Magazine article Drug Topics

Class Struggle

Magazine article Drug Topics

Class Struggle

Article excerpt

Chain drugstores remained the pharmaceutical industry's best customer last year, but mail-service pharmacy was the fastest-growing retail outlet, according to the latest class-of-trade analysis from IMS America.

The overall U.S. prescription drug market soared to nearly $90 billion in 1996, up more than 13%, reported IMS, a market research firm in Plymouth Meeting, Pa. Both the retail and nonretail segments have more than doubled in the past six years, when the Rx market ballooned from about $41 billion in 1990. The big three classes-chains, hospitals, and independents-were able to remain on top. Chains actually increased their share from 25.7% in 1990 to 26.2% last year. However, hospitals' share dropped from 23.6% to about 19% during the same period, and the independents' share plummeted from about 26% to 16.5% during the past six years.

Sales to mail-service pharmacy accounted for $8 billion of the total Rx drug sales, 29% higher than the previous year and good enough for nearly 9% of the market. Purchases per outlet jumped more than 21%, to about $39 million. In addition to a dozen more outlets coming online last year, mail service was boosted by Uncle Sam's employees taking advantage of the fact that copayments were dropped from the federal Rx drug benefit. Another factor favoring mail service was the move by many third-party plans to reduce the cost to members for maintenance drugs.

Chain drugstores remained at the head of all the classes, with a 26.2% share of the Rx market, fueled by purchases of $23.7 billion. Sales to chains grew at a rate of 13.7% last year. Sales averaged about $1.3 million per chain outlet, up nearly 11%. However, the fastest-growing traditional retail Rx market segment was food stores with pharmacies, which grew by more than 15%, to about $6 billion.

Independent pharmacies still represent more than 16% of manufacturer sales, but their purchases couldn't keep pace with the market growth last year, posting only a 7% increase on purchases of nearly $15 billion. Once again, the independent store count fell, down to 21,975 from 23,067 in 1995. In 1990, IMS counted 32,079 independent pharmacies. However, those independents who stayed in business showed average prescrition drug purchases of $667,000 per outlet, up more than 12% from the previous year. …

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