HSA Verse
How to calculate losses from expired medicines
What counts as an expiry loss
When a medicine expires unsold, the pharmacy loses the money it paid for that stock. Calculate the loss at purchase cost, not at selling price, because cost is the cash that was actually spent. Keeping a reliable pharmacy mein expired medicine ka record, with product, batch, quantity and cost, is what makes this calculation possible.
Also note the indirect costs, even if you do not put a number on all of them: staff time spent on checking and returns, disposal or transport charges, shelf space occupied by dead stock and cash that could have been used for fast-moving items.
The basic formulas
| Measure | Formula | Why it matters |
|---|---|---|
| Gross expiry loss (PKR) | Expired packs × purchase cost per pack | Shows the money tied up in stock that can no longer be sold |
| Net expiry loss (PKR) | Gross expiry loss − supplier credit or other permitted recovery | Shows what the pharmacy actually lost after returns |
| Expiry loss rate (%) | Net expiry loss ÷ purchases for the period × 100 | Lets you compare months and branches fairly |
| Sales needed to recover the loss (PKR) | Net expiry loss ÷ gross margin % | Shows how much extra selling is needed to make the money back |
Worked example (illustrative figures)
A pharmacy reviews one month of expired stock. The medicine names and prices below are examples only.
| Item (example) | Expired packs | Cost per pack (PKR) | Loss at cost (PKR) |
|---|---|---|---|
| Antibiotic suspension, 60 ml | 12 | 380 | 4,560 |
| Cough syrup, 120 ml | 25 | 210 | 5,250 |
| Vitamin D3 capsules, strip | 40 | 150 | 6,000 |
| Cold-chain injectable vial | 3 | 1,800 | 5,400 |
| Total gross expiry loss | 80 | 21,210 |
The supplier accepted the cough syrup for a credit note of PKR 5,250 because it was returned within the agreed return terms. The rest of the loss cannot be recovered.
| Step | Calculation | Result (PKR) |
|---|---|---|
| Gross expiry loss | 4,560 + 5,250 + 6,000 + 5,400 | 21,210 |
| Less supplier credit note | − 5,250 | (5,250) |
| Net expiry loss for the month | 21,210 − 5,250 | 15,960 |
| Expiry loss rate | 15,960 ÷ 1,800,000 (monthly purchases) × 100 | 0.89% |
| Sales needed to recover the loss | 15,960 ÷ 0.12 (12% gross margin) | 133,000 |
The last line is the part many owners overlook. With a 12% gross margin, a PKR 15,960 loss needs about PKR 133,000 of extra sales just to bring the pharmacy back to where it started.
Look at stock that is still saleable but at risk
Do not wait for medicines to expire before you measure the problem. Group batches by how soon they expire and value them at cost. The figures below are illustrative.
| Expiry window | Packs | Value at cost (PKR) | Suggested action |
|---|---|---|---|
| 0–30 days | 48 | 14,400 | Verify on the shelf, keep at the front under FEFO, stop reordering and check supplier return terms immediately |
| 31–60 days | 95 | 28,500 | Check whether a transfer to a busier branch makes sense and review reorder quantities |
| 61–90 days | 140 | 46,200 | Watch the sales rate. If it will not sell in time, speak to the supplier early about options |
| Total at risk | 283 | 89,100 |
Any discount on near-expiry stock should follow your pharmacy’s policy and the pricing rules that apply to the product. Expired medicines must never be sold.
Find the root cause
| Cause | Warning sign | Practical fix |
|---|---|---|
| Over-ordering | Months of stock on hand for a slow product | Order using sales history and a reorder point (section 11) |
| Weak stock rotation | Newer batches sold while older ones sit behind them | Apply FEFO on the shelf and in the system (section 4) |
| Short-dated stock accepted | Packs arrive with little shelf life left | Agree a minimum remaining shelf life with suppliers |
| Unrecorded returns | Credit notes never claimed | Keep a list of pending supplier returns and follow up monthly |
| Seasonal over-buying | Large stock left after Ramadan, Eid or a flu or dengue season | Review last year’s sales and order in smaller, repeated amounts |
A simple monthly loss review
- Export or list every write-off with product, batch, quantity, cost and reason.
- Calculate the gross loss, supplier recoveries and net loss.
- Divide the net loss by purchases for the month to get the expiry loss rate.
- List the five products with the highest loss and decide what will change for each.
- Compare the rate with last month and record any action taken.
Dukanverse records every write-off against its lot and flags stock that is expiring soon, which gives you the inputs for this review. Ask us to show you the write-off records during a demo.
Frequently asked questions
How do I calculate the loss from expired medicines?
Multiply the number of expired packs by the purchase cost per pack, then subtract any supplier credit to get the net loss. Divide the net loss by the period’s purchases to get the expiry loss rate. Section 10 shows a worked example in PKR.