Magazine article Drug Topics

Strategies for Growth

Magazine article Drug Topics

Strategies for Growth

Article excerpt

While major drugstore chains merge among themselves, the question isn't whether small drugstore chains will survive; the question is how small chains can plan now for future growth.

"Small and regional drug chains are and will remain a vital component of the nation's health-care system," argued Gerald N. Zlotnik, executive v.p., Medic Drug, Cleveland. Addressing the opening session of the National Association of Chain Drug Stores' annual small chain conference, held in late February on Amelia Island, Fla., Zlotnik offered some suggestions for improving the outlook of small chain operators while pointing out their strengths.

He observed that there are 410 small drugstore chains in this nation, operating a total of nearly 4,000 drugstores. Their combined 1996 sales totaled $12 billion, which represented an 8% increase over the total for 1995, he added.

Meanwhile, small chains opened 79 drugstores last year, said Zlotnik.

Small chains' greatest asset is in providing what they have already delivered well, he commented. "As regional chain operators, our greatest strength lies in the service that we provide to the consumers at our local market areas." But pressures on profit margins are rising from managed care, and this must be addressed, Zlotnik continued. "The share of thirdparty prescriptions at the close of 1996 was 67% of all prescriptions," he noted. "By the year 2000-just three short years from now-that number will grow to close to 90%."

Not only have reimbursement rates declined, but the amount of time it takes to get a prescription claim reimbursed has grown to as long as 52 days, "which is 45 days too long," he said. …

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