Chain drug industry executives say pharmacies are positioned to become integral health care players as the Affordable Care Act brings them millions of newly insured patients to pharmacies and drives cost containment. Still, drug chains must continue to cope with the pressures on the business from ever-diminishing prescription reimbursements.
Meanwhile, demographic changes and the slow economic recovery will have their own part to play in the industry’s performance. The ability to serve a budget-conscious population and increasing numbers of seniors will go a long way to determining chains’ results this year.
To that end, pharmacy chains are continuing to provide a well-planned, strongly supported front end — expanding such categories as consumables, beauty care and over-the-counter health products — to ensure that patients can shop for all their needs.
In any event, executives say, drug chains will keep doing what they do best: delivering accessible, trusted care and being a convenient source of consumer packaged goods.
Here’s a look at what some drug retail executives had to say about the business environment and top issues for their companies and the chain drug store industry in 2015.
ECONOMY & BUSINESS
“We finished 2014 with a strong holiday selling season and, for the most part, I see that momentum carrying over to 2015. It was a successful selling season particularly with just about anything in electronics, whether it was targeted toward adults or children. … In our advertising and promotions, we continue to look more at the social media and less at traditional print campaigns, especially as we continue to attract the Millennials. Sales were helped by low fuel prices, which impact the mind-set of the shopper as well as the pocketbook. … An improving economy and stronger consumer confidence have me more optimistic than I’ve been in a number of years.” — Mark Griffin, president and CEO, Lewis Drug
“We experienced strong front-end and pharmacy sales growth and more than doubled our e-commerce business at pharmaca.com. … The utilization of both our loyalty program (Feel Better Rewards) and wellness e-mail campaign (WellM@il) has consistently driven profitable sales and customer engagement, and as such we will be expanding our FBR loyalty programming and digital campaigns in 2015. … The economy and consumer spending on health and beauty remains robust, and we see expenditures in both areas expanding in 2015.” — Mark Panzer, president and CEO, Pharmaca Integrative Pharmacy
“Our retail business continues to turn in strong performance. We’ve grown our front-store share despite the fact that consumers continue to exhibit cost-conscious shopping behaviors. In the last five years, our front-store business has grown 50% faster than the multi-outlet sector as a whole. We also continue to lead the prescription drug market, with more than one in every five prescriptions in the United States being filled at a CVS/pharmacy in 2014. I am excited about the new products, services and programs we’ll begin offering in 2015, and our retail business is fully activating our ‘Think Customer’ mind-set to deliver a differentiated experience.” — Helena Foulkes, president, CVS/pharmacy
“The economy continues to improve gradually, and that — combined with lower gas prices — should result in more disposable income and higher sales. It’s not a cinch, however, that these sales will go to brick-and-mortar stores without a lot of work on our part. On the pharmacy side, it’s easy to predict more of the same. But with a shift in power in the Washington, there may be some big bumps in the road.” — George Bartell, chairman and CEO, Bartell Drugs
“We’ve had three good years in a row. Sales are holding up. They’ve been up 3% to 3.5% in 2014. We’re still being hurt by narrow networks, but it’s hard to say how much. There are some networks we can’t get into. … But we have gained access to more networks than we had access to a year ago. So that’s been a positive development.” — Tom McConnell, chief financial officer, Discount Drug Mart
“2014 proved to be a year of continued transformation at Rite Aid, as the entire team worked hard to redefine the community pharmacy experience within our store walls and affirm our spot as the customer’s choice for health and wellness needs. From acquisitions to milestones in our Wellness Store development program to new health care programs, Rite Aid took bold and strategic steps towards becoming a growing retail health care company. … To achieve our goals, we will actively and aggressively pursue opportunities to enhance our offerings; work diligently to strengthen our brand of health, wellness and value; and ultimately deliver an outstanding experience to our customers.”
— John Standley, chairman and CEO, Rite Aid
PRACTICE OF PHARMACY
“We see tremendous upside for continued growth in 2015. With the continued focus on pharmacy, Thrifty White sees great potential in the growth of new patients as we expand our health and wellness initiatives and clinical program offerings such as medication therapy management, immunization expansion, biometric screenings and rapid diagnostic testing to name a few. Growth in specialty pharmacy, access to more patients and working with health plans and employer groups are other avenues of growth.” — Tim Weippert, executive vice president of pharmacy, Thrifty White Pharmacy
“By providing patient care services, pharmacies can position themselves as a convenient and less costly setting for health promotion and disease prevention, simultaneously addressing a public health need and improving their profitability. 2015 will be a year where pharmacies can set themselves apart as critical players in shaping health care delivery.” — A.J. Caffentzis, president, community and specialty pharmacy (Good Neighbor Pharmacy), AmerisourceBergen
“While the landscape for community and retail pharmacy in Canada continues to shift, Shoppers Drug Mart’s momentum is encouraging heading into 2015. We have responded to the changing regulatory environment by improving our competitiveness and increasing stability and predictability in pharmacy, producing solid results led by strong momentum in script-count growth. This includes the sustained success of our expanded scope of practice services at our pharmacies, in particular with respect to flu shots. As we enter 2015, we will continue to adapt our business to provide more patient-centered pharmacy services.” — Dorian Lo, executive vice president of pharmacy and health care, Shoppers Drug Mart
“McKesson Canada’s Retail Banner Management business gathered a lot of momentum during the last 12 months. Indeed, we have had close to 100 new members join one of our four banner brands (Guardian, IDA, the Medicine Shoppe Pharmacy and Proxim). We’re continuing to grow, and we expect that kind of momentum in the next year as well. We’re all about providing access to health care, and we’re not having trouble attracting independent owners who share that vision. … Pharmacy provides one of most trusted, accessible and economical local care environments. And the expanded scope of pharmacy practice across the country (led by Alberta) has given pharmacists a broader role. So we’re quite bullish about how pharmacy can play a greater part in health care and continue to grow ” — Dale Weil, interim senior vice president, retail banner management services, McKesson Canada
“2015 will be a dynamic year for retail pharmacy. There is an inherent need for pharmacy to take on a greater role in the changing landscape of health care. … At Care Pharmacies, we think our ability to get closer to our customers is an opportunity to lower costs by driving better patient outcomes and making sure that our customers’ experiences match their expectations. The new models of care play directly into our organization’s strengths, so we are bullish on 2015.” — Michael Wysong, CEO, Care Pharmacies
HEALTH CARE REFORM & DELIVERY
“As the health care spending burden shifts to the patient, value is taking on new meaning and is all about the quality of care. This is where community pharmacists have a tremendous opportunity to get credit for more than simply dispensing medications. Most do not see pharmacy as a production line, but as an opportunity to build relationships with the community and deliver quality, personal care. Based on their passion, their sense of innovation and the strong patient relationships they develop, community pharmacy has a strong foundation to build upon in this era of change.” — Steve Courtman, president, Health Mart
“Health plans are closely scrutinizing which pharmacies help them on patient safety and medication adherence criteria — and which pharmacies don’t. Pharmacies are being recognized for their contributions to positive outcomes while being evaluated on the Centers for Medicare & Medicaid Services Five-Star scale as the primary proxy. This important incentive provides an opportunity for pharmacies to secure increased patient revenue and to set themselves apart as vital providers in the health care system” — David Neu, president, AmerisourceBergen Drug Corp.
“In 2015, it will continue to be of utmost importance for independent pharmacies to operate efficient businesses with diversified patient health services that also drive diversified revenue streams. Toward that end, Medicine Shoppe International will continue assisting our franchisees in building focused, cost-efficient, patient-focused businesses. We have for quite some time been helping franchisees work with patients to improve outcomes, particularly through the delivery of services including medication therapy management and medication synchronization — and that work will continue in the coming year. ” — John Fiacco, Vice president, Medicine Shoppe International
“Health care reform and the Affordable Care Act without question will continue to define how the pharmacy industry evolves in 2015. We believe this presents a unique opportunity for Health Mart and community pharmacies to capitalize on their existing reputation for delivering quality care and service. The only difference now is both will be measured by a standardized set of performance metrics that will ultimately contribute to a pharmacy’s ability to gain access to preferred networks.” — Tony Willoughby, Chief Pharmacist, Health Mart
“More and more, people are looking for technology solutions to make their lives easier. Health care in general, and pharmacy in particular, is no exception. … A new initiative that we’ve recently launched is Pharmasave eCare. This interactive tool provides patients with online access to their personal medication information, sends refill and appointment reminders, and facilitates online refills. For pharmacists, Pharmasave eCare is the only integrated platform for independent pharmacy that enables stores to optimize funded pharmacy services, giving our members a competitive advantage in the marketplace and strengthening customer loyalty.” — Carmen Churcott, president, Pharmasave Drugs National
“Community pharmacies will continue to focus on finding new ways to track, measure and report how well they are able to help improve medication adherence and overall patient health. We’ll see continued increase in the use of data analytics, reporting, adherence and compliance solutions, mobile reminder programs and medication therapy management services to help retail pharmacies better understand their performance in caring for their patients.” — Jon Giacomin, CEO, pharmaceutical segment, Cardinal Health
*To read the full five-page Retail Forecast 2015 report, please see the Jan. 5, 2015, print issue of Chain Drug Review.