Plan Boosts Independent Pharmacies
Pharmacist Dennis Witherwax, 62, owner of the Medical Arts Rexall Pharmacy in Anaheim, was looking forward to retiring in a few years, but had no successor. He was determined not to sell his 50-year-old business to a chain operator, despite multiple offers to do just that.
Pharmacy student Cliffton Amend, 28, dreamed of owning his own pharmacy but lacked the money to buy one and the experience to run it.
The two men, who met at an industry event last year, became the first match made by the Pharmacy Ownership Program, a local initiative hatched by Amend and set to launch this summer.
Under the program, Amend, a student at USC and now an intern at Medical Arts, will become a junior partner at the pharmacy when he graduates next May. The plan is for him to buy out the pharmacist over a five-year period.
“It’s a complete relief,” Witherwax said. “You work so hard for so many years to develop this little baby, and to know that there is someone else who is going to come in and take good care of it and the clientele gives you a good feeling.”
The hope is that the fledgling program -- which is backed by the Institute for Community Pharmacy in Glendale and AmerisourceBergen Corp., a national drug distributor -- will help reverse the decline in the number of independent pharmacists by providing entrepreneurial pharmacy students with business-owner mentors.
Nationwide, the number of pharmacists who own their own businesses has plummeted by almost half in the last 15 years to 24,345 in 2005, according to the National Community Pharmacists Assn.
California, which has a strong history of independent pharmacy, has seen a drop as well, although less dramatic. There were 1,847 independent pharmacy owners last year, down 12% over the last decade, according to the California Pharmacists Assn.
The decline is due in part to the price pressures of managed healthcare, competition from chain pharmacies and an aging population of pharmacy storeowners who typically lack successors.
Starting salaries of about $100,000 also have attracted many students to careers at retail chain pharmacies.
“Right off the bat I would make more money working at a chain drugstore,” Amend said.
Dealing with a chain’s management structure is less appealing, he said. He likes the personal connections with customers that he says he has more time for at an independent pharmacy.
Community pharmacists provide an important service for patients, proponents say.
“The No. 1 thing customers are looking for is information, and independents are just set up to do that better than chains,” said Mike Quick, the Valencia-based vice president of Western retail sales for AmerisourceBergen, which is based in Chesterbrook, Pa.
Quick was part of the team that began the Good Neighbor Pharmacy branding program for independent pharmacists.
After years of decline, the number of independent pharmacies is stabilizing, he said, as pharmacists have learned to find new profit centers to supplement prescription drug sales, their former mainstay.
“Some years in my area, not one new independent would open,” Quick said. “Last year I had 45 new stores open from the ground up. They are coming back.”
The renewed interest in independent pharmacies spurred the USC School of Pharmacy to recently create a series of elective courses about the business side of being a pharmacist. The first year, six students enrolled. The second year, 40 signed up.
Students learn the nuts and bolts of starting, buying and running a pharmacy. They identify a pharmacy they would like to buy and create detailed business plans that explore key information such as corporate structure options, traffic patterns, competition and product mix.
“They can actually walk out the door with a pretty sophisticated business plan,” said R. Pete Vanderveen, dean of the USC School of Pharmacy.
Amend took the USC courses, which are taught by independent pharmacists -- many are USC alumni -- and decided to abandon his original plan to use his pharmacy degree for research. He joined the new student chapter of the national community pharmacy group at the school and began to think about how to match up fellow student entrepreneurs with owners.
“I just thought there ought to be a way to marry together a student with an owner so they can maybe build a relationship that allows the owner to retire, allows the pharmacy to stay independent and allows somebody like myself to get my feet in on the ground floor,” said Amend, a former cancer researcher.
He took the idea to the Institute for Community Pharmacy, which provides $10,000 scholarships to USC pharmacy students interested in owning their own businesses. The nonprofit, founded in 2001, created a formal program that included building a database of Good Neighbor Pharmacy owners who would be ready to sell their businesses in the next five to 10 years. The institute also provides resources to help owners draw up exit strategies that spell out the details of their partnerships with new graduates.
“If it works in California, we’ll take it nationally,” said Walter Cathey, president and chief executive of the institute, a sister company to United Pharmacists Network Inc., also in Glendale.
For now, Amend and Witherwax are laying plans for the nine-employee pharmacy, which has an annual revenue of about $3 million. Remodeling the 3,000-square-foot space, adding new product lines to the profitable home-healthcare items and branching out into compounding -- creating custom prescription medications -- are all under consideration.
After years of watching students head for careers in retail chain pharmacies, hospitals or industrial settings, Witherwax is thrilled that independent pharmacies are once again attracting attention.
“Up until a few years ago, people said community pharmacy is a dying breed,” Witherwax said. “Well, we have proven them wrong and the interest is literally exploding.”
Cyndia Zwahlen can be reached at cyndia.zwahlen @latimes.com.
