Pharmacy expiry loss is the money you write off for stock that expired before anyone bought it. Every pharmacy has some, but most have more than they need to, because nobody measures it until the year-end write-off. This guide shows how to measure expiry loss, the five causes behind almost all of it, and a monthly routine that turns potential write-offs into supplier credit. For the selling side, first-expired, first-out, read our FEFO inventory guide.
1How to measure pharmacy expiry loss
Measure it the same way every month:
Expiry loss rate = cost of stock written off as expired ÷ cost of stock purchased in the same period
Use cost, not selling price, so the number reflects money actually lost. Then break it down two ways: by supplier (who sends short-dated stock, or stock you cannot return?) and by product (which lines expire again and again?).
A worked example
The figures below are illustrative. A pharmacy buys Rs 3,000,000 of stock in a month and writes off Rs 60,000 of expired stock:
| Amount | |
|---|---|
| Purchases at cost | Rs 3,000,000 |
| Expired stock written off, at cost | Rs 60,000 |
| Expiry loss rate | 2.0% |
| Of which: one slow-moving syrup range | Rs 22,000 |
| Of which: stock from one supplier delivered with less than six months to run | Rs 18,000 |
| Of which: everything else | Rs 20,000 |
Two causes account for two thirds of the loss. That is typical: expiry loss is rarely spread evenly, which is why breaking it down matters more than the headline figure.
2The five causes of expiry loss
| Cause | What it looks like | The fix |
|---|---|---|
| Over-ordering | Ordering by habit or to reach a supplier's discount | Reorder at a level based on what actually sells |
| Slow movers | A few lines that sell a handful a month | Lower stock, smaller pack sizes, or stop stocking them |
| Short-dated deliveries | Stock that arrives with little life left | Check expiry at receiving; agree a minimum shelf life with suppliers |
| Poor rotation | Newer stock sold before older stock | Sell earliest-expiry first, automatically |
| Missed return windows | Near-expiry stock found too late to return | A 60-day near-expiry list, reviewed every month |
3At receiving: stop the problem at the door
Most expiry loss is decided the day stock arrives. At delivery, check every line against the purchase order, and record the batch number and expiry date from the pack, not the invoice. Agree a minimum remaining shelf life with each supplier, and refuse or return stock that arrives short-dated. A delivery accepted without checking is a write-off waiting to happen.
4The 60-day near-expiry list
Expiry loss turns into supplier credit when you see it early enough to act. Sixty days before expiry is a practical threshold: long enough to send stock back, short enough that the list stays manageable.
- Pull every batch expiring within 60 days, with quantity and cost.
- Group it by supplier, because returns are made supplier by supplier.
- Return what the supplier will take, against the delivery it came in on, and record the credit against what you owe them.
- Move what will still sell to the front of the shelf and tell the counter.
- Quarantine what cannot be sold or returned, physically and in the system, so it can never be sold, and write it off with a reason.
5Order less, more often
Over-ordering is the single largest cause in most pharmacies, and it usually comes from good intentions: avoiding stock-outs, or reaching a supplier's volume discount. The fix is to order from what sells:
- Set a reorder level for each product from its recent sales, not from memory.
- Order slow movers in the smallest pack the supplier offers.
- Compare a volume discount with the cost of what expires if it does not sell.
- Prefer a supplier who delivers reliably and quickly; it lets you hold less.
6A monthly expiry review
| Step | Owner | Time |
|---|---|---|
| Work out the expiry loss rate, by supplier and product | Owner or manager | 15 minutes |
| Act on the 60-day list: returns, shelf moves, quarantine | Store or counter lead | 30 minutes |
| Lower reorder levels for lines that expired | Owner or manager | 15 minutes |
| Raise short-dated deliveries with the suppliers concerned | Owner or purchaser | As needed |
| Record write-offs with a reason | Store lead | 10 minutes |
Run it in the first week of the month, and compare the expiry loss rate with the month before.
7How PharmaFlow helps
PharmaFlow holds stock batch by batch, and at the counter and on your own online store it sells the batch that expires first. Anything within 60 days of expiry appears in your return suggestions, grouped by supplier, so it can go back for credit against the delivery it came in on. When something runs low it joins your reorder list, with every connected supplier's price side by side and how reliably each one has delivered, so you can order less, more often, from the supplier who sends what you ordered.
Sources
Rates, thresholds and rules change. Confirm current figures with the issuing body or your advisor before relying on them.