Drug Stores & Pharmacies

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 19,200 drug store and pharmacy firms in the US are the primary channel for selling prescription drugs. Mail order pharmacies typically sell only prescription drugs, while retail drug stores usually market a large number of other drug and non-drug products, and may offer several healthcare-related services. Both retail drug stores and mail order pharmacies may act as Prescription Benefit Managers (PBMs), designing and administering prescription drug benefit plans on behalf of private employers, unions, insurance companies and other benefit plan providers.

Reduction in Prescription Drug Reimbursement

Sales of prescription drugs reimbursed by third party payers, including the Medicare Part D plans and state sponsored Medicaid agencies, typically represent over 95% of drug store and pharmacy prescription revenues.

Increased Government Regulation

Prescription drug pharmacies are subject to rapidly changing and increasingly complex government regulations at the federal, state and local levels.

Industry size & Structure

The average drug store and pharmacy employs 15 workers and generates $15-16 million in annual revenue.

    • The drug store and pharmacy industry is comprised of about 19,300 retail or mail order pharmacy firms that operate over 44,000 stores, generating $301 billion in revenue, and employing 669,000 people.
    • About 39% of stores have less than 20 employees, and 29% have fewer than 10 employees.
    • Three large chains dominate the retail drug store segment (CVS Caremark, Walgreens, and RiteAid).
    • Express Scripts dominates the mail order segment.
                                Industry Forecast
                                Drug Stores & Pharmacies Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 1, 2022 - Flu Season Off To A Strong, Early Start
                                • Influenza is hitting the US unusually early and hard, according to the US Centers for Disease Control and Prevention. Drug stores and pharmacies may see an early jump in demand for flu shots. Flu season usually lasts from October to May, peaking in December and January. A record number of people were hospitalized in the month of October. “It’s unusual, but we’re coming out of an unusual covid pandemic that has really affected influenza and other respiratory viruses that are circulating,” said Lynnette Brammer, an epidemiologist who heads the CDC’s domestic influenza surveillance team. Activity is high in the south and southeast and is starting to move up the Atlantic coast.
                                • Walgreens Boots Alliance, the nation’s second-largest pharmacy chain is setting up a network of automated, centralized prescription-filling centers equipped with robotic arms used to sort and bottle medications. The company says that the setup cuts pharmacist workloads by at least 25% and will save Walgreens more than $1 billion a year. The goal is to give pharmacists more time to provide medical services such as vaccinations, patient outreach, and prescribing of some medications. Those services are a relatively new and growing revenue stream for drugstores, which are increasingly able to bill insurers for some clinical services.
                                • The US Food and Drug Administration (FDA) wants expanded authority to detect and address supply chain shortages well before they become problems, citing the COVID-19 pandemic’s persistent effects on availability of many medical products. Experts say that the FDA is seeking additional power outside of pandemics and other public health emergencies, for example, when product recalls and natural disasters cause shortages that put patients at risk. The FDA called for new ways to “assure a more resilient domestic supply chain and help reduce dependence on foreign production.” One proposal targets shortages of critical drugs due to “unnecessarily short expiration dates.” The FDA wants drugmakers to study the maximum shelf life of drugs that are life-supporting, life-sustaining, or that prevent or treat debilitating diseases and conditions. The law would include a financial penalty for noncompliance.
                                • The Biden administration is planning for worst-case contingencies that could include rationing supplies of vaccines and treatments this fall if Congress doesn’t approve more money for fighting the coronavirus pandemic, according to Dr. Ashish Jha, the White House coronavirus coordinator. Biden administration officials warn that nearly all of the $1.9 trillion American Rescue Plan funding that was dedicated directly to COVID-19 response is spent. That means tough decisions, like weighing whether to use the remaining funding to secure the next generation of vaccines or giving priority to therapies that dramatically reduce the risks of severe illness and death. Jha has warned that without more money, vaccines will be harder to come by, tests will once again be scarce, and the therapeutics that are helping the country weather the current omicron-driven surge in cases without a commensurate increase in deaths could be sold overseas before Americans can access them.
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