For a small pharmacy in Sri Lanka, stock is the biggest investment in the business. Shelves hold hundreds of items, many with short shelf lives, and every expired strip or bottle is money written off. At the same time, running out of a commonly dispensed medicine sends a customer to the pharmacy down the road.
This guide covers practical ways to reduce expiry losses and stock-outs without complicated systems.
Note: this article covers stock and business management only. Always follow the record-keeping and storage requirements of your pharmacy licence and the relevant authorities.
Here is an illustrative example. If a pharmacy holds Rs. 2,500,000 of stock and 2% of it expires each year, that is Rs. 50,000 lost, with nothing to show for it. Many small pharmacies do not know their real figure because expired items are simply removed and thrown away.
The first step is to measure it: record every expired item, its quantity and its cost before disposing of it.
In a pharmacy, the right rule is first expiry, first out. This is different from first in, first out, because a newer delivery can sometimes have an earlier expiry date than older stock.
Once a month, go through the shelves and list every item expiring within the next three months. Then decide what to do with each one:
| Time to expiry | Action |
|---|---|
| Within 3 months | Move to the front and make sure staff know to dispense it first. |
| Within 1–2 months | Check whether your distributor accepts near-expiry returns or exchanges under your agreement. |
| Expired | Remove immediately, record the quantity and cost, and dispose of it properly. |
Ask each distributor about their return and exchange terms before you order. It is much harder to negotiate once the stock is close to expiry.
Expiry losses mostly come from slow-moving items bought in large quantities to get a discount. A discount is worthless if a third of the stock expires on the shelf.
To set a reorder level: average daily sales × (supplier delivery days + safety days). If you dispense 10 strips a day of an item, delivery takes 2 days and you keep 1 safety day, reorder when stock falls to 10 × 3 = 30 strips. Our guide to stock management for small shops explains this in more detail.
In most pharmacies, a relatively small number of items make up a large share of sales. Use your sales records to find your top 30–50 items. These deserve the most attention: never run out of them, and count them weekly so any missing stock is spotted early.
Count every delivery against the supplier invoice before signing, and check expiry dates at the same time. Do not accept short-dated stock unless you agreed to it.
When pharmacists and counter assistants each have their own sign-in, every sale is linked to the person who made it. This helps with accountability and makes it easier to spot where stock differences come from.
Medicine prices are often fixed by a printed or regulated maximum price, so margin depends heavily on the price you pay your distributor. Track the cost price and selling price of every item and review your margin monthly. Our pricing guide explains how margin works on fixed-price items.
First expiry, first out: always dispense the batch that expires soonest, even if it arrived later than other stock.
At least once a month, listing everything that expires within the next three months.
It depends on your agreement with each distributor. Ask about return and exchange terms before placing orders.
VeeraOne updates stock with every sale, alerts you before commonly dispensed items run low, keeps the cost and selling price on every item, and gives each pharmacist and assistant their own login. See VeeraOne for pharmacies.
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