Magazine article Drug Topics

And the Reality Vote Goes to ... Independent Pharmacy

Magazine article Drug Topics

And the Reality Vote Goes to ... Independent Pharmacy

Article excerpt


I think it's time for a pep talk. For more than a generation now, we've heard all about the challenges facing the drugstore business. Declining reimbursements from third-party payers, erosion of our professionalism by the faceless corporate bureaucrat, ever-growing mounds of red tape to slash through just to get the increasing volume of prescriptions out the door - I could go on all year, and many others will. And recently, in this very magazine, 'human Lastinger asked, "Is community pharmacy a dying profession?" [DTBlog, December 2014].

Here's my answer - and a big piece of evidence: No, and $6.7 billion.

That's the amount of money the "Big three'' drugstore operators made last year by running drugstores. Yes, CVS also made a chunk of its profit through one of the country's largest pharmacy benefit managers, but that's not an argument you can make about Walgreens and the $1.9 billion it earned, at roughly $225,000 profit per store. Even perennial laggard Rite Aid has found its way back to profitability.

And how are the chains earning this giant pot of cash? By buying things and selling them for more than they paid. Just the way the community pharmacist does.

What's really being promoted?

So how do the industry big boys manage to be so competitive and profitable in a perpetually challenging business climate?

Give any of their executives a shot of truth serum, and they'll freely admit they don't compete on price. Loyalty cards and advertised specials aside, any customer who is primarily price-sensitive is likely to end up at a big-box retailer.

The "Big Three'' sell themselves to consumers with convenience. They scout out the best locations in town so that everyone will see their drive-through windows on the way home from work. They offer a product mix, so that customers who do leave their cars will be able to "pick up a few things'' while they're in the store getting their Rxs. And in case folks notice that they're paying more for those few things than they would at the Taiget across town, the chains pick locations that will make it awfully inconvenient for them to get back into their cars and drive all the way there.

Who really delivers? …

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