Holding Gains & Increasing Profits

Listen in as Consultant Michael Bunn discusses brand drug inventory and the new math for holding gains and increasing profits.

PHSI evaluated the financial impact of lowering inventory and found that lower is not always better.

  • Economic downturn has resulted in lower cost of money (i.e. low interest rate and lower returns on investments).
  • Reduced number of small molecule blockbusters from brand manufacturers and the current generic patent cliff has increased the brand inflation rate.
  • With interest or returns on investments at 3-5% and brand price inflation rates of around 9%, there is financial benefit to holding brand inventory on your shelf.
  • Low opportunity cost and high price inflation result in greater holding gains.

We worked through some typical pharmacy numbers. All of these numbers are available here.