ASSIGNMENT 01

Course title: Corporate Finance

Course Code: FIN-522
Section: 01

Submitted to:
Dr. Tanbir Ahmed Chowdhury
Department of MBA
East West University

Submitted by:

Afshara Tashnim
2019-2-95-027

Submission Date: 09/08/2020

COMPANY:
The D’s Pharma's is a pharmaceutical shop serving mainly medications along with healthcare
product. Its main goal is to provide prescription medications for our customers at the lowest prices
on the market. We will be able to sell prescriptions at reduced prices by carefully maintaining
efficiencies in our operations and by targeting a specific segment of the market - those customers
who pay for their prescription medications themselves. By focusing on this segment, it gives us
additional efficiencies.
This will be a partnership business co-owned by 3 member having equal shares.

VISION:
We aim to become the health care providers of choice in the region. We will keep striving
for excellence in customer service through innovation in marketing, enabling a wide and easily
accessible network of community and prime location pharmacies, supply of exclusive and unique
high-quality products, superior consultation services and above all – customer care focus.
MISSION:
Our mission is to provide our customers with more community's access to pharmacy
products and superior service in response to the regional customer’s health and well-being needs
and the best prices for their prescription medications. We prioritize a quality and timely service
in market while continuously exploring new opportunities in order to compel further growth. Our
convenience and services will exceed the expectations of our customers.

JUSTIFICATION:
Health care is a basic need for human. For how long there is mankind the requirement of health
care product and medicines are there too. Specially in now a day that we are going through such a
pandemic situation many businesses have stopped its growth and we came to realize very well
what are our essentials. And pharmacy is one kind that is necessary in no matter what the situation
is and it will be like this.

MARKET STUDY:
Ours is no new business plan. There are many such business in areas. Thus, we went for a
secondary survey for the products to be sold and demand of those.
We also did a primary walk-in interview survey to choose our target customer.

The target market consists of two different groups, local or walk-in customers, and mail order
customers.
 • Mail order customers: This group of customers' orders their medication through the
mail in an effort to save money. Generally, the mail order customers are older in age,
typically over 50. In general, elderly customers consume more medication relative to
younger people. The mail order customer will typically purchase maintenance
medications - prescriptions for an ongoing ailment that requires regular treatment. This
group of customers will also be more likely to purchase several months of medication at
once.

• Walk-in customers: This group of customers are also looking for the lowest prices for
their medication. However, they tend to purchase medications monthly at their local
pharmacy, often at a higher price. There is not a common demographic for this group of
people, other than living in the Portland metropolitan area. Some of these customers will
pay for the medications out of pocket and some will submit a claim to their insurance
company for reimbursement at a later date.

We will employ two different strategies to reach these two different market segments.

RESOURCE REQUIRED:
• Office equipment including chairs, file cabinets, shelfs and desks.
• Front counter, storage bins, cash register.
• Three computer terminals.
• Main computer server with a laser printer, and back-up system.
• Software: Microsoft Office, QuickBooks Pro, drug interaction software, Physician Desk
Reference software detailing side effects and other information pertinent to the customer.
• Assorted bottles, boxes, envelopes, etc. for dispensing and shipment.
• Scales for shipping.
• Telecom system.
• Storefront build-out.
• Start-up inventory.
• Rent, utilities, insurance.
FINANCIAL PLANING:
INITIAL EXPENSES REQUIRED
Legal 1,000
Rent 2,000
Utilities 400
Telecom System 400
Insurance 300
Storefront Build-out 15,000
Expensed Equipment 4,000
Website development 1,000
TOTAL START-UP EXPENSES 24,100
Initial Assets
Cash Required 140,500
Initial Inventory 10,000
Other Current Assets 0
Long-term Assets 8,500
TOTAL ASSETS 159,000
Total Requirements 183,100

INITIAL FUNDING
Initial Expenses to Fund 24,100
Initial Assets to Fund 159,000
TOTAL FUNDING REQUIRED 183,100
Assets
Initial Non-cash Assets 18,500
Initial Cash Requirements 140,500
Additional Cash Raised 0
Cash Balance on Starting Date 140,500
TOTAL ASSETS 159,000
Liabilities and Capital
Liabilities
Current Borrowing 0
Long-term Liabilities 0
Accounts Payable (Outstanding Bills) 0
Other Current Liabilities (interest-free) 0
TOTAL LIABILITIES 0
Capital
Planned Investment
Seed Funding 50,000
John 51,000
Friends and Family 50,000
Additional Investment Requirement 32,100
TOTAL PLANNED INVESTMENT 183,100
Initial Loss (Initial Expenses) (24,100)
TOTAL CAPITAL 159,000
TOTAL CAPITAL AND LIABILITIES 159,000
 Total Funding 183,100

HR PLANING:
We will employ the following people in phases-

• Store Manager: 1 at 1st month

• Pharmacy Manager: 1 at 1 st month
• Financial Manager: 1 at 1 st month
• IT engineers: 1 at 1st month, 1 at 8 months
• Sales agents: 2 at 2nd month, additional person at 6th month.
• Pharmaceutical technicians: 2 at 2nd month ,1 at 6th month.
• Pharmacists: 1 at 1st month, 1 at 4th month.
• Delivery agents: 1 at 2nd month 3 at 8th month.
• Counter representative: 1 at 3rd month.

MARKETING STRATEGY:

The marketing strategy will be based on targeted advertisements, appealing to the customer's sense
of value. The marketing campaign's goal will to be increase awareness of us with our target market.
We will seek to attract two different groups of customers and will thus have two strategies to attract
them.
We anticipate that by far our largest group of customers will be those who order through the mail.
These customers will be targeted through an advertising campaign in magazines and newsletters
that have an older (>55) audience who regularly need medication and are aware in advance of their
needs. Walk-in customers will be targeted through advertisements in the local paper, through lift
lets, and participating in community events, such as health fairs. Ads will raise awareness for us
and our low prices.
We will operate from one store that will serve both mail order customers and those who visit in
person. We will thrive by employing friendly and knowledgeable personnel, which, along with our
great prices, will drive the repeat business that we will rely upon. We only expect that as the price
of medication continues to skyrocket, we will appeal more and more to the customer's sense of
value and convenience.
We will offer a wide range of prescription drugs to patients. Both generics and name brands are
offered. In order for a customer to purchase medications mail order, they must first contact us over
the phone. The customer then needs to either mail in the prescription, fax it, or email it. Once it is
received and payment arrangements are complete, the medicines will be sent out to the customer
via Pathao or personal delivery man. Local customers may stop by the store front to pick up the
medications. We will only service customers who self-pay. The self-pay customers will be
attracted to us because of our superior prices. A discount on drugs is very welcome on today's
increasingly tight monthly budgets. We will save money by not paying for customer's unlimited
access to a pharmacist. If a customer has a question regarding a drug, the pharmaceutical technician
will attempt to answer it. As a last resort the pharmacist will provide the answer. Generally, the
technician or the accompanying printed literature will answer the question. This model of saving
costs by not providing unlimited access to the pharmacist will be successful because the majority
of customers will be customers who have been taking said drug for a while, as opposed to a new
prescription, and will not require their hand to be held during the transaction. They are interested
in The Pharmacy as an inexpensive source for their medication. We will be using computer print
outs from industry software to reduce the cost of providing this information.

SUPPLY CHAIN:
For our case the supply chain is not that much complicated.
Pharmeceutical products will 1st be received by the National wholesaler. From them it will go to
the Regional wholesaler. They will then send them to the contract manufacture. Which then goes
to the Local distributor center. They then give to the Retail wholesaler and from the retail
wholesaler to pharmacy finally to consumers.

ACCOUNTING POLICY:
Balance Sheet
BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets
Cash 69,525 167,024 318,513
Inventory 28,838 63,135 69,963
Other Current Assets 0 0 0
TOTAL CURRENT ASSETS 98,364 230,159 388,477
Long-term Assets
Long-term Assets 8,500 8,500 8,500
Accumulated Depreciation 1,704 3,408 5,112
TOTAL LONG-TERM ASSETS 6,796 5,092 3,388
TOTAL ASSETS 105,160 235,251 391,865
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable 32,484 46,059 48,660
Current Borrowing 0 0 0
Other Current Liabilities 0 0 0
SUBTOTAL CURRENT 32,484 46,059 48,660
LIABILITIES
Long-term Liabilities 0 0 0
TOTAL LIABILITIES 32,484 46,059 48,660
 Paid-in Capital 183,100 183,100 183,100
Retained Earnings (24,100) (110,424) 6,092
Earnings (86,324) 116,516 154,013
TOTAL CAPITAL 72,676 189,192 343,205
TOTAL LIABILITIES AND 105,160 235,251 391,865
CAPITAL
Net Worth

RISK FACTOR AND CHALLENGES:

Many external pressures are acting on the industry that an owner cannot fully control. While it is
possible to mitigate the impact of some of these challenges, others are much more difficult to
manage. It is imperative, then, to control internal factors as much as possible blunting the impact
of the external.

External pressures such as business laws (Federal, state, local), pharmaceutical-specific

regulations, and business relationships (PBM’s, wholesalers, prescribers, patients) all have an
impact on a pharmacy business. Many of these can only be mitigated or managed, not really
controlled. It becomes that much more important to control the internal aspects such as
pharmaceutical and general inventory levels, employee labor costs, and other operating expenses
as much as possible.

Dealing with factors beyond the control of an owner is likely the most challenging part of operating
a business. It seems that each one chips away at profitability with no end in sight. These include
specific situations unique to pharmacies and others that can apply to any business.

Relationships of big Pharma, Insurance Carriers, PBM’s, and Wholesalers

It’s no secret that there are forces joined together having a significant impact on community
pharmacies. It is undeniable that there is a tight relationship between pharmaceutical
manufacturers, Pharmacy Benefit Managers, and drug wholesalers.
Community pharmacies must purchase their drug inventory from some source. It is usually
impossible to buy directly from a manufacturer unless a pharmacy chain is national in scope. That
means local pharmacies and even regional chains must deal with wholesaler operators and PBM’s
regularly. Insurance carriers develop their formularies based on availability from manufacturers,
national prescription patterns, and a desire to reduce their costs as much as possible. In most cases,
the relationships between each of these entities give them a joint strength that has a notable impact
on community pharmacies.
One way a pharmacy owner can counteract some of the effects is to have reliable relationships of
their own. Direct contact with the most frequent prescribers can translate into more predictable
prescription patterns. Partnership discussions with patients can lead to an increase in medication
adherence and medication synchronization programs. These types of initiatives can all work
together to benefit the pharmacy by helping to control inventory costs, one sure way to maintain
profitability.
Laws rules & regulations

Laws (Federal, state, and local) impact all businesses in many ways, but there are also many
pharmaceutical-specific regulations that come into play. Two of the biggest unknowns are the
reintroduction and the possible signing of the Pharmacy and Medically Underserved Areas
Enhancement Act and the potential changes in the Patient Protection and Affordable Care Act of
2010. These two Federal initiatives alone could potentially have a massive impact pharmacy. This
is in addition to multiple state efforts attempting to regulate PBM’s further and to combat the abuse
of opioid drugs. A pharmacy owner needs to keep abreast of the legislative landscape to ensure
compliance as well as potentially pivot quickly to remain profitable.
These legislative shifts are only representative of the numerous potential changes coming that can
impact pharmacies. It is impossible within the scope of this brief article to mention every proposed
state and Federal law. It is therefore imperative for every pharmacy owner to maintain an
awareness of legislative currents that can have an impact. The only certainty is that there is more
legislation on the way that will affect pharmacies.

Tax Man

Every business needs a relationship with a tax professional. It could be as simple as working with
a local provider or having a business relationship with a major regional/national firm. In either
case, someone beyond the owner needs to consider the tax implications of decisions. This area is
much too complicated to trust to chance or self-study. It may even require the specialized
assistance of both a tax accountant and a tax lawyer.
Of course, that doesn’t mean that the owner takes no initiative at all and turns everything over to
an outsider. There needs to be a basic understanding of pertinent laws and oversight of the tax
professional.

Chain pharmacies
These are state or national chains. The advantage to these are better prices through economies of
scale, as well as personalized service. The personalized service takes the form of the chain having
a record of your medication purchases as well as any allergies that you have disclosed to them.
Local pharmacies
These are the pharmacies where you typically know the pharmacist and they know your medical
history. This option is high in personalized service and convenience, and high in price.

FINANCIAL STATEMENT:

PROFIT AND LOSS

YEAR 1 YEAR 2 YEAR 3
Sales 441,822 967,265 1,071,877
Direct Cost of Sales 176,729 386,906 428,751
Other Production Expenses 0 0 0
TOTAL COST OF SALES 176,729 386,906 428,751
Gross Margin 265,093 580,359 643,126
Gross Margin % 60.00% 60.00% 60.00%
Expenses
Payroll 268,620 322,960 330,960
Sales and Marketing and Other 8,400 8,400 8,400
Expenses
Depreciation 1,704 1,704 1,704
Leased Equipment 0 0 0
Utilities 4,800 4,800 4,800
Insurance 3,600 3,600 3,600
Rent 24,000 24,000 24,000
Payroll Taxes 40,293 48,444 49,644
Other 0 0 0
Total Operating Expenses 351,417 413,908 423,108
Profit Before Interest and Taxes (86,324) 166,451 220,018
EBITDA (84,620) 168,155 221,722
Interest Expense 0 0 0
Taxes Incurred 0 49,935 66,005
Net Profit (86,324) 116,516 154,013
Net Profit/Sales -19.54% 12.05% 14.37%

CASH FLOW
YEAR 1 YEAR 2 YEAR 3
Cash Received
Cash from Operations
Cash Sales 441,822 967,265 1,071,877
SUBTOTAL CASH FROM 441,822 967,265 1,071,877
OPERATIONS
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0 0 0
New Current Borrowing 0 0 0
New Other Liabilities (interest-free) 0 0 0
New Long-term Liabilities 0 0 0
Sales of Other Current Assets 0 0 0
Sales of Long-term Assets 0 0 0
New Investment Received 0 0 0
SUBTOTAL CASH RECEIVED 441,822 967,265 1,071,877
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending 268,620 322,960 330,960
Bill Payments 244,177 546,807 589,427
SUBTOTAL SPENT ON OPERATIONS 512,797 869,767 920,387
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out 0 0 0
Principal Repayment of Current Borrowing 0 0 0
Other Liabilities Principal Repayment 0 0 0
Long-term Liabilities Principal Repayment 0 0 0
Purchase Other Current Assets 0 0 0
Purchase Long-term Assets 0 0 0
Dividends 0 0 0
SUBTOTAL CASH SPENT 512,797 869,767 920,387
Net Cash Flow (70,975) 97,498 151,490
Cash Balance 69,525 167,024 318,513

BALANCE SHEET
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets
Cash 69,525 167,024 318,513
Inventory 28,838 63,135 69,963
Other Current Assets 0 0 0
TOTAL CURRENT ASSETS 98,364 230,159 388,477
Long-term Assets
Long-term Assets 8,500 8,500 8,500
Accumulated Depreciation 1,704 3,408 5,112
TOTAL LONG-TERM ASSETS 6,796 5,092 3,388
TOTAL ASSETS 105,160 235,251 391,865
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable 32,484 46,059 48,660
Current Borrowing 0 0 0
Other Current Liabilities 0 0 0
SUBTOTAL CURRENT 32,484 46,059 48,660
LIABILITIES
Long-term Liabilities 0 0 0
TOTAL LIABILITIES 32,484 46,059 48,660
Paid-in Capital 183,100 183,100 183,100
Retained Earnings (24,100) (110,424) 6,092
Earnings (86,324) 116,516 154,013
TOTAL CAPITAL 72,676 189,192 343,205
TOTAL LIABILITIES AND 105,160 235,251 391,865
CAPITAL
Net Worth 72,676 189,192 343,205