An examination of the effect of market demographic and competitive characteristics on gross margins of prescription drugs.

This study was carried out to determine the influence of selected demographic and competitive market factors on community pharmacy operations. Data were collected from a panel of pharmacies located in large mid-western city. A sample of 300 prescriptions was obtained from each of the panel pharmacies. From the prescriptions, the gross margins and the addresses of the patrons were determined. A profile of the demographic and competitive factors was determined. Eight research hypotheses were tested. The variables were subjected to regression analysis with per cent markup and dollar markup-on-retail being the dependent variables in each case. The simple regression analysis did reflect a significant relationship between select competitive variables and per cent markup. The stepwise regressions indicated a significant relationship between all demographic and competitive market factors and per cent markup. No significant relationships were found in the simple regression treatment of a dollar markup and the market variables. The stepwise regression routine yielded a nonsignificant relationship between dollar markup and all market variables except income and education. It can be concluded that pricing in this market is reflective of both demographic and competitive market factors of the trading area.