Investing in Canadian pharmacies: Is It Worth Considering?

The pharma business is strongly associated with huge profits, and it is not just a myth. So, in 2019, the revenue of the global pharma market reached $1.25 trillion. And that figure will definitely keep on growing year by year.

What is the reason for such an immense demand for pharmaceuticals? There are several factors:

  • unfavorable ecological conditions;
  • constant stresses;
  • consumption of junk food;
  • bad habits;
  • a sedentary lifestyle;
  • frequent and severe epidemics, due to the high density of population and poor sanitation conditions;
  • aggressive advertising.

No doubt, the pharma market is occupied by large companies mainly, but that does not mean that you cannot enter it and get your share of incomes. The best solution is to establish or buy a pharmacy. That is much easier than investing in the production sphere.

Why Choose the Canadian Pharma Market?

According to researchers, in 2019, the revenue share of the North American pharma market was about 49%. The US pharma market is the biggest and the most fast-growing in the world. There are more than 300 million potential customers, and a significant part of them suffer from several chronic diseases, which means that they have to constantly use several drugs. In addition, most of them are exposed to persistent advertising, which encourages them to ask doctors to prescribe additional medications and to buy more over-the-counter products for improving health. Besides, due to advertising, US buyers tend to opt for newer and more expensive medications. One should also note that drug prices in the USA are significantly higher than in most other countries since there is no governmental regulation.

So, why not to open a pharmacy in the USA? As of now, about 25% of Americans experience serious problems with covering drug expenses since most local insurance plans do not cover all the medications needed or require high copays. So, many patients from the USA prefer to buy medications abroad, where prices are more affordable. The most popular choice is Canadian pharmacies ― prices in this country are up to 90% lower than in the USA, due to regulation, while the quality of medicines is identical. Besides, the USA and Canada are neighboring countries, so it does not take much time to make a trip to a suitable pharmacy or to receive medications via mail. Popularity among Americans allows Canadian drugstores to significantly increase their sales volumes and incomes.

You have probably heard that drug importation is currently forbidden in the USA. But importing medicines for personal use is allowed in certain cases. Local authorities monitor and prosecute those who are involved in reselling in the first place. More to the point, there is a chance that, in the future, the situation will become more favorable since many American politicians promote the idea of legalization of drug importation from Canada. They believe that it is the best solution to the problem of unbearable drug prices.

An Independent Drugstore vs. a Franchise

When thinking over an idea of opening a pharmacy, you will have to decide whether to establish an independent company or to buy a franchise. And the answer to that question is not so obvious.

Many aspiring entrepreneurs strive to stay independent and avoid any outside help and advice. But, in practice, that strategy is likely to lead to failures and financial losses. Any business requires specific knowledge, skills, and experience, and the pharma industry is not an exception. A pharmacy is not like a usual store. Medications are a specific category of goods. If you want to enter this market, getting a corresponding education and vast experience is a must. It is better to start with working as a pharmacist, then you will get an opportunity to see this business from the inside and that will help you avoid common mistakes. But, even if you have vast experience of working in this sphere, it is highly advisable to obtain the support of a partner or a franchisor.

Having taken into account the results of the poll, about 60% of the Canadian market is controlled by franchises. It is much easier to succeed when you work under a well-known brand. In the case of a new brand, it may take you many years to win the trust of customers. It is really hard to compete with big companies.

More on the pharmaceutical market in Canada is available here:

In addition, if you decide to buy a franchise, you can count on the comprehensive support and help of specialists working for a franchisor. Companies selling franchises value their reputation and make everything in their power to ensure that each and every franchisee offers the highest quality of goods and services.

What can you expect from a franchisor? In most cases, such a company will help you both to open a business and to streamline all the business processes. The employees of state that the upside of any franchisor is the resources of a bigger company, and keeping up the high standards of services imposed by the brand. For example, a franchisor will probably help you get licenses, choose reliable manufacturers, select goods that will enjoy proper demand, form a team and train them, find reliable shipping partners and provide useful recommendations on a wide range of business aspects. Such a company will not leave you one-on-one against problems, since that is an issue of their image as well. One can safely say that purchasing a franchise is a perfect variant for a businessman that wants to get experience without taking unreasonable risks.

An Offline Pharmacy vs an Online Platform

If you want to join the pharma business, there is no need to invest in buying or renting premises for satellites and hiring a big team of pharmacists for serving them. You can open or purchase an online pharmacy and avoid all those extra expenses.

Online drugstores offer a wide range of benefits that help them attract more and more customers day after day:

  • A wider assortment of items. There is no need to waste hours searching for medicines needed all around the city when one can order everything from one website. Today, people do not have so much free time, so they count every minute. No doubt, if a client sees that there is an opportunity to save a couple of hours, he will make use of it.
  • Lower prices. If you open an online pharmacy, you will have an opportunity to offer significant discounts since you will not have to invest in expenses related to running offline satellites. And, for many consumers, a price is the main choice factor.
  • 24/7 availability. As it has already been mentioned, clients place a high value on their time. And that is the key reason for the success of online drugstores. Using the services of such a company, a client can make purchases at any time, which is convenient for him: when standing in the traffic jam in the morning, during the lunch break, or even after returning home late in the evening. No doubt, most customers give preference to those drugstores, which are open around the clock. And, in the case of an online pharmacy, it is much easier to provide that: most buyers cope with searching for products and placing orders on their own without turning to pharmacists for help.
  • Convenience. To succeed on the online pharma market, be ready to ensure the highest quality of additional services, like shipping or payment acceptance. When clients see that buying medicines from your online drugstore is quick and easy, they will turn to you again and will probably recommend your website to their friends and relatives.
  • Privacy. Ordering medicines online provides buyers with extra privacy. They do not have to discuss their health problems in front of other customers. If they need a consultation, they can get in touch with a pharmacist by phone or via the Internet from the comfort of their homes.

As you can see, in most cases, there is little sense in investing in an offline pharmacy. Most buyers prefer to do shopping online since that allows them to save time, effort, and money. When you always have a smartphone connected to the Internet at hand, you would probably take advantage of every opportunity that provides.

How to Start?

  1. First of all, one should not get involved in any business without discussing that idea with at least one independent advisor. Sure, if you decide to buy a franchise, you will be invited to a consultation with a manager, but that is not enough. Turn to an outside expert for advice as well.
  2. Secondly, if you are a newcomer, it is recommended to find a reliable partner or franchisor. There is no sense in learning from your own mistakes when you can involve a partner that will warn you about all the pitfalls.
  3. As a potential investor, you should make sure that you have enough money or access to credit. The size of an investment needed will depend on a range of factors. If you decide to buy a mid-size offline pharmacy, you will need to pay around $2,000,000. And, in case you want to start from scratch, you will need to make an initial investment of about $300,000 without taking into account expenses on salaries. Sure, opening an online drugstore will require smaller investments. In any case, you should never start a new business if you do not have enough money to cover all the planned expenses, and you should be ready for unexpected losses as well.
  4. If you decide to buy or open an offline facility, pay much attention to a location. First, a business should be situated in a place with intense traffic. Choose a spot near or inside a popular supermarket or business center. Make sure that there is enough parking space and that it is easy to enter and exit a place in a wheelchair and with a baby stroller. Also, find out whether there are any other drugstores in a neighborhood. Remember that competing against well-established businesses is hard. Do not overestimate your talents and abilities.
  5. If you want to buy a small offline pharmacy and to turn it into a big one, make sure that there is enough space. Keep in mind that changing an address in the future may result in losing a significant part of clients. It is better to stick to the same location.
  6. Become or hire a secret shopper to evaluate the quality of goods and services provided by the pharmacy, which you plan to purchase. If you plan to buy a franchise, that method will come in handy as well.
  7. Study the reputation of a company chosen. Look through reviews and articles on the Internet or talk to steady customers offline.
  8. After choosing an investment option, write a business plan. Involve experts and work out your goals and strategies in detail. Be sure to participate in that process yourself, do not entrust that to any outside specialists, including those working for franchisors.

In conclusion, one should say that investing in a Canadian pharmacy is a beneficial choice for both experienced entrepreneurs and newcomers. On the local market, there are options for investors with different budgets. And, even if you do not have so much experience as of now, you can start with working under a franchise to gain it.