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 19,300 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 16-17 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 739,000 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
Recent Developments
Mar 18, 2024 - Prices Remain Stable
- The prices that stores charge for their products largely remained unchanged during 2023, according to the US Bureau of Labor Statistics (BLS). Drug store and pharmacy sales increased modestly during the first eight months of 2023, according to the US Census Bureau. Personal consumption expenditures, an indicator of expenditures at drug stores and pharmacies, increased moderately during the first nine months of 2023, according to the US Bureau of Economic Analysis. Labor costs decreased during 2023 as employment and wages for nonsupervisory employees decreased slightly, according to the BLS.
- CVS and Walgreens, the two largest drug store chains in the US, will start offering the abortion pill mifepristone in March, according to The New York Times. The chains plan to initially offer mifepristone at stores in just a few states and gradually expand to all other states where they can legally do so. About half of US states allow the sale of mifepristone. The pills won't be sold by mail. Doctors and other eligible providers will be able to call in a prescription to a pharmacy for a patient to pick up.
- Merchandise retailers including pharmacies closed at disproportionate rates across all five boroughs in New York City in 2023, according to the Center for an Urban Future (CUF). It was the fifth straight year of disproportionate closure rates and the second largest number of closures in a single year since 2020. The number of pharmacy chain stores is down by triple digits--leading to a renaissance of mom-and-pop drug stores, the CUF noted.
- Patients are having difficulty obtaining drugs to treat conditions including anxiety, attention deficit hyperactivity disorder, and addiction, according to the New York Times. Some experts say that a 2022 opioid settlement which imposed new requirements on distributors that provide medications to pharmacies may be a key contributor to lack of access. The $21 billion settlement, which was brokered between the three largest American pharmaceutical distributors and the attorneys general of 46 states, was designed in part to correct practices that had flooded the country with prescription painkillers which intensified the nation’s opioid crisis. Distributors are placing stricter limits on drug supplies to individual pharmacies and heavily scrutinizing their dispensing activity. Oversight is not limited to opioids, however. It applies to some potentially addictive or habit-forming controlled substances like muscle relaxants or medications like Xanax, which is used to treat anxiety and panic disorders.
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