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Executive Summary

INDEPENDENT COMMUNITY PHARMACY's AVERAGE Rx CHARGE INCREASED 10.2% IN 1984, according to preliminary data from the Lilly Digest, Rx income in the average independent community pharmacy increased 10.8% to $342,717, and "substantially outpaced other sales, which rose only 0.7%," the Digest preview said. "Rx income accounts for almost 61 cents of every revenue dollar." On the strength of the Rx department, total pharmacy sales were up 6% in 1984 to $564,000. The preliminary Digest data indicate that Rx prices at the consumer level in independent pharmacies ran slightly ahead of producer prices in 1984. The Bureau of Labor Statistics' Producer Price Index for Rx preparations advanced 8.2% last year. Refills, continuing a trend over the past five years, increased as a percent of total Rxs to 51.3%. The average pharmacy dispensed 13,928 new Rxs in 1984 and 14,665 refills. "The share of renewed Rxs is considered important since it reflects the degree of patient loyalty enjoyed by a pharmacy," the Digest preview observed. The preview reported that "gross margin advanced more than 6% in dollars but remained unchanged as a percent of total sales." Total expenses fell as a percentage of sales to a record low of 30.1% (down from 30.2% during 1983). This reduction, the Digest explained, "was the result of declines in both manager's salary and employee wages, which more than offset the increase in miscellaneous operating costs. The combined effect of these changes was that net profit before taxes rose to 3.0% of sales." The figures indicate that Rx inventories are being handled more efficiently. "Although both Rx and OTC inventory required a greater dollar investment, Rx stock decreased from 10.7% to 10.6% of Rx income, whereas general merchandise inventory remained the same at 20.9%," the Digest said. "The Rx department's sales productivity increased to $9.42 per stock dollar -- - up from $9.34 recorded for 1983. Other merchandise sales productivity was unchanged at $4.79." The current survey is based on operating data from 1,078 independent community pharmacies.

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