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The Top 10 Chain Drug Retailers

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Consolidation, integration reshape the field of players

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NEW YORK — The new landscape of chain drug retailing came into sharper relief over the past year.

Integration and consolidation were the themes, as Walgreens Boots Alliance Inc. (WBA) assimilated its global holdings while agreeing to buy Rite Aid Corp., and CVS Health picked up Target Corp. pharmacies as well as long-term-care pharmacy leader Omnicare.

“The pharmacy consolidation endgame has begun,” pharmacy supply chain expert Adam Fein said when WBA’s purchase of Rite Aid was announced in the fall.

More recently, WBA struck a deal with PBM OptumRx to provide pharmacy benefits, including the option to fill 90-day scripts at mail-order co-pay levels at any Walgreens store. The partnership is seen as a means to compete with CVS’ “channel-agnostic” Maintenance Choice program, which gives CVS/caremark PBM plan members a choice of how they want to fill their prescriptions.

TOP 10 DRUG CHAINS BY SALES

1
Walgreens
$80.97 billion
2
CVS Health
$72.01 billion*
3
Rite Aid
$26.87 billion*
4
Health Mart
$10.30 billion**
5
Shoppers Drug Mart
$9.03 billion†
6
Diplomat Pharmacy
$3.37 billion
7
Jean Coutu
$3.19 billion*†
8
London Drugs
$2.02 billion**†
9
McKesson Canada
$1.98 billion**†
10
Rexall
$1.94 billion**†
*Retail drug store sales only. **CDR estimate.
†Translated from Canadian dollars.
Source: Racher Press research.

If the Rite Aid deal goes through, both CVS — having gained close to 1,700 Target pharmacies — and WBA will have more than 9,500 stores. (WBA, depending on how many units it has to divest to satisfy regulatory requirements, could end up with close to 12,000).

But it is the two companies’ sales that will dwarf those of other drug chains. Having two 12-figure players alone at the top of the industry will magnify the importance of large pharmacy operators from outside the chain drug trade class, namely Walmart, Kroger Co. and Albertsons.

Walmart and Kroger, besides capturing a significant share of prescription and H&BA volume, also are players in the retail clinic market. Walmart Care Clinics, while small in number, are challenging the standard model with lower prices. Kroger’s The Little Clinic has added registered dietitians — providing services such as nutrition counseling— to its array of programs.

Supermarketers are emphasizing their ability to tie healthful food to pharmacies in order to become comprehensive wellness providers. Among regional players, Hy-Vee Inc. emphasizes its in-store assemblage of pharmacists, dietitians, health concierges, chefs and clinics.

But drug chains are not standing by idly. CVS/pharmacy president Helena Foulkes is enthusiastic about the chain’s better-for-you food, having noted that the retailer is continuing to broaden categories such as nutrition bars and high-protein snacks. Customers have embraced the additions, with three-quarters saying they intend to shop CVS more for ­on-the-go snacks.

North of the border, Shoppers Drug Mart — capitalizing on its ownership by No. 1 Canadian grocer Loblaw Cos. — has been testing perishable sales. It conducted extensive training to ensure the freshest product rotation, and it has continued to refine the mix and number of displays.

The upshot has been both success with fresh food and an increase in total store sales. While president Mike Motz says the pilot is “well on its way,” SDM is proceeding deliberately in an effort “to get it right.”

At Rite Aid, a focus has been on vitamins, minerals and supplements. A novel design for the chain’s GNC department debuted a little over a year ago at a new Wellness Store in Harrisburg, Pa. Located in the center of the store, the section has freestanding, winged displays to encourage customers to browse the wide assortment of products and provide easy access to complementary categories. A “Vitamins & Supplements Center” kiosk stands in the middle of the department and has a touchscreen that allows shoppers to find more information.

TOP 10 DRUG CHAINS BY STORE COUNT

1
CVS Health
9,655
2
Walgreens
8,173
3
Health Mart
4,610
4
Rite Aid
4,561
5
McKesson Canada
1,560
6
Shoppers Drug Mart
1,313
7
Pharmasave
555
8
Medicine Shoppe
523
9
Rexall
476
10
Jean Coutu
416

Rite Aid has also tested vitamin advisers. “They help consumers navigate the area and serve as a bridge to the pharmacist for customers who have questions or need advice,” said executive vice president of merchandising and distribution Tony Montini.

Such pioneering efforts notwithstanding, the core of the chain drug business remains pharmacy — and pharmacy’s role in health care is growing ever more important. That message was reinforced this year at the National Association of Chain Drug Stores RxImpact Day, when advocates let members of Congress know just how much the industry can do to expand access to care, improve quality and contain costs.

Advocates highlighted the importance of securing provider status for pharmacists under Medicaid, expanding funding for medication therapy management under Medicare and ensuring beneficiaries are able to utilize the pharmacy of their choice under Tricare.

Attitudes and expectations about care are changing, outgoing NACDS chairman Randy Edeker noted last year, and pharmacists are helping drive the change. They are integral to “the quality revolution,” which “is about measurement and data and personal touch all at the same time,” he said.

Millennials in particular can elevate the role of pharmacists, because 28% of the members of this generation self-diagnosis and 36% treat themselves at home before even considering going to a doctor, said Edeker, who is chairman, president and chief executive officer of Hy-Vee Inc.

He added that while the Affordable Care Act has had a momentous impact, “we’ve done an exceptional job of being part of the solution and not just the naysayers sitting on the sidelines.” He credited pharmacy operators with “getting in and trying to work to make our patient care better and put the patient first.”

To that end, Ritzman Pharmacy has unveiled a forward-looking “practice” highlighting pharmacists’ clinical knowledge and services. A concierge greets customers at the entrance to the 4,200-square-foot “Pharmacy of the Future” and explains the specially curated front-end offerings, which are centered on dietary supplements and homeopathic remedies.

To remove the pharmacist from the dispensing function, the drug inventory is walled off behind the prescription counter. With the bagging of scripts out of view, pharmacists engage with patients as the medication experts that they went to school to become, says chief executive officer Eric Graf. A “tech bar” on one side of the counter, integrating technology into health care, reaffirms pharmacists’ enhanced status.

CHAIN DRUG REVIEW: THE TOP 50 DRUG CHAINS

Click here to view a list of the top 50 drug chains by dollar sales and store count

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