Financial performance of retail pharmacies in Uganda: a case of Kampala city
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Introduction: Private retail pharmacies are a critical component of national health systems and economies since they employ most (about 60%) of the world’s pharmacist work force (FIP, 2009; FIP, 2012). In terms of health care, retail pharmacies are the primary source of most medicines for the population, hence are essential in ensuring both access to medicines and their appropriate use. A number of retail pharmacies in Uganda (14%) have closed in the last three years (PSFU 2014). It is possible that retail pharmacy business may be economically weak, but this has not yet been investigated. Objective: To assess the financial performance and the factors associated with it in retail pharmacies in Uganda, using a case study of Kampala City. Methods: This was a cross–sectional, quantitative study of retail pharmacies in Kampala. It was done to establish their financial performance and associated factors. Interview of pharmacy managers was carried out for a period of three months in 30 randomly selected retail pharmacies in Kampala city. One manager per selected pharmacy was interviewed making a total of 30 managers. All clients that entered the selected pharmacy on the day of the study were counted. Results: At least half of the pharmacies had a mean operating profit margin of greater than 18%. Only the urban/peri-urban location of the pharmacy had a strong but marginally statistically insignificant association with financial performance. A strong and statistically significant association was found between average number of daily customers and financial performance while number of employees, working experience of longest tenured dispenser, and monthly salary bill had strong but statistically insignificant associations with financial performance. No association was found between inventory management practices with financial performance whereas having a dedicated cashier was strongly related to financial performance Conclusion: Financial Performance is majorly affected by location of the pharmacy, average number of daily customers, sound financial management practices and human resource factors. To a lesser extent, inventory management practices affect financial performance, while little or no association was deduced from ensuring good financial record keeping/reporting practices. Recommendations: A retail pharmacy in Kampala should choose to be premised in an urban area, hire experienced staff, set performance targets for its staff, set strong financial management practices and ensure a customer footfall of not less than 75 per day.