5 Signs Your Pharmacy Is Losing Money on Expired Stock

Ask most pharmacy owners in Kampala how much stock they wrote off last year and the honest answer is “I don’t know exactly.” The expired boxes went into a bin, or back to a distributor who may or may not have credited them, and nobody added it up.

That is the whole problem. Expiry losses are quiet. One box a week does not feel like anything. But one box a week at UGX 40,000 is over UGX 2,000,000 a year, and most pharmacies are losing more than a box a week. Here are the five signs that say your shop is one of them.

1. You find out a product has expired when a customer hands it back

If the first person to notice an expiry date is the customer, the medicine was already on the shelf for months past the point where you could have done something about it. Three months before expiry you can run it at a discount, move it to a busier branch, or return it to the distributor. On the day it expires you can do none of those things.

The tell-tale version of this sign is a policy of “check the date when you dispense.” It sounds careful, but it is a last line of defence, not a system. By the time a dispenser reads the date at the counter, the loss has already happened.

What to change: every product should be recorded with its batch number and expiry date at the moment you receive it, and something should list, every week, what expires in the next 90 days. Doing that by hand from a receiving book is possible but nobody keeps it up. Software that tracks stock by batch does it without being asked. We wrote about how that works in how smart pharmacies track expiry dates automatically.

2. The same product has two open batches on the shelf

Walk to your shelf of amoxicillin, or whatever moves fastest, and look at the boxes. If there are two batches open and the one nearer the front is the newer one, you are selling the wrong stock first. The older batch will sit at the back until it expires.

This happens for an innocent reason. New deliveries get unpacked in front of what is already there because that is where the space is. Unless someone deliberately rotates the shelf, the oldest stock is always the last to leave.

What to change: adopt First Expiry, First Out and make it the till’s job rather than the dispenser’s memory. When the sale is recorded against a batch and the till always takes from the earliest-expiring one, shelf order stops mattering. Our FEFO guide explains the method and the common ways it fails.

3. You reorder from memory, or from what the rep suggests

A distributor’s rep wants to sell you a full carton. Your memory of last month’s demand is generous. Put the two together and you order more than you sell before the batch expires, especially for slow movers with short shelf lives.

The sign to look for is a product you have written off twice. If it has expired on you more than once, the quantity you reorder is the problem, not bad luck.

What to change: reorder from sales data, not from memory. You need to know how many units a product sold in the last 30 and 90 days before you decide how many to buy. A report that shows best sellers, slow movers and stock on hand next to each other turns this from a guess into arithmetic. When you can see that a product sold eleven units in three months, you stop buying a carton of a hundred.

4. Your write-off figure is a round number, or there is no figure

If somebody asks what expired stock cost you last quarter and the answer is “about a million” or “not much,” there is no figure. And a cost nobody measures is a cost nobody manages.

Owners are often surprised when they add it up properly for the first time. The distributor returns that were never credited, the discounted clearances sold below cost, the boxes binned without a note: together they are usually the size of a junior salary.

What to change: record every expired batch as a stock adjustment with a reason, valued at the price you paid for it. Then look at the total monthly. When the till, the receiving and the adjustments all live in one system, this report already exists. In SmartPharm the expiry report shows what is due to expire and what it is worth at cost, and every adjustment is logged with who made it and why, so the figure is never a guess.

5. Stock counts are done at night, by hand, and they never match

If you are still walking the shelves with a notebook at closing time, two things are true. First, the count is expensive: hours of the most tired part of the day. Second, it is wrong more often than it is right, because a count by hand cannot tell you which batch of a product is on the shelf, only how many boxes.

A count that only knows quantities cannot see expiry. You can have the right number of boxes and still have half of them expiring next month.

What to change: count by batch, and count less often. When every receipt, sale and adjustment is recorded against a batch, the system’s stock on hand is the count, and a physical check becomes a spot check rather than a nightly ritual. The time you save is real: most owners we talk to get an evening back every week.

The pattern behind all five

Every one of these signs comes from the same gap. The information exists, on the delivery note, on the box, in the sales you made, but it lives in different places and nobody is joining it up. Expiry management is not a matter of being more careful. It is a matter of recording stock by batch once, at receiving, and letting the till and the reports do the rest.

That is why SmartPharm tracks every product by batch and expiry from the moment it arrives. The till sells the earliest-expiring batch first, an expired batch can never be sold, and the expiry report tells you every week what is due in the next 90 days and what it is worth. Set-up takes about an hour, and plans start from UGX 98,000/month.

If you recognised two or more of the signs above, the maths is simple: a year of the software costs less than the stock you are writing off. Start with the sign that hurts most, and fix that one first.