Do Ontario Pharmacies have high margins? No.

The Claim:
In a presentation on the province’s drug system on July 10, 2009, the Ministry of Health and Long-Term Care indicated that “Ontario pharmacies have high margins relative to the broader retailing sector, on average.”

The Facts:
Ontario community pharmacies do not have high margins in comparison to other retailers.

In fact, gross margins in pharmacy are about average for all retailers, and lower than clothing stores, shoe stores, furniture stores, books stores and many others. In addition, pharmacy gross margins are significantly lower than those of beer, wine and liquor stores.
See the graph below:

The Bottom Line:
After deducting from gross margin all expenses, employee wages and benefits, and all health programs and services provided to patients, community pharmacies’ net profit margins are not large at all.

Pharmacies provide remarkably high value for money, especially considering that their employees have the highest level of professional education and training of any retail sector.