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

                                Mar 2, 2023 - Proposal Would Tighten Telehealth Prescription Rules
                                • New rules proposed by the Biden administration would require patients to have an in-person medical evaluation before being prescribed controlled substance medications by their doctors. Federal regulators had relaxed pre-pandemic rules mandating that doctors evaluate patients in person before prescribing any controlled substances. The new rule proposals from the Drug Enforcement Agency would require an in-person appointment before any Schedule II medications, a classification reserved for the strongest drugs, may be prescribed. Prescriptions for other potentially addictive drugs – to help with pain or sleep, for example – could be prescribed via telehealth but a patient would need an in-person evaluation before obtaining a refill. Patients would still be able to get medications like antibiotics or birth control prescribed to them via telehealth.
                                • The US Food and Drug Administration (FDA) will allow retail pharmacies to offer abortion pills in the US for the first time. Pharmacies can apply for certification to distribute the abortion pill mifepristone, and if certified, they will be able to dispense it directly to patients upon receiving a prescription from a certified prescriber. The change includes permanently removing restrictions on mail order shipping of the pills and their prescription through telehealth.
                                • Three major drug wholesalers have banned drugs such as Adderall and Xanax from certain US pharmacies in response to the opioid crisis. AmerisourceBergen Corporation, Cardinal Health, and McKesson Corporation said that they imposed the bans because pharmacists had filled prescriptions written by doctors who frequently prescribed psychiatric drugs. Adderall and Xanax are psychiatric drugs, not opioids, but they are regulated by the federal government because they can be addictive. They are used to treat conditions like attention deficit hyperactivity disorder and anxiety.
                                • 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.
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