7428 Kingston Pike, Knoxville, TN 37919
A Business Proposal/Plan
Date May 16th, 2020
Table of Contents
Section Page
Executive Summary……………. 3
Background and Description 5
Market and Competitor Analysis………………………………… 7
Operational Structure and Processes……………………………. 10
Quality and Regulatory Issues…………………………………………….. 12
Marketing Plan………………….. 13
Financial Projections………… 15
Milestones, Schedule, and Action Plan………………………… 18
Exit Strategy………………………. 19
Conclusion…………………………. 20
References 21
Executive Summary
Right Choice Pharmacy is a new long-term pharmacy that creates products for the elderly population in the local Knoxville area.
Vision statement
To improve quality of life for senior citizens through patient centered care.
Mission statement
“To provide safe and effective pharmaceuticals to elderly populations while providing high quality patient care under the utility of professionalism, respectability and unmatched determination.”
Our objective is to open a new long-term care business in Knoxville, Tennessee, which will service the elderly population of 80,734. The estimated average household income is $56,382 as compared to the Tennessee median of $51,340. The focus on healthcare for the elderly is growing exponentially in the United States and we can further maximize funds from that with Right Choice Pharmacy. We are expecting to obtain 62% of the local market share by October 2020. The location will be close to nearby nursing homes so the elderly patients will have instant access to these compounded medications.
It is our devotion that patients receive the utmost care to nurture their overall health and wellbeing. Right Choice Pharmacy will be managed and ran by our board-certified pharmacists and pharmacy technicians to establish the best care for these elderly patients. Our pharmacy team will compound and dispense medications that are tailored to patients during each workday. We will establish free delivery services for our patients that reside in long term care facilities.
Right Choice Pharmacy will follow regulatory and clinical standard requirements detailed in nonsterile compounding <795> which describes the requirements for compounding facilities, equipment, components, documentation quality controls. Sterile compounding <797> will also be followed which helps to ensure that patients receive quality preparations that are free from contaminants. To ensure quality of our products we will make sure all our products are within the Good Manufacturing Practices (CGMPs).
Right Choice Pharmacy advertising will consist of signs, posters, social media agencies (Twitter, Facebook, Instagram), newspaper ads, monthly publications, and radio station commercials. Initial operations will require a $300,000 startup business loan. We anticipate our average annual expenses to be at least $500,000.
We will need approximately $750,000 from investments to get the business started up and running. We anticipate the opening of the business to be in January 2021. We are expecting to pay $500,000 a year to keep the pharmacy in business. We will split these costs into utilities, wages, inventory and general maintenance for the business. Our business group will pay $150,000 to help raise funds to achieve our business goal. We are aiming to have a gross revenue of approximately $1,000,000. This will result in having an estimated return of about 35% which will give us our net profit of $750,000. We are estimating a payback period of about 2.5 years based on the initial investment of $750,000. We are expecting to expand our location by January 2023. Our long-term goal is to control 45% of the market within the next 10 years and have at least 25-30% market by fifth year.
We will be superior to our competition and will be the compounding pharmacy that patients rely and depend on for their services since patient care is our #1 priority.
Background and Description
Background
Right Choice Pharmacy is a long-term care pharmacy that target the needs of the elderly population. We will provide specific compounds that are tailored to each individual patient by utilizing standards that were set in place by USP and CGMP. The United States long-term care was valued at 443.2 billion in 2019. Demand for long term care has increased due to the unmet needs of the elderly population which are not met in hospital settings. According to the U.S. department of health and human services, around 69% of the U.S. population will need long-term care services for approximately three years which creates demand. The U.S. will see a considerable growth in the geriatric population aged 65 years and older.
The demographics we target will have age related disabilities and chronic disease (heart problems, Alzheimer’s, dementia, and mental stress). The prevalence of these chronic diseases in elderly patients has increased in recent years. This has been a major disability which requires medical care. This also gives this market an increased demand for market growth.
Description
Right Choice Pharmacy is conveniently located in the West hills area near other nursing homes. The central location will allow an expedited delivery of patient care needs. The pharmacy team which consists of pharmacists and pharmacy technicians which will collaborate together to fills prescription orders for elderly patients in nursing homes. Patients will receive their prescriptions through delivery drivers after the business workday.
The objective of Right Choice Pharmacy is to service the elderly by delivering specially compounded medications to help improve each individual patients’ quality of life. Each medication would be created for each patient’s specific needs with the direct supervision of a pharmacist. Our goal is to improve patient’s quality of life by having their medications custom made for each patient to ensure the appropriate care.
Anticipated outcomes of Right Choice Pharmacy are to create a distinctive business that is centered around patient care for the elderly population in the Knoxville community. We are expecting a high impact on our economic status which will result in us opening a new location.
Market Analysis
Potential Market
The target area of Knoxville, TN (third largest city in Tennessee) has a total population of 178,874 people in which 80,734 whom are elderly. Knoxville is among the ten fastest growing cities in the United States. Right Choice Pharmacy will be conveniently located in West Hills next to local nursing homes to provide easy access for the elderly population. This location is desirable because Right Choice Pharmacy will provide free delivery service to our patients who reside in these long-term care facilities, this will increase the value of our location.
Target Market
Every patient is unique, and many may not benefit from the traditional approach to prescribing and delivering medicine. Right Choice can capitalize on the special needs of the elderly by providing high quality custom formulations to provide the best patient care.
Trends in Market
New research reports the U.S. compounding market will exceed $7 billion by 2025. The demand for compounding pharmacies is increasing due to patients requiring medication at a strength which is currently unavailable in the market. The rapidly growing geriatric population is suffering from various chronic disease which will further drive the market.
Competition
The local independent and chain retail pharmacies will be our pharmacy competitors in this location. The disadvantage is these pharmacies have an established relationship with patients. There are no compounding pharmacies in the area which will be direct competition.
SWOT Analysis
Strengths
- We provide the patients with custom formulations of their medications and delivery.
- We cater to the needs of the elderly community and strive to achieve a personal connection with each patient.
Weakness
- We located near the West Town Mall and would be not be easily accessible to the elderly during rush hour.
- Some medications would take time to formulate which can increase the wait time for emergency prescriptions.
Opportunities
- We could offer healthy living workshops to the residents of the local nursing facilities.
Threats
- Patient loyalty to local independent and retail chain pharmacies.
- Retail chain pharmacies now also offering specially medications and delivery.
Market Share
We are aiming to have a gross revenue of approximately $1,000,000. Local retail pharmacies such as Walgreens have an annual revenue of approximately $127 billion. Our long-term goal is to control 45% of the market within the next 10 years and have at least 25-30% market by fifth year.
Operations and Processes
If it is a new patient, it will start with the patient filling out a little information about them and having a small interview with a pharmacist to get a good background on the patient for the patient’s profile. Upon receiving the prescription from the patient, a technician will enter the order if it is not needed to be compounded. However, if it is needed to be compounded, the technician will check with the lead pharmacist who is compounding or lead compounding technician to ensure the prescription can be made. After the prescription is entered into the system, a pharmacist will review the order and make any adjustments that are needed. Then the prescription will be filled or compounded using USP 797 rules in the compounding room. A pharmacist will then check the compounded medication or filled medication and prepare for counseling, delivery, or pickup. In the next week, we will call each patient to ensure they did not have any reactions to their medication and that everything is working fine.
The addition of a compounding room onto the regular pharmacy is needed. This section needs all equipment that is appropriate for the type of preparations we are making. To ensure precision and reliability, all apparatus, instruments, and accessories must be inspected, maintained, cleaned, and calibrated at appropriate intervals as specified by manufacturers. The room should have lighting that is sufficient, and fixtures located as so the area is well lit to allow verification at all compounding processes. The heating, ventilation, and air condition system must be controlled in such a way as to avoid decomposition and contamination of chemicals and maintain the quality and efficacy of stored products and ensure staff safely and comfort. There should be potable water supplied for hand and equipment washing and facilities shall be easily accessible to the compounding areas. Purified water should be used for compounding non-sterile drug preparations when formulations indicate the inclusion of water. Plumbing system should not have defects that can lead to contamination. All work surfaces should be smooth, impermeable, and non-porous materials, preferably stainless steel. We will need balances and weights, refrigerator and freezer, glass measures, mortar and pestles, ointment jars and slabs, stirrers and spatulas with several other utensils. We will also need USP 797 required shoe covers, gloves, mask, and gowns.
During the day there should be a ratio of 1 pharmacist per 4 technicians if 2 are certified according to Tennessee Board of Pharmacy. We will have 1 technician imputing prescriptions and checking out patients. One certified technician and one other technician filling prescriptions and checking out. Then we will have our compounding certified technician in the compounding room preparing preparations. We will also have a part time pharmacist compounding in the compounding room. We also have 6 new pharmacists from South College who are founders of Right Choice Pharmacy that will be working shifts either in the compounding room or in the general pharmacy.
We will have a business performance evaluation quarterly. During this time, we will evaluate all technicians as well as Right Choice Pharmacy Pharmacists.
Quality and Regulatory Issues
A beyond use date is assigned to all compounded sterile products. This date references a time after which a compounded sterile product cannot be administered. This is a factor based on the drug’s chemical stability and the drug’s sterility. USP 797 defines Beyond use date based on sterility and drug compounding risk levels.
| Risk Level | Room temperature | Refrigerated | Frozen |
| Immediate use | 1 hour | N/A | N/A |
| Low with 12 hour or less | 12 hours or less | 12 hours or less | N/A |
| Low | 48 hours | 14 days | 45 days |
| Medium | 30 hours | 9 days | 45 days |
| High | 24 hours | 3 days | 45 days |
Sterility testing is required when the BUD exceeds USP 797 limits to ensure the quality and safety. This is completed by direct inoculation and membrane filtration. Standard operating procedures are required for every aspect of compounding which includes personnel qualifications, documentation practices, surface sampling, particle testing, airflow and pressure differential monitoring, cleaning and disinfecting, hand hygiene and garbing training and competency, gloved fingertip sampling, and inventory storage and handling.
Marketing Plan
Positioning Statement
We strive to satisfy the need of our geriatric population, via compounding the best product to meet their needs and to promote a healthier lifestyle. The quality and sanitary conditions of our products are going to be our main priority to minimize the possibilities of infections and further complications in our elderly patients. The rise in numbers of the geriatric population indicates a higher demand for care and need of our products hence we are here to meet those demands.
Promotional Plan
In order to promote Rx Pharmacy and its services, we will print our signs and posters to display on nursing homes information boards, cards on the cars in parking lots just to name a few. Other methods we will be using to promote our business are listed below including cost.
- Signs and Posters $7000
- Social media Agency (Twitter, Facebook, Instagram) $240
- Newspaper Ads $4000
- Monthly publications (Cars, Mailboxes, Doors) $2000
- Radio station Commercials $5000
Growth Potential
We are projecting about a 35% growth in our business within the next two years. We are also aiming to control about 45% of the compounding pharmacy market within the next 10 years. We are also aiming to acquire about 25 – 30% of the gross market shares after about 5 years in business. Our location is very strategic, close to a good number of nursing home facilities, very limited number of compounding pharmacies for competition making our goals very attainable.
[Insert information from questions and responses in chapter 7, including the brand name for the program/service (if applicable) and the positioning statement.
Financial Projections
Investment Required
To get Right choice compounding pharmacy on a start and running, we will need an initial investment of $750,000. Our group will be contributing $150,000 each to help raise the money needed to start the business. This amount will come up to about $750,000. This amount will go towards purchasing equipment for compounding, down payment on the site, internal design, advertisements, hiring and initial inventory. We will be looking at spending about $500,000 a year after Rx compounding pharmacy is up and running. This money will be used to cover utilities, mortgage, wages, restocking inventory and general maintenance of the building. We will be compounding products that are in high demand and we believe the revenue generated will cover the cost in the first few years of the business. We are projecting the annual expenditures to decrease by the second year of running the business and eventually come to a steady amount provided there are no major offsets to the economy and inflation.
Sources of Revenue
We will generate revenue from the sales of our products. With the steady increase in the targeted population comes an increase demand of our products to meet their needs. We will be advertising our products to as many retirement and nursing homes as possible. If we can secure a good part of the market, which we are projecting to be about 30% then we will be generating enough revenue to cover our yearly cost at the same time generating profit. With these assumptions, we are estimating a payback period of about 2.5 years based on the initial investment of $750,000. With an estimated yearly expenditure of $500,000 we are aiming at a gross revenue of about $1,000,000. Within a five-year period, we are looking at an estimated percent return of about 35%. If everything goes well, with the best-case scenario we will be looking at a net profit of about $750,000 a year after we must have paid all the contributed amounts and loans in full. On the worst outcome, we should be getting at least 90% of the initial investment amount meaning we are losing money. We could make some adjustment and reevaluate our strategies. In making such adjustments if we still can’t make profit and pay off our initial invested individual amounts within 2.5 years period, we would consider ceasing operations.
Milestones, Schedule, and Action Plan
| Milestone | Due Date | Responsible Party |
| All contributions in from members and Investors | June 2020 | Team |
| Acquired building, equipment and setup. Begin advertisement. | September 2020 | Team, |
| Start full operations | October 2020 | Team |
| Gross sales of $200,000 | March 2021 | Team |
| Overall performance review | January 2021 | Team |
| Employees and Pharmacists performance review | January 2021 | Team |
Long Term growth and Expansion Objectives
In terms of expansion, our goals are to get our services to as many nursing homes as possible. This will help expand our customer base which will eventually bring in more profits. We will evaluate our performance after six months to assess the possibility of expanding. We will also evaluate the quality and effective of our products by following patient responses while respecting all ethical principles. The goal is to be able to control about 45% of market shares within 10 years and about 30% within a 5-year period.
Exit Strategy
Our goal in opening up Right Choice Pharmacy in Knoxville, Tennessee is to provide safe and effective pharmaceuticals to the elderly population while providing high quality patient care that no other Long-term Care Pharmacy can offer.
Deciding the exit strategy will be based on failure to meet our goals within the financial portion of the business plan within 2.5 years. These goals will be measured quarterly. Our exit plan will be as followed:
First, we will notify our pharmacy staff in the days that closing down will occur. They will be provided with addition resources that could help them find new work.
Second, we will notify our patients and Health care teams that work closely with us such as doctors, nurse practitioners, and physician assistances. Just like our staff we will help provide them with the resources and information they need to continue with their treatment and care.
The exit plan of Right Choice Pharmacy will also include how we dispose of the business. Our accountant and lawyers will explain to us what we own and how we could sell our business. If we weren’t able to sell, we will have to cease all operations regardless.
Conclusion
Right Choice Pharmacy is dedicated to serving our elderly community in a timely manner, while successfully contributing to improved patient outcomes. This improvement is provided through unique and expedited services. We will be providing our clients with superior quality service and support for a seamless pharmacy experience. In other words, we will be taking the stress out of pharmaceutical care and allowing other practitioners the opportunity to provide the best care possible. It is through our diligence and determination; Right Choice Pharmacy will become a steadfast leader in the Knoxville area.
References
1) City of Knoxville. 2020. Demographics. Retrieved from: https://knoxvilletn.gov/visitors/knoxville_info/demographics
2) World Population Review. 2020. Knoxville, Tennessee Population 2020. Retrieved from: https://worldpopulationreview.com/us-cities/knoxville-population/
3) Department of Numbers. n.d. Tennessee Household Income. Retrieved from: https://www.deptofnumbers.com/income/tennessee/
4) Grand View Research. 2020. U.S. Long Term Care Market Size, Share & Trends Analysis Report By Service (Home Healthcare, Hospice, Nursing Care, Assisted Living Facilities), And Segment Forecasts, 2020 – 2027. Retrieved from: https://www.grandviewresearch.com/industry-analysis/us-long-term-care-ltc-market
5) The National Association of Pharmacy Regulatory Authorities. (2015). Model Standards for Pharmacy Compounding of Non-Sterile Preparations. Retrieved from: https://www.cshp.ca/sites/default/files/2017-03/1_Non-Sterile_Compounding_Draft_5b_Aug_5_2016.pdf
6) Forbes. 2020. How Has Walgreens’ Revenue Performed And What Is Its Potential. Retrieved from: https://www.forbes.com/sites/greatspeculations/2019/04/15/how-has-walgreens-revenue-performed-and-what-is-its-potential/#60c502c46f7d
7) Varpe, R. 2020. U.S. Compounding Pharmacies Market Comprehensive Analysis, Growth Forecast from 2019 to 2025. Retrieved from: http://news.marketsizeforecasters.com/u.s.-compounding-pharmacies-market-comprehensive-analysis-growth-forecast-from-2019-to-2025-
8) Desselle, Shane P and etal. 2020. Pharmacy Management: Essentials for All Practice Settings, 5th Edition. McGraw-Hill.
