further diluted.
Investor Involvement
Management seeks a close working relationship with the investor. The investor will be given one seat on the board of directors. Management would solicit consultations (for a fee) on financial matters, or any other area of investor expertise (e.g., planning, management development), but voting power is not an option. Fees will also be paid for any future financing and/or profitable business connections arranged by the investor.
Limited Operating History
Even though management feels that the company is at first-stage expansion, it is definitely still an early-stage company. Two obvious risks inherent in early-stage companies are undercapitalization and poor liquidity. Management has capitalized the business operations to date well enough to have developed the product and identified penetrable market segments. The current proposed financing will provide enough capital to handle the anticipated growth.
Limited Resources
Management believes that it has the resources to continue at the present pace of business. An anticipated increase in sales through advertising media such as QVC , regional/national catalogues, retail outlets, and some European distribution can be financed by factoring. These "bootstrapping" approaches have sustained the company to date and will accommodate slow growth. Management believes, however, that more rapid expansion is desirable in order to penetrate its identified market segments. More rapid expansion requires more resources.
Limited Management Experience
All officers have successful backgrounds in marketing. Additional experience in manufacturing/distribution has been gained in the past nine years of product development. Management has consistently shown a willingness to leverage themselves with accomplished professional consulting relationships. The company culture is one which reinforces sharing of expertise with mutual benefit to all concerned.
Market Uncertainties
Any consumer product business is subject to the changing preferences of the marketplace. As presented in the marketing section of this proposal, the target markets are showing substantial growth, which limits uncertainty. There is currently a growing consumer preference for homeopathic topical remedies. More uncertainty is evident when considering competition, but can be made tolerable by on-going research and analysis.
Production Uncertainties
The only uncertainty at present is whether or not the lead time (4 weeks) from purchase order to finished product can consistently be reduced. This uncertainty is of material concern as sales increase. Herbal Laboratories is a sound company with a promising long-term future and has always been customer-friendly, so no more serious uncertainties exist at present. Management believes that vertical integration of manufacturing is feasible in the long-term but is not practical in the near-term.
Liquidation
In the event that liquidation becomes necessary, management believes that the most value could be realized from the sale of the product formula itself. The formula is not patented, so valuation remains uncertain. However, the sales history, along with the testimonials attesting to the effectiveness of this "ready-made" product, should determine value. Office equipment would yield limited value, and unless the company building was purchased prior to liquidation, no value would be realized. Management believes that the company can and will generate increasing value in the near future, evidenced by increasing sales.
Dependence on Key Management
At present, CEO Robert Peale is considered the primary key manager/officer. His knowledge of the product ingredients, his history of public appearances promoting the product, his increasing recognition by the health community as an expert in natural medicine, and his charisma as a business professional highlight his key role. Managerially, the other officers are thoroughly competent and could manage the company and market its products without Mr. Peale. At this critical early stage, however, the product needs an identity and a market position before the loss of any key managers could be overcome. Once the premier product is securely launched and the product line is expanded, the loss of any officer could be absorbed by continued proper management of the company. Management believes that such a development is not far off, once the company is properly capitalized. Until such time, key person life insurance will be purchased.
What Could Go Wrong?
Upgraded advertising campaigns could not lead to any substantial increase in sales. This problem can be avoided by using experienced advertising/marketing consultants who have familiarity with the targeted markets. Furthermore, properly designed test runs on any advertising campaign would provide objective indicators of expected returns. Capital investment in advertising should be gradual and progressively based upon certain expected levels of return.
Stronger competition could capitalize on and stall Pain Away's early success by replicating the product and its marketing strategy. This problem can be solved in two ways: First, with proper capitalization, Pain Away can make an entry into targeted markets rapidly and with enough strength to grab market share. Keeping market share can be easier than getting it. This market requires extensive advertising. Increasing market share could mean an increasing advertising budget. An increasing advertising budget can easily reduce profit margin, so strategic planning is required. The second way to solve the competition problem is in the formula itself. Management will seek to patent the formula. The nature of the homeopathic ingredients is likely to inhibit any mainstream non-homeopathic company from replicating the product. Acquisition of a homeopathic company would make more sense. Narrowing the competition, then, to other homeopathic companies gives Pain Away more of a fighting chance, since its formula is more sophisticated and user-friendly than any homeopathic topical analgesic on the market.
Governmental controls could conceivably impede sales. This problem is unlikely because the ingredients are already FDA-approved. Furthermore, management's participation in the FDA committee to develop regulatory standards for the natural medicine field would provide early warnings of any such prohibitory controls.
The company could be controlled by non-investor stockholders. This problem is not likely to develop because the management team would hold a majority. Management is dedicated to the principles of increasing value and profits and is confident that its efforts will be in concert with those of the investor.
RETURN ON INVESTMENT ANDEXIT
Public offering.
Management plans for an IPO in 5-7 years. The investor's shares would be sold to provide the targeted return on investment. Should there be no public market, then a buy back would occur.
Management will negotiate a buy back formula with the investor and will target milestones in planning for this possibility. Management aims for returning 6 times the original investment in five years.
ANALYSIS OF OPERATIONS AND PROJECTIONS
The business has not shown a profit since sales activity began in May 1994. This lack of profit is not unusual for an early-stage company. Losses were incurred in the start-up phase, where the objective was to get consumers to try the product. Gross profit margins have remained stable, however. Management focus was targeted on getting professionals and consumers to try the product in order to collect anecdotal evidence and testimonials of its effectiveness. Not enough focus was on asset management, as evidenced by a low return on assets ratio (p.32). Now that the product has gotten some recognition, especially in professional circles, the focus will shift toward mass marketing. Management intends to improve inventory management by using factoring of receivables in conjunction with JIT inventory control. As sales volume increases, drop-shipping from plant to wholesale customer, will also be arranged.
Balance Sheet
Monthly Income Statements 1995
Income Statement - 12/31/95
Key Ratio Analysis
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Pharmacy Business Plan Template [Updated 2023]
I. executive summary.
This Section's Contents
Business Overview
Products served, customer focus, management team, success factors, financial highlights.
[Company Name] is a pharmacy in the [location] area. It provides a wide range of branded and generic medicines, medical devices, personal care products and other basic everyday needs. It aims to be a pharmacy that offers supreme service and easy access to the local residents. In order to meet its customers’ needs, [Company name] is open 24/7.
[Company Name] is the brainchild of [Founder’s name], a pharmacist, working at a local drug store in [location]. Through her 5 years of experience in the medical field, [Founder] saw the need for an accessible pharmacy that stocks all major medicines and medical devices and offers them at an affordable rate.
Here are the products as well as services that [Company name] will offer to our consumers:
- Generic over the counter drugs
- Generic prescription drugs
- Branded over the counter drugs
- Branded prescription drugs
- Basic medical equipment
- Medicine delivery and pick-up services
- Health and wellness products
- Selfcare products
[Company Name] will primarily serve the residents who live within a 5-mile radius from our pharmacy. The demographics of these customers are as follows:
- 62,237 residents
- 4,500 workers (who do not live the neighborhood)
- Average income of $57,300
- 49% married
- 42% in Mgt./Professional occupations
- Median age: 39 years
[Founder’s Name] is a pharmacist at a local drug store. Her experience in the medical field gives her a great advantage in building a pharmaceutical business. Before pursuing a career in the medical field, she attended [University Name], where she earned a degree in Business Management, which means she is not only capable of saving lives, but also managing a business.
[Company name]’s management team will also include registered pharmacists and highly skilled and trained employees that will contribute greatly to its success.
[Company Name] is uniquely qualified to succeed for the following reasons:
- The area is in need of a pharmacy.
- Our location is in a high-volume population and business district and will thus be highly convenient to significant numbers of passersby each day.
- The management team has a track record of success in business.
- The pharmacy business has a positive track and has succeeded in communities throughout the United States
[Company Name] is seeking total funding of $260,000 of debt capital to launch. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Store design/build: $150,000
- Inventory: $50,000
- Working capital: $60,000 to pay for marketing, salaries, and lease costs until [Company Name] is cash-flow positive
Comments are closed.
Pharmacy Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan
Pharmacy Business Plan Template
Pharmacy business plan.
You’ve come to the right place to create your pharmacy business plan.
We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their pharmacies.
Pharmacy Business Plan Example
Below is a sample pharmacy business plan and template to help you create each section of your pharmacy business plan.
Executive Summary
Business overview.
Healthy1 Pharmacy is a new independent retail pharmacy located in Charleston, South Carolina. The company is founded by Stephen Harris, a licensed pharmacist who has spent more than fifteen years working in the pharmacy industry. Stephen is confident that his strong communication skills combined with his keen attention to detail when preparing prescriptions will help him quickly grow a loyal customer base for his new pharmacy. Stephen has recruited a team of highly qualified professionals to help manage the day-to-day complexities of running a retail pharmacy including marketing, sales, customer service, financial reporting, and operations management.
Healthy1 Pharmacy will provide all of the products and services that are available at large retail chains, only with a better price and a small-town atmosphere. At Healthy1, sales associates and pharmacy technicians will get to know each customer by name and be able to offer a more personalized service not typically offered at larger pharmacies. Healthy1 Pharmacy will be a one-stop shop for any customer in need of a prescription, flu shot, OTC medication, and more.
Product Offering
The following are the services that Healthy1 Pharmacy will provide:
- Over-the-counter (OTC) medications
- Prescription medications
- Immunizations
- Travel medications
- Point-of-Care (POC) Tests
- Compounding
Customer Focus
Healthy1 Pharmacy will target all individuals in Charleston. The pharmacy will target multiple age groups from pediatric to geriatric. Healthy1 will also target patients needing prescriptions filled on a regular basis. No matter the customer, Healthy1 Pharmacy will deliver the best communication, service, and prices.
Management Team
Healthy1 Pharmacy will be owned and operated by Stephen Harris. He has recruited Emily Jackson, an experienced retail pharmacy manager to be his Store Manager and help to supervise the staff and run the day-to-day retail operations.
Stephen Harris is a licensed pharmacist with a Doctor of Pharmacy (PharmD) degree and more than fifteen years of experience working in the pharmacy industry. Stephen has been recognized by his former employer as a top performing pharmacist for five years in a row.
Emily Jackson has been a store manager at a local retail pharmacy for over a decade and has garnered a positive reputation for her exceptional organizational skills and leadership. Emily has worked in the pharmacy industry for so long, she understands all aspects required in running a successful retail pharmacy.
Success Factors
Healthy1 Pharmacy will be able to achieve success by offering the following competitive advantages:
- Friendly, knowledgeable, and highly qualified team of sales associates and pharmacy technicians who will assist customers, answer questions, and provide a personalized approach not found in larger pharmacies.
- Comprehensive array of products and services that includes everything you would expect from a large pharmacy, only with attentive customer service and lower prices.
- Healthy1 Pharmacy offers the best pricing in Charleston. The pharmacy’s pricing structure is the most cost effective compared to the competition.
Financial Highlights
Healthy1 Pharmacy is seeking $400,000 in debt financing to launch its new pharmacy. The funding will be dedicated towards securing the retail space and purchasing equipment, inventory, and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs. The breakout of the funding is below:
- Pharmacy and retail space build-out: $100,000
- Equipment, supplies, inventory, and materials: $100,000
- Three months of overhead expenses (payroll, rent, utilities): $160,000
- Marketing costs: $25,000
- Working capital: $15,000
The following graph below outlines the pro forma financial projections for Healthy1 Pharmacy.
Company Overview
Who is healthy1 pharmacy.
Healthy1 Pharmacy is a newly established independent retail pharmacy located in Charleston, South Carolina. Healthy1 Pharmacy will provide all of the products and services that are available at large retail chains, only with lower prices and a small-town atmosphere. At Healthy1, sales associates and pharmacy technicians will get to know each customer by name and be able to offer a more personalized service not typically offered at larger pharmacies. Healthy1 Pharmacy will be a one-stop shop for any customer in need of a prescription, flu shot, OTC medication, and more. Healthy1 Pharmacy will be able to provide Charleson customers with the experience of a friendly, neighborhood drugstore while ensuring each prescription is handled with the highest standards of quality and care. The team of pharmacy technicians and sales associates will be highly qualified and experienced in helping customers find the right over-the-counter solutions for their individual needs as well as ensuring each prescription is filled accurately and efficiently.
Healthy1 Pharmacy History
Healthy1 is owned and operated by Stephen Harris, a licensed pharmacist with over fifteen years of experience working in the pharmacy industry. Stephen has worked for a large pharmacy chain and managed a team of pharmacy technicians for several years. Stephen’s tenure with the pharmacy chain combined with his pharmaceutical education has given him the skills and knowledge required to start his own pharmacy.
Since incorporation, Healthy1 Pharmacy has achieved the following milestones:
- Registered Healthy1 Pharmacy, LLC to transact business in the state of South Carolina.
- Has a contract in place to lease the retail storefront he will use for his pharmacy.
- Reached out to numerous contacts to include experienced pharmacy technicians and sales associates to advise them of the upcoming opportunities at his new pharmacy.
- Began recruiting the management team members including a store manager, an accountant/bookkeeper, and a marketing director.
Healthy1 Pharmacy Services
The following are the pharmacy products and services that Healthy1 Pharmacy will provide:
Industry Analysis
The pharmacy industry in the United States is valued at $534.2B and is projected to grow to $862B by 2028. Major market drivers include a growing number of types of diseases, an increasing percentage of people with chronic illnesses, an aging population, and higher healthcare costs.
There are more prescription medications being developed, and the demand for more prescriptions is growing faster than ever before. In 2020, there were an estimated 860M medications prescribed by physicians and 336M prescribed by hospitals. This prescription demand is resulting in more pharmacies opening across the U.S. The National Council for Prescription Drug Programs (NCPDP) reports an estimated 20,400 independent pharmacies in 2010. This number has grown to over 23,000 by 2019, a 12.9% increase in the number of independent pharmacies for that time period.
Industry operators in the pharmaceutical market can benefit from providing above average customer service, lower prices than competitors, and products or services that aren’t being offered elsewhere.
Customer Analysis
Demographic profile of target market.
Healthy1 Pharmacy will target all individuals in Charleston, South Carolina. The pharmacy will target multiple age groups from pediatric to geriatric. Healthy1 will also target patients needing prescriptions filled on a regular basis.
Customer Segmentation
Healthy1 will primarily target the following customer profiles:
- Parents of pediatric patients
- Geriatric patients
- People taking medications on a regular basis
- People needing compounding services
- People looking for vaccines or immunizations
- People who need lab tests
Competitive Analysis
Direct and indirect competitors.
Healthy1 Pharmacy will face competition from other companies with similar business profiles. A description of each competitor company is below.
Charleston Care Pharmacy
Charleston Care Pharmacy provides a wide variety of pharmacy products and services including OTC medications, lab testing, and compounding. Located in a senior neighborhood, Charleston Care Pharmacy specializes in serving the geriatric population, but welcomes customers of all ages. Charleston Care Pharmacy’s promise is to deliver effective communication, honesty, and integrity in every transaction. Charleston Care Pharmacy’s team of experienced pharmacy technicians assures customers are well taken care of and prescriptions are filled quickly and correctly.
FeelBetterNow Pharmacy
FeelBetterNowPharmacy is a Charleston-based neighborhood pharmacy that provides a full suite of services including compounding, vaccines, lab testing, local delivery, and more. The owners of FeelBetterNowPharmacy are licensed pharmacists who have extensive experience working for independent retail pharmacies so they understand what customers are looking for in a neighborhood pharmacy. Customers who choose FeelBetterNowPharmacy can rest assured they are getting the best quality products at reasonable prices.
Care Better Pharmacy
Care Better Pharmacy is a trusted Charleston pharmacy that is known for providing superior customer service. They are able to provide a one-stop shop for customers looking for convenient OTC and prescription medications, durable medical equipment, vaccines, and immunizations. Care Better Pharmacy is also able to serve customers in need of compounding, recurring prescriptions, and lab testing. They have expert pharmacy technicians to provide information about each medication and answer all of their customers’ questions.
Competitive Advantage
Healthy1 Pharmacy will be able to offer the following advantages over their competition:
- Healthy1 Pharmacy offers the best pricing in Charleston. The pharmacy offers its customers low prices on all of its products and services compared to the competition.
Marketing Plan
Brand & value proposition.
Healthy1 Pharmacy will offer the unique value proposition to its customers:
- Highly-qualified team of skilled pharmacy technicians and sales associates will be able to provide personalized customer service and ensure all prescriptions are handled with care.
- Unbeatable pricing to its clients – Healthy1 Pharmacy does not mark up its products and services at a large percentage. The pharmacy will offer the lowest prices guaranteed. If a customer finds a cheaper price elsewhere, Healthy1 Pharmacy will give the customer a better price.
Promotions Strategy
The promotions strategy for Healthy1 Pharmacy is as follows:
Healthy1 Pharmacy will create and maintain a company website that is well organized, informative, and lists all the products and services that Healthy1 is able to provide. The website will also list promotions and discounts, informative healthcare articles, and pharmacy-sponsored community events.
SEO/Google Marketing
The company’s marketing director will manage Healthy1’s website presence with SEO marketing tactics so that any time someone types in the Google or Bing search engine “Charleston pharmacy” or “pharmacy near me”, Healthy1 Pharmacy will be listed at the top of the search results.
Social Media Marketing
Healthy1 Pharmacy’s marketing director will also manage the company’s social media presence on several platforms including Instagram, Facebook, Twitter, YouTube, TikTok, and LinkedIn. The goal of the social media strategy is to attract new customers while engaging with current customers to encourage referrals, reviews, and feedback.
Content Marketing/Email Marketing
The company will post blogs and other promotional content on a regular basis with informative health and wellness information to keep people coming back. Healthy1 will post informative content on the website, social media platforms, and through email newsletters.
Professional Associations/Networking
Healthy1 Pharmacy will become a member of professional associations such as the Independent Retail Pharmacy Association, the National Community Pharmacists Association, and the Tennessee Pharmacists Association. The company will focus networking efforts on expanding its customer base.
Print Advertising
Healthy1 Pharmacy will invest in professionally designed print ads to display in programs or flyers at industry networking events, in magazines, direct mailers, and in local newspapers.
The pricing will be lower than competitors so customers feel they receive value when they choose Healthy1 products and services.
Operations Plan
The following will be the operations plan for Healthy1 Pharmacy.
Operation Functions:
- Stephen Harris will be the Owner and Lead Pharmacist. He will oversee pharmacy technicians. Stephen has spent the past year recruiting the following staff:
- Emily Jackson – Store Manager who will oversee all retail operations, sales associates, supplier relations, and inventory management.
- Jessica Johnson – Staff Accountant/Bookkeeper who will provide budgeting, tax payments, and financial reporting.
- Tim Thompson – Marketing Director who will provide marketing and sales campaigns for Healthy1 Pharmacy.
Milestones:
Healthy1 Pharmacy will have the following milestones complete in the next six months.
9/1/2022 – Finalize contract to lease the retail space.
9/15/2022 – Finalize personnel and staff employment contracts for the Healthy1 Pharmacy team.
10/1/2022 – Finalize contracts with suppliers.
10/15/2022 – Network at industry events and initiate the marketing and promotional campaign.
10/22/2022 – Begin moving into the Healthy1 Pharmacy storefront.
11/1/2022 – Healthy1 Pharmacy opens for business.
Stephen Harris is a licensed pharmacist with a Doctor of Pharmacy (PharmD) degree and more than fifteen years of experience working in the pharmacy industry. Stephen has been recognized for his commitment to excellence in filling prescriptions accurately and efficiently as well as his communication skills and positive rapport with customers.
Emily Jackson has been a store manager at another retail pharmacy for over a decade and has garnered a positive reputation for her exceptional organizational skills and leadership. Emily has worked in the pharmacy industry for so long, she understands all aspects required in running a successful retail pharmacy.
Financial Plan
Key revenue & costs.
The revenue drivers for Healthy1 Pharmacy are the fees charged to customers in exchange for the pharmacy’s products and services.
The cost drivers will be the overhead costs required in order to staff a pharmacy. The expenses will be the payroll cost, rent, utilities, inventory, supplies, and marketing materials.
Funding Requirements and Use of Funds
Healthy1 Pharmacy is seeking $400,000 in debt financing to launch its pharmacy business. The funding will be dedicated towards securing the retail space and purchasing equipment, inventory, and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs. The breakout of the funding is below:
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Number of prescriptions filled per month: 2,000
- Average fees collected each month: $50,000
- Retail lease per year: $100,000
Financial Projections
Income statement, balance sheet, cash flow statement, what is a pharmacy business plan.
A pharmacy business plan is a plan to start and/or grow your pharmacy business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your pharmacy business plan using our Pharmacy Business Plan Template here .
What are the Main Types of Pharmacy Businesses?
There are a number of different kinds of self storage business , some examples include: Pharmacy, Home Care Pharmacy, Mail Order Pharmacy and Compounding Pharmacy.
How Do You Get Funding for Your Pharmacy Business Plan?
Pharmacy businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Pharmacy Business?
Starting a pharmacy business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Pharmacy Business Plan - The first step in starting a business is to create a detailed pharmacy business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your pharmacy business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your pharmacy business is in compliance with local laws.
3. Register Your Pharmacy Business - Once you have chosen a legal structure, the next step is to register your pharmacy business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your pharmacy business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Pharmacy Equipment & Supplies - In order to start your pharmacy business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your pharmacy business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful pharmacy business:
- How to Start a Pharmacy Business
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Pharmacy Business Plan
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The Discount Pharmacy
Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.
People need to be able to buy prescriptions at reduced prices. We make that possible by carefully maintaining efficiencies in our operations. So we can target a specific segment of the market – those customers who pay for their prescription medications themselves. They are poor, they are sick, they deserve the same care as those who can afford healthcare and full price prescriptions.
The Discount Pharmacy’s mission is to provide our customers with the best prices for their prescription medications. Our convenience and services will exceed the expectations of our customers.
The Discount Pharmacy’s target market consists of two different groups, local customers or walk-ins, and mail order customers.
Competition
Competition takes many different forms in the pharmacy industry. They are: chain pharmacies, local pharmacies, mail in pharmacies, canadian pharmacies.
The Discount Pharmacy’s we have superior pricing. To do that we must maintain our position as the low cost provider by painstakingly ensuring that costs are kept low through operating efficiencies.
Expectations
Costs will be minimized by maintaining only one pharmacist and filling the void with pharmaceutical techs. We expect to reach profitability by our third year and will generate substantial sales by year three
Financial Highlights by Year
Financing needed.
We will need $115,000 to start, we will be able to pay the investment back at the end of year 4
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Creating a Business Plan for Pharmaceuticals Company
The healthcare service is changing rapidly due to the changing pattern of diseases in the current rising situation of the pandemic. If you are planning to start a business plan for a pharmaceutical company then it requires a huge capital expenditure and manpower for managing the competitiveness. Therefore, a well-prepared B-plan will help to allocate resources by minimizing the risk in the innovation.
Are you willing to be an Entrepreneur and not sure about the process of managing a team to successfully research the market? Whether the business will get the exact value for proposing the financial plan? Do you analyze the competition in the market?
The above questions will be solved by a perfect plan that helps you to start your innovation in the pharmaceutical business.
Let's understand the deep importance of the business plan for the pharmaceutical business. A B-plan acts as the guideline for your entrepreneurial creativity and the plan helps in collaboration with teams for creating a business model canvas. B-plan is the step by step process for allocating resources and it helps to pitch the investor for investment in the manufacturing and distribution process of pharmaceutical products. B-plan guides you to determine the importance of planning and achieving the objective of innovation in the pharmaceutical business.
Let us discuss more the vital points of a B-plan:
- Determination of Business Model Canvas
This is the most vital step in the b-plan for the pharmaceutical business as it helps to make a business model canvas. A business planning template service helps you to identify your required resources like manpower, technology, finance and legal guidelines for starting a venture. A plan helps you to identify the revenue streams in the pharmaceutical business by determining the mission and of vision the startup venture.
- Market Research for Understanding Strengths and Weaknesses
Whether you want to start a venture in a pharmaceutical company, then it is essential to thoroughly research the market to determine the strengths and weaknesses of the business. B-plan acts as a guide for searching the current market opportunities by identifying the innovation in the pharmaceutical business. Effective implementation of the market research also helps you determine the strategies for marketing. A B-plan for the pharmacy business enables opportunities for improving a pharmaceutical company ’s manufacturing by focussing on the cost and wastage of resources.
- Competitor Analysis in The Pharmacy Business
It is essential to determine the competitors in the pharmaceutical company for your startup venture. B-plan helps in the identification of companies that are well settled up in the market. A plan acts as a guideline to research the business process of successful entrepreneurs in the pharmaceutical business. A business plan template helps you to identify the market leaders for manufacturing diverse products in the pharmacy business .
- Innovation in the Drugs Manufacturing Process
If you are not getting the required financial resources for the pharmaceutical company , then the B-plan helps to pitch to the investor. You can attract investors by showing the current market opportunities for business in the business model canvas. B-plan helps you to innovate the manufacturing process for achieving the objectives of cost-effective drug manufacturing process. If you are not sure about the success of the business then the B -plan guides you to cater for growth by innovation. B-plan helps to determine the importance of innovation in the pharmacy business .
- B-Plan for Financial Evaluation
Projection of profit and loss, cash flow statement and preparation of balance sheet are the important steps for financial evaluation in the pharmacy business . B-plan acts as the guideline for the financial projection for 3 to 5 years in the business. Projection of profit and loss also helps to attract investors to invest in the pharmaceutical company . Further, if you think that the available finance is not enough for the manufacturing process of the pharmacy business, then the B-plan helps you to gather finance for the innovation.
We hope that the above information helps you to understand the importance of a B-plan template for starting a pharmaceutical company. We think that this information also helps to understand the tips for writing business plans .
Please check out some of our business planning templates,
https://icrestmodels.com/product/business-plan-for-pharmaceuticals-company
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Home » Business Plans » Healthcare & Medical » Pharmacy
How to Write a Pharmaceutical Company Business Plan [Sample Template]
Are you about starting a pharmaceutical company? If YES, here is a complete sample pharmaceutical business plan template & feasibility report you can use for FREE . If you are pharmacist and you are certain that you have a winning formula when it comes to producing effective generic drugs; drugs / medicine that has been tested and proven to meet the requirement for such products, then you should consider launching your own generic pharmaceutical manufacturing company.
It is a business that is still pretty much open for investors to come and compete for the available market in the country you intend launching the business.
A Sample Pharmaceutical Company Business Plan Template
1. industry overview.
The Generic pharmaceutical and medicine manufacturing companies primarily develop prescription and over-the-counter drug products that are used to prevent or treat illnesses in humans or animals. Generic drugs are produced and distributed without patent protection, and industry operators are not significantly engaged in the research and development of new drugs.
It is important to mention that the generic pharmaceutical manufacturing industry does not include manufacturers of nutritional supplements, cosmetic beauty products or similar products. All over the world, the pharmaceutical industry is highly regulated. This is so because the devastating effect of fake drugs or drug abuse can’t be quantified.
As a matter of fact, there are several universal laws and regulations that govern the patenting, testing, safety, efficacy and marketing of drugs.For example, in the united states, new pharmaceutical products must be approved by the Food and Drug Administration (FDA) as being both safe and effective before they can be allowed to go into the market.
Statistics has it that global spending on prescription drugs grew to a whopping sum of $954 billion in 2011 and The United States accounts for more than a third of the global pharmaceutical market, with an estimate of $340 billion in annual sales
The Generic Pharmaceutical Manufacturing Industry is a thriving sector of the economy of countries like India, China, united kingdom , Germany and the United States of America. Statistics has it that in the united states alone, the industry generates a whooping sum of well over $66 billion annually from more than 1,203 registered and licensed generic pharmaceutical manufacturing companies scattered all around the United States of America.
The industry is responsible for the employment of well over 67,699 people. Experts project the industry to grow at a 4.1 percent annual rate from 2011 to 2016. Mylan Inc., Sandoz Ltd. and Teva Pharmaceuticals Industries Ltd. have the lion share of the available market in the Generic Pharmaceutical manufacturing industry in the United States of America.
A close study of the Generic Pharmaceutical Manufacturing industry shows that the industry is expanding rapidly. This is due to the demand for the industry’s products by the aging population with more chronic illnesses. So also, with the regulatory provisions of the Patient Protection and Affordable Care Act expand consumer access to prescription insurance and provide increased opportunities for product development.
Going forward, the industry revenue growth is expected to outpaced revenue growth for the Brand Name Pharmaceutical Manufacturing industry. A large number of brand name drugs manufacturers lost patent protection for blockbuster drugs beginning in 2010; demand for generics subsequently grew, as consumers demanded affordable versions of these high-profile products. These trends are expected to continue in the next five years.
A recent report published by IBISWORLD shows that the Generic Pharmaceutical Manufacturing industry has a low level of concentration, with the top four companies accounting for 30.2 percent of industry revenue in 2016. Having a large operation as a generic manufacturer does not offer the same advantages as it does for brand name producers.
The report further stated that generic drug manufacturers can be smaller because the cost of research and development is significantly lower than it is for brand name companies; however, operators can still benefit from economies of scale through savings on administrative and capital costs. Moreover, a company’s presence in both generic and brand drug markets can buffer company revenue against volatility in price or demand for any one specific drug.
The bottom line is that; the Generic Pharmaceutical Manufacturing industry is still very much open for new entrant; the competition within the industry is not as stiff as similar industry. If your product is good, it can gain fair share of the available market in any country or region you intend launching the business.
2. Executive Summary
Harry Tancredo® Pharmaceuticals, LLC is a licensed and standard generic pharmaceutical manufacturing company that will be located in an industrial area in Concord – New Hampshire. We have been able to secure a long-term lease agreement for a facility in a strategic location with an option of a long-term renewal on an agreed terms and conditions that is favorable to us.
The facility has government approval for the kind of production business we want to run and the facility is easily accessible and we are deliberate about that because we want to facilitate easy movement of raw materials (chemicals and packaging containers) and finished products (drugs / medicines).
Harry Tancredo® Pharmaceuticals, LLC is in the generic pharmaceutical manufacturing industry to engage in developing and producing generic drugs, marketing and distributing generic drugs and gaining regulatory approval for generic drugs.
We will manufacture standard and effective pharmaceutical products such as mental health and lipid regulators, anti diabetics and respiratory, pain and antibacterial, nervous system disorders and antihypertensive, antiulcerants and thyroid, dermatological and hormonal contraceptives, and ADHD and anticoagulants.
We are also in business to make profits at the same to give our customers value for their money; we want to give people and businesses who patronize our pharmaceutical products the opportunity to be part of the success story of our brand.
We are aware that there are several big scale and small scale generic pharmaceutical manufacturing companies scattered all around the United States and Canada whose products can be found in every nooks and crannies of The United States and Canada, which is why we spent time and resources to conduct our feasibility studies and market survey so as to enable us locate the business in an area that can easily accept our products and brand.
We ensured that our facility is easy to locate and we have mapped out plans to develop a far-reaching distribution network for wholesalers of pharmaceutical products all around Concord – New Hampshire and throughout the United States of America.
Much more than producing quality, effective and safe generic pharmaceutical products, our customer care is going to be second to none. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they purchase any of our product and also to become our loyal customers and ambassadors.
Harry Tancredo® Pharmaceuticals, LLC will ensure that all our customers (wholesale distributors) are given first class treatment whenever they visit our factory. We have a CRM software that will enable us manage a one on one relationship with our customers (wholesale distributors) no matter how large the numbers of our customer base may grow to.
We will ensure that we get our customers involved when making some business decisions that will directly or indirectly affect them. Harry Tancredo® Pharmaceuticals, LLC is family business that will be owned by Harry Tancredo and his immediate family members. Harry Tancredo who is the Chief Executive Officer of the Company is Graduate of Pharmacology and he holds a Master’s Degree in Business Management (MBA).
He has well over 12 years of experience working in related industry as a senior production manager prior to starting Harry Tancredo® Pharmaceuticals, LLC. He will be working with a team of professionals to build the business and grow it to enviably height.
3. Our Products and Services
Harry Tancredo® Pharmaceuticals, LLC is going to run a standard and licensed generic pharmaceutical manufacturing company whose products will not only be sold in Hartford – Connecticut but also throughout the United States of America and Canada.
We are in the generic pharmaceutical manufacturing industry to make profits and also to give our customers value for their money. We will ensure that we do all that is permitted by the law in the United States of America to accomplish our business goal and objective. These are some of the products that we will be offering;
- Developing and producing generic drugs
- Marketing and distributing generic drugs
- Gaining regulatory approval for generic drugs
- Mental health and lipid regulators
- Anti-diabetics and respiratory
- Pain and antibacterial
- Nervous system disorders and antihypertensive
- Anti-ulcerants and thyroid
- Dermatological and hormonal contraceptives
- ADHD and anticoagulants
4. Our Mission and Vision Statement
- Our vision is to establish a standard generic pharmaceutical manufacturing Company whose products will be not only be sold in Concord – New Hampshire, but also throughout the United States of America and Canada.
- Our mission is to establish a standard and world class generic pharmaceutical manufacturing Company / brand that in our own capacity will favorably compete with leaders in the industry.
- We want to build a business that will be listed amongst the top 20 generic pharmaceutical manufacturing brands in the United States of America and Canada.
Our Business Structure
Harry Tancredo® Pharmaceuticals, LLC is a business that is established with the aim of competing favorably with other leading generic pharmaceutical product brands in the industry. This is why we will ensure that we put the right structure in place that will support the kind of growth that we have in mind while setting up the business.
We will ensure that we only hire people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders (the owners, workforce, and customers).
As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target. In view of that, we have decided to hire qualified and competent hands to occupy the following positions;
- Chief Executive Officer (Owner)
Production / Plant Manager
Human Resources and Admin Manager
Merchandize Manager
Sales and Marketing Manager
- Machine Operators
- Accountants / Cashiers
Distribution Truck Drivers
5. Job Roles and Responsibilities
Chief Executive Officer – CEO (Owner):
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization.
- Responsible for overseeing the smooth running of the pharmaceutical production plant
- Part of the team that determines the quantity and quality of pharmaceutical products that are to be produced
- Maps out strategy that will lead to efficiency amongst workers in the plant
- Responsible for training, evaluation and assessment of plant workers
- Ensures that the steady flow of both raw materials to the plant and easy flow of finished products through wholesale distributors to the market
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Ensures that the plant meets the expected safety and health standard at all times.
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
- Enhances department and organization reputation by accepting ownership for accomplishing new and different requests; exploring opportunities to add value to job accomplishments.
- Defines job positions for recruitment and managing interviewing process
- Carries out staff induction for new team members
- Responsible for training, evaluation and assessment of employees
- Oversees the smooth running of the daily office and factory activities.
- Manages vendor relations, market visits, and the ongoing education and development of the organizations’ buying teams
- Responsible for the purchase of raw materials and packaging materials
- Responsible for planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
- Ensures that the organization operates within stipulated budget.
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Models demographic information and analyze the volumes of transactional data generated by customer purchases
- Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
- Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
- Develops, executes and evaluates new plans for expanding increase sales
- Documents all customer contact and information
- Represents the company in strategic meetings
- Helps to increase sales and growth for the company
Accountant / Cashier
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for the organization
- Serves as internal auditor for the organization
Client Service Executive
- Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Manages administrative duties assigned by the manager in an effective and timely manner
- Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
- Receives parcels / documents for the company
- Distribute mails in the organization
- Handles any other duties as assigned by the line manager
Production Workers / Machine Operators:
- Responsible for preparing, blending, compounding and packaging pharmaceutical products
- Handle labeling of pharmaceutical products
- Operate machines used in the manufacturing mental health and lipid regulators, ant diabetics and respiratory, pain and antibacterial, nervous system disorders and antihypertensive, antiulcerants and thyroid, dermatological and hormonal contraceptives, and ADHD and anticoagulants
- Assist in packaging and loading pharmaceutical products into distribution trucks
- Assists in loading and unloading pharmaceutical products
- Maintains a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
- Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment
- Assists the transport and logistics manager in planning their route according to a delivery schedule.
- Local-delivery drivers may be required to sell products or services to pharmaceutical stores and businesses on their route, obtain signatures from recipients and collect cash.
- Transports finished goods and raw materials over land to and from manufacturing plants or retail and distribution centers
- Inspect vehicles for mechanical items and safety issues and perform preventative maintenance
- Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
- Collects and verifies delivery instructions
- Reports defects, accidents or violations
6. SWOT Analysis
We are quite aware that there are several generic pharmaceutical manufacturing companies both large and small in the United States of America and Canada which is why we are following the due process of establishing a business so as to compete favorable with them.
We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be welled equipped to confront our threats.
Harry Tancredo® Pharmaceuticals, LLC employed the services of an expert HR and Business Analyst with bias in start – up business to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives. This is the summary of the SWOT analysis that was conducted for Harry Tancredo® Pharmaceuticals, LLC;
Part of what is going to count as positives for Harry Tancredo® Pharmaceuticals, LLC is the vast experience of our management team, we have people on board who are highly experienced and understands how to grow business from the scratch to becoming a national phenomenon.
So also, our state of the art machines and equipment, the wide varieties of pharmaceutical products that we produce, our large national distribution network and of course our excellent customer service culture will definitely count as a strong strength for the business.
A major weakness that may count against us is the fact that we are a new generic pharmaceutical manufacturing company in the United States and we don’t have the financial capacity to engage in the kind of publicity that we intend giving the business especially when big names like Mylan Inc., Sandoz Ltd. and Teva Pharmaceuticals Industries Ltd. et al are already determining the direction of the market both in the United States and in the global market.
- Opportunities:
The opportunities available to generic pharmaceutical manufacturing companies with a wide range of products are enormous. This is due to the fact that almost all Americans and people from all over the world take drugs / medicine for different reasons.
As a result of that, we were able to conduct a thorough market survey and feasibility studies so as to position our business to take advantage of the existing market for pharmaceutical products and also to create our own new market. We know that it is going to requires hard work, and we are determined to achieve it.
We are quite aware that just like any other business, one of the major threats that we are likely going to face are economic downturn and unfavorable government policies . It is a fact that economic downturn affects purchasing power. Another threat that may likely confront us is the arrival of a new generic pharmaceutical manufacturing company in same location where ours is located.
7. MARKET ANALYSIS
- Market Trends
A close study of the trends in the Generic Pharmaceutical Manufacturing industry shows that the industry is expanding rapidly. This is due to the demand for the industry’s products by the aging population with more chronic illnesses.
So also, with the regulatory provisions of the Patient Protection and Affordable Care Act expand consumer access to prescription insurance and provide increased opportunities for product development. Going forward, the industry revenue growth is expected to outpaced revenue growth for the Brand Name Pharmaceutical Manufacturing industry.
A large number of brand name drugs manufacturers lost patent protection for blockbuster drugs beginning in 2010; demand for generics subsequently grew, as consumers demanded affordable versions of these high-profile products. These trends are expected to continue in the next five years.
Lastly, the generic pharmaceutical manufacturing industry is the adoption of eco – friendly approach towards the production and packaging of its products. As a matter of fact, the industry’s adoption of eco-friendly practices will likely persuade environmentally conscious consumers to buy its products, while increasing operators’ efficiency.
8. Our Target Market
When it comes to selling pharmaceutical products, there is indeed a wide range of available customers. In essence, our target market can’t be restricted to just a group of people, but all those who resides in our target market locations.
In view of that, we have conducted our market research and we have ideas of what our target market would be expecting from us. We are in business to engage in developing and producing generic drugs, marketing and distributing generic drugs and gaining regulatory approval for generic drugs. Hence our target markets are;
- Health Facilities
- Pharmaceutical Products Wholesalers
- Retail Pharmacy Stores
- Everybody in our target market location
Our competitive advantage
A close study of the generic pharmaceutical manufacturing industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry.
We are aware of the stiffer competition and we are well prepared to compete favorably with other generic pharmaceutical manufacturing companies in New Hampshire and throughout the United States and Canada.
Harry Tancredo® Pharmaceuticals, LLC is launching a standard generic pharmaceutical product brand that will indeed become the preferred choice of residence of Concord – New Hampshire and every city where our generic pharmaceutical product will be retailed.
Part of what is going to count as competitive advantage for Harry Tancredo® Pharmaceuticals, LLC is the vast experience of our management team, we have people on board who are highly experienced and understands how to grow business from the scratch to becoming a national phenomenon.
So also, our state of the art pharmaceutical production machines and equipment, the wide varieties of generic pharmaceutical products that we produce our large and far reaching national distribution network and of course our excellent customer service culture will definitely count as a strong strength for the business.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (startups generic pharmaceutical manufacturing companies) in the generic pharmaceutical manufacturing industry, meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.
We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Harry Tancredo® Pharmaceuticals, LLC is established with the aim of maximizing profits in the generic pharmaceutical manufacturing industry in both the United States of America and Canada and we are going to go all the way to ensure that we do all it takes to sell a wide range of generic pharmaceutical products to a wide range of customers.
Harry Tancredo® Pharmaceuticals, LLC will generate income by selling the following pharmaceutical products;
- Antiulcerants and thyroid
10. Sales Forecast
One thing is assured when it comes to generic pharmaceutical manufacturing company, if your products are well – packaged and branded and if your production plant is centrally positioned and easily accessible, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Concord – New Hampshire and every city where our generic pharmaceutical products will be sold and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six month of operations and grow the business and our clientele base.
We have been able to critically examine the generic pharmaceutical manufacturing industry and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions that are peculiar to similar startups in Concord – New Hampshire.
Below is the sales projection for Harry Tancredo® Pharmaceuticals, LLC, it is based on the location of our business and other factors as it relates to small scale and medium scale generic pharmaceutical manufacturing company start – ups in the United States;
- First Fiscal Year-: $250,000
- Second Fiscal Year-: $550,000
- Third Fiscal Year-: $950,000
N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor manufacturing same generic pharmaceutical products and customer care services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
Before choosing a location for Harry Tancredo® Pharmaceuticals, LLC and also the kind of generic pharmaceutical products we will produce, we conduct a thorough market survey and feasibility studies in order for us to be able to be able to penetrate the available market in our target market locations.
We have detailed information and data that we were able to utilize to structure our business to attract the numbers of customers we want to attract per time and also for our products to favorable compete with other leading generic pharmaceutical manufacturing brands in the United States of America and Canada.
- Introduce our generic pharmaceutical products brand by sending introductory letters to pharmacy stores, hospitals, residence, pharmaceutical merchants, retailers and other stakeholders in Concord – New Hampshire and other cities both in the United States of America and Canada
- Open our generic pharmaceutical manufacturing company with a party so as to capture the attention of residence who are our first targets
- Engage in road show in targeted communities from time to time to sell our products
- Advertise our products in community based newspapers, local TV and radio stations
- List our business and products on yellow pages ads (local directories)
- Leverage on the internet to promote our generic pharmaceutical product brands
- Engage in direct marketing and sales
- Encourage the use of Word of mouth marketing (referrals)
11. Publicity and Advertising Strategy
In spite of the fact that our generic pharmaceutical manufacturing plant is a standard one with a wide range of pharmaceutical products that in few years from now will favorably compete with other leading brands in the industry like Mylan Inc., Sandoz Ltd. and Teva Pharmaceuticals Industries Ltd.
We will still go ahead to intensify publicity for all our products and brand. We are going to explore all available means to promote Harry Tancredo® Pharmaceuticals, LLC.
Harry Tancredo® Pharmaceuticals, LLC has a long-term plan of distributing our generic pharmaceutical products in various locations all around the United States of America and Canada which is why we will deliberately build our brand to be well accepted first in Concord – New Hampshire before venturing out.
As a matter of fact, our publicity and advertising strategy is not solely for selling our products but to also effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Harry Tancredo® Pharmaceuticals, LLC;
- Place adverts on both print (community based newspapers and magazines) and electronic media platforms
- Sponsor relevant community programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, et al to promote our generic pharmaceutical product brand
- Install our Bill Boards on strategic locations all around major cities in the United States of America and Canada
- Engage in road show from time to time in targeted communities
- Distribute our fliers and handbills in target areas
- Position our Flexi Banners at strategic positions in the location where we intend getting customers to start patronizing our products.
- Ensure that our products are well branded and that all our staff members wear our customized clothes, and all our official cars and distribution vans are customized and well branded.
12. Our Pricing Strategy
When it comes to pricing for products such as generic pharmaceutical products, there are two sides to the coin. We are aware of the pricing trend in the generic pharmaceutical manufacturing industry which is why we have decided to produce various sizes of pharmaceutical products as regulated by the industry.
In view of that, our prices will conform to what is obtainable in the industry but will ensure that within the first 6 to 12 months our products are sold a little bit below the average prices of various generic pharmaceutical product brands in the United States of America. We have put in place business strategies that will help us run on low profits for a period of 6 months; it is a way of encouraging people to buy into our generic pharmaceutical product brands.
- Payment Options
The payment policy adopted by Harry Tancredo® Pharmaceuticals, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Harry Tancredo® Pharmaceuticals, LLC will make available to her clients;
- Payment via bank transfer
- Payment with cash
- Payment via credit cards / Point of Sale Machines (POS Machines)
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our client make payment for generic pharmaceutical product purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for the purchase of our products.
13. Startup Expenditure (Budget)
Starting a standard generic pharmaceutical manufacturing company is indeed a capital – intensive business. This is so because the amount required in setting up a generic pharmaceutical production plant is not a piecemeal. The bulk of the start – up capital will be sent on leasing or acquiring a facility and also in purchasing mixing, blending, compounding and packaging equipment.
Aside from that, you are not expected to spend much except for purchase and servicing of distribution trucks, purchasing raw materials, paying of your employees and utility bills. These are the key areas where we will spend our start – up capital;
- The total fee for registering the Business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
- Marketing promotion expenses for the grand opening of Harry Tancredo® Pharmaceuticals, LLC in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- The cost for hiring Business Consultant – $2,500.
- The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $105,600.
- The cost for construction of a standard generic pharmaceutical production plant – $100,000.
- Other start-up expenses including stationery ( $500 ) and phone and utility deposits ( $2,500 ).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost for start-up inventory (mixing, blending, compounding and packaging equipment, raw materials, and packaging materials et al) – $80,000
- Cost for store equipment (cash register, security, ventilation, signage) – $13,750
- Cost of purchase of distribution vans – $60,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000.
- The cost of launching a website – $600
- The cost for our opening party – $10,000
- Miscellaneous – $10,000
We would need an estimate of $500,000 to successfully set up our generic pharmaceutical manufacturing company in Concord – New Hampshire. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.
Generating Funds / Startup Capital for Harry Tancredo® Pharmaceuticals, LLC
Harry Tancredo® Pharmaceuticals, LLC is a family business that is owned and financed by Harry Tancredo and his immediate family members. They do not intend to welcome any external business partner which is why he has decided to restrict the sourcing of the start – up capital to 3 major sources.
These are the areas we intend generating our start – up capital;
- Generate part of the start – up capital from personal savings and sell of stocks
- Source for soft loans from family members and friends
- Apply for loan from my Bank
N.B: We have been able to generate about $200,000 (Personal savings $150,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and document have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
14. Sustainability and Expansion Strategy
The future of any business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.
One of our major goals of starting Harry Tancredo® Pharmaceuticals, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to retail our generic pharmaceutical products a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.
Harry Tancredo® Pharmaceuticals, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
Check List / Milestone
- Business Name Availability Check: Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Leasing of facility and construction of standard generic pharmaceutical production plant: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from family members and friends: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of the Company’s Logo: Completed
- Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Purchase of the Needed furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business both online and around the community: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Opening party / launching party planning: In Progress
- Establishing business relationship with vendors – pharmacy stores, hospitals, pharmaceutical products wholesale suppliers / merchants: In Progress
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