Creating a Purchasing Strategy

Admin
Aug 9
3 min read

For many independent pharmacy owners, reducing costs—especially Cost of Goods Sold (COGS)—is the top priority when it comes to protecting margins and improving profitability. It’s a challenge we hear about every day from the pharmacies we serve.

At RxConnexion, our mission is clear: help our members enhance profitability and build sustainable growth. That commitment is what inspired this blog series—Pharmacy Business 101—where we break down practical strategies and proven methods to help you take control of your purchasing, negotiate better terms, and make smarter buying decisions that directly improve your bottom line.

Why a Purchasing Strategy Matters

Without a clear purchasing strategy, many pharmacies fall into the trap of reactive buying—making purchases based on urgency or convenience instead of data. This can lead to:

Paying higher prices than necessary
Missing out on rebates and incentive programs
Carrying excess or slow-moving inventory
Reduced cash flow and tighter margins

A well-designed purchasing strategy gives you the ability to proactively manage costs, leverage supplier relationships, and align inventory levels with actual demand.

Step 1: Assess Your Current Purchasing Process

Start with a clear understanding of your current state:

Who are your primary and secondary suppliers?
What are your average purchase prices for high-volume items?
Are you fully utilizing available rebates, discounts, and GPO benefits?
How often do you evaluate alternative sourcing options?

RxConnexion Tip: Use purchasing reports to identify your top 50 dispensed products by volume and price, then benchmark them against other supplier options.

Step 2: Balance Primary & Secondary Suppliers

While primary suppliers offer contract pricing, rebates, and consistent fulfillment, secondary suppliers can provide flexibility and competitive pricing—especially for generics. A balanced approach can help you:

Maximize rebate thresholds with your primary wholesaler
Capture savings from secondary sources when market prices drop
Reduce out-of-stock risks

RxConnexion Solution: We connect our members with vetted secondary suppliers and group purchasing programs that can lower your COGS without disrupting your primary contracts.

Step 3: Leverage Group Purchasing & Rebates

Joining a Group Purchasing Organization (GPO) can give you access to:

Negotiated bulk pricing
Quarterly or annual rebate checks
Exclusive deals on high-volume generics and brands

RxConnexion members benefit from GPO access and supplier relationships designed to help independents compete with chain-level pricing power.

Step 4: Monitor Metrics That Matter

The two most important purchasing metrics are:

COGS % – Cost of goods as a percentage of sales
Gross Margin % – Sales revenue minus COGS, expressed as a percentage

Tracking these monthly helps you see the real impact of purchasing decisions over time.

RxConnexion Advantage: Our data analytics tools make it easy to monitor purchasing trends, track supplier performance, and identify cost-saving opportunities at a glance.

Step 5: Use Data, Not Guesswork

Data-driven purchasing allows you to:

Predict demand based on historical dispensing patterns
Avoid overstocking slow movers
Spot sudden market price shifts
Negotiate better deals with hard numbers in hand

Our CostPlusRx platform takes this further by showing real-time cash price comparisons vs. insurance reimbursements, ensuring you always make the most profitable dispensing decision.

The RxConnexion Difference

We know that for independent pharmacies, every dollar saved in purchasing can translate directly into profitability. That’s why we created the supply chain integeration for capturing all purchases regardless of the source and combined:

Technology – Data analytics, price comparison tools, and inventory insights
Relationships – Access to trusted suppliers and GPO leverage
Expertise – Guidance from pharmacy business experts who understand your challenges

By working with RxConnexion, you don’t just get purchasing advice—you get a partner committed to helping you lower COGS, improve margins, and grow sustainably.