Business Overview


An online pharmacy sells prescriptions over the internet, and gives patients the option to talk to a pharmacist either online or over the phone rather than physically visiting a store. With up to 50% of people failing to take their medications as prescribed, business owners are attempting to shake up the industry by offering different ways to access information or medical advice.

Who is this business right for?

This business is suited for entrepreneurial doctors/pharmacists or business people who can partner with pharmacists or doctors. An online pharmacy owner should have an inherent interest in the healthcare space and follow the many trends in insurance, patient care, and consumer preferences.

What happens during a typical day at an online pharmacy?

Doctors or pharmacists are required to be employed on-site to handle and quality check the medications. If you’re the employer, you will be responsible for managing the online inventory and general customer service. Reduce your liability by consistently evaluating communication protocol and working with suppliers to determine which drugs will best serve your audience.

What is the target market?

For the time being, it will likely be people between the ages of 30 to 50 who will order from a online pharmacy. They’re the ones who will be most comfortable navigating pages, chatting over a video platform, and using an online shopping cart.

How does an online pharmacy make money?

Online pharmacies make money by marking up the costs of the drugs from wholesale. They may or may not charge people to speak to the pharmacist or doctor on-site.

What is the growth potential for an online pharmacy?

The growth potential is huge for online pharmacies. Based on recent statistics, it’s thought there will be 4.25 billion prescriptions written in the US alone by 2019. While there has been plenty of bad press for online pharmacies selling fake or otherwise unsafe drugs, those that offer a consistent, reputable service will find they can quickly grow their business.

Getting Started


What are some skills and experiences that will help you build a successful online pharmacy?

A business owner doesn't need to be a doctor or pharmacist, but they need to employ a qualified and licensed professional to distribute drugs on an online platform. If the business owner doesn’t have a formal medical background, they will need to be industrious, organized, and diligent. They should have at least some experience working with suppliers, lawyers, and insurance companies before jumping into this career.

What are the costs involved in opening an online pharmacy?

Owners will need to buy plenty of medical insurance in the case of a liability claim. The average cost of a pharmaceutical claim is more than $14,000, and those numbers will likely increase due to the still somewhat unregulated online healthcare space.

Medical professionals will also need to obtain licenses for the state from which they sell their prescriptions and the states to which they sell. (The costs for these licenses will vary depending on the state.) Entrepreneurs will also need to hire a lawyer to ensure they’re following all rules to the 0 and pay their healthcare professionals a substantial salary to guarantee quality care. Finally, owners need to account for the wholesale cost of prescription drugs, which will vary by supplier.

What are the steps to start an online pharmacy?

Once you're ready to start your online pharmacy, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2. Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your security guard company is sued.

STEP 3. Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4. Open a business bank account

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 5. Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6. Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7. Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8. Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9. Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting an online pharmacy?

There is a lot of fraud to be found online, so it helps to establish your reputation as soon as possible. Many online pharmacies will unknowingly work with disreputable suppliers, so owners have to understand where their drugs are coming from and how they’re made.

You will also need to be on top of any compliance or industry changes when it comes to your business. For example, you can’t sell an imported drug to a patient unless they’ve been seen in-person by a doctor. Poorly run online pharmacies have left a bad taste in both the public’s and the government’s mouth, so harsher changes and regulations may be on the horizon.

And with the popularity and profitability of prescriptions, you’ll want to be careful of potential competitors. CVS recently acquired Aetna, which has sparked rumors that Amazon may be looking to get into the prescription business. It will be difficult to compete with a juggernaut like Amazon when it comes to price, but online pharmacists can choose to establish local loyalty first before branching out.

Growing Your Business


How to promote & market an online pharmacy

It’s not just low prices that customers want when it comes to their prescriptions — they also want effective and convenient advice. Since you’ll be running your store online, you should primarily be advertising your services online. Use social media, blogs, and even Google Ads to boost your online presence. However, you may also want to establish relationships with local doctors in your area, and consider finding ways to advertise specifically to their patients. This may be done either by direct recommendations from the doctor or with printed flyers around the hospital.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

The more important thing is to deliver safe drugs alongside an equally safe treatment plan. The doctor or pharmacist should have excellent people skills and the ability to quickly develop relationships with their patients. They should also be knowledgeable and ready to find the answers if they're unsure of something.

How and when to build a team

Depending on the quantity and the types of drugs you sell, it’s likely you’ll need to build a team at the very beginning. If you’re aiming for excellent customer service, you’ll want to decrease wait times and increase patient compliance. This will take time and effort on the part of the medical professional, so you’ll need to find people with patience and people skills. You'll also need a lawyer with a background in the medical industry to give advice on how to stay within the legal code of conduct.

Legal Considerations


Federal Business Licensing Requirements

There are many federal regulations regarding the production and distribution of prescription drugs. Before opening your online pharmacy, be sure to review this FDA page regarding drug distribution, as well as any other relevant FDA laws. 

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate an online pharmacy business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account


  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.

  • It also makes accounting and tax filing easier.

Get a business credit card


  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
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CORPORATE VEIL

To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Earning Potential


How much can you charge customers?

The markup for a prescription drug is based on both demand and location. The best way to determine how much you can charge is to do research on what people are paying in the markets you serve, and what their insurance will typically cover for each drug.

What are the ongoing expenses for an online pharmacy?

Online pharmacy owners will have the following ongoing expenses:

  • Liability insurance
  • Legal expenses
  • Advertising costs
  • Wholesale prescription costs
  • Employee salaries
  • Administrative costs (e.g., website upkeep, etc.)

How much profit can an online pharmacy make?

Online pharmacies stand to make a significant portion of the more than $370 billion spent on prescription drugs each year. These numbers are only expected to rise due to both an aging population and standard inflation. If your pharmacy sells 1,000 prescriptions a month at at average of $400 a piece and operational costs are $300,000 a month, that's still $100,000 in profit per month.

How can you make your business more profitable?

Online pharmacies may include premium subscription services as they grow. For example, a person with a Gold plan will get 5 hours a month of direct pharmaceutical care from a licensed doctor. They will have access to personalized treatment plans or more detailed advice about their conditions.

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Next Steps

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