Being a part of a buying group is critical to the success of independent pharmacies.
Buying groups help lower the cost of inventory. But knowing which type of buying group works best for your community pharmacy is essential.
There are three main types of independent pharmacy buying groups – for-profit, an association and a cooperative. For-profit organizations give their profits generated by the group back to the owner of the organization.
With an association, income is generated in the form of administrative fees collected from suppliers contracted to provide goods and services. Profits generated are used to support the association.
An independent pharmacy cooperative, also known as a pharmacy buying cooperative or a pharmacy cooperative purchasing group, is an organization formed by a group of independent pharmacies that come together to pool their resources and purchasing power for the purpose of obtaining better pricing, discounts and other benefits from suppliers, wholesalers, like API Warehouse, manufacturers and other vendors. These cooperatives are established to help independent pharmacies compete more effectively with larger pharmacy chains and benefit from economies of scale.
American Associated Pharmacies (AAP) is an independent pharmacy cooperative.
Our income is generated in the form of administrative fees collected from suppliers that contract to provide goods and services. Qualified profits generated are shared among all members in the form of an annual Board-declared Patronage Dividend.
Here are some other key features of an independent pharmacy cooperative:
1. Aggregation of Purchasing Power:
Independent pharmacies, when acting individually, might have limited bargaining power when negotiating prices and terms with suppliers. By joining a cooperative, these pharmacies can combine their orders, creating a larger collective purchasing volume that gives them more opportunities to negotiate favorable terms and discounts.
2. Cost Savings:
A primary objective of an independent pharmacy cooperative is to help its members achieve cost savings. By obtaining better pricing on pharmaceuticals, over-the-counter products, medical supplies and other inventory, independent pharmacies can improve their profit margins and maintain competitive pricing.
3. Networking:
Joining a cooperative allows independent pharmacies to connect with like-minded peers who share similar challenges and goals. This networking can create opportunities to share best practices and insights for running a successful pharmacy business.
4. Advocacy and Representation:
Pharmacy cooperatives can serve as a unified voice to advocate for the interests of independent pharmacies in areas such as regulatory issues and industry regulations. This advocacy can help shape policies that are favorable to independent pharmacy businesses.
5. Educational Opportunities:
Many independent pharmacy cooperatives offer educational programs, training sessions and workshops to keep their members informed about industry trends, regulatory changes and advancements in pharmaceutical care.
6. Variety of Services:
Depending on the cooperative, members might have access to additional services such as technology solutions, compliance assistance and more.
7. Local Community Focus:
Independent pharmacies are often deeply rooted in their local communities. Cooperatives can help these pharmacies maintain their community presence while benefiting from the advantages of collective purchasing.
It’s important for independent pharmacies that are considering joining a cooperative to thoroughly research and evaluate different options. The cooperative’s structure, pricing agreements, available resources and overall reputation should align with the needs and goals of the individual pharmacy.
By becoming part of a well-established and reputable independent pharmacy cooperative, pharmacies can strengthen their position in the marketplace and enhance their overall business viability.
If you have any questions about how the AAP Member-owned cooperative can help your store, contact AAP.