Estimated Cost Savings and Return on Investment After Implementation of the Upgraded Management System (US$)
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Improved pricing for products purchased | |||||
| Annual government drug purchases | 47,714,539 | 61,782,129 | 70,716,350 | 79,651,204 | 88,586,058 |
| Average drop in drug costs from better management practices | 668,004 | 864,950 | 990,029 | 1,115,117 | 1,240,205 |
| Reduced product waste from expiry | |||||
| Current annual drug throughput subject to expiry | 166,707,098 | 123,202,782 | 134,928,853 | 145,538,815 | 155,590,406 |
| Change in expiry rate after better management practices | 625,152 | 462,010 | 505,983 | 545,771 | 583,464 |
| Summary cost savings | |||||
| Estimated cost savings due to better management | 1,293,155 | 1,326,960 | 1,496,012 | 1,660,887 | 1,823,669 |
| Absorbed existing staff, supervision, and training | 1,206,032 | 1,237,960 | 1,270,847 | 1,304,720 | 1,339,609 |
| Total estimated cost savings | 2,499,187 | 2,564,921 | 2,766,859 | 2,965,607 | 3,163,278 |
| Total costs | 2,867,981 | 3,041,408 | 2,958,068 | 2,862,776 | 2,922,023 |
| Total estimated net savings (savings minus costs) | (368,794) | (476,487) | (191,209) | 102,831 | 241,255 |
| Estimated cumulative savings | (2,727,072)a | (3,203,559) | (3,394,768) | (3,291,937) | (3,050,682) |
| Simple return on investment | −52% | −39% | −30% | −23% | −18% |
↵a Includes US$2,358,278 in start-up costs.