Retail News Breaks Archives
2012 Retail Forecast: Chain drug eyes broader role
January 5th, 2012
by CDR Staff
NEW YORK – Though uncertainty still surrounds the economy and the U.S. health care reform law, North American drug chains have carved out a role as wellness providers.
The accessibility and trustworthiness of pharmacies and pharmacists — combined with the convenience of front-end offerings, including healthful food — have made drug stores indispensable for people seeking to stretch their dollars.
Looking ahead, chain drug executives are optimistic that their positioning will entrench their stores as destinations for people seeking to get the most for their money in areas ranging from chronic care to cosmetics. They note that making their stores health and wellness centers with pharmacies that offer a wide array of services is essential to continue being seen as a vital part of the health care system.
Enhanced customer loyalty programs can be a key contributor to their appeal, executives add. They are also hopeful that, as the year progresses, there will be more indications that the economic malaise is lessening and consumers are feeling better about spending on discretionary items.
Here's a snapshot of what some drug retail executives had to say about the business environment facing their companies and the chain drug store industry in 2012.
HEALTH CARE & REFORM
"Although we are optimistic given the progress made over the past 12 to 18 months, the economy and the undetermined impact of health care reform remain significant challenges for the retail pharmacy industry. You could make the case that health care faces more challenges today than during any other period in history. While reform may make health care more accessible for more Americans, many worry there won’t be enough doctors to care for the more than 30 million lives that may be introduced into the system. Who will patients and payors turn to? We believe pharmacists will help fill this gap. I couldn’t be more excited about the opportunity for community pharmacy and how well Health Mart pharmacists are positioned to continue to grow their businesses." — Chuck Wilson, vice president of pharmacy operations, Health Mart
"What makes us extraordinary is our unique ability to improve the lives of millions of Americans by providing caring, expert guidance, more convenient access to care, and innovative solutions to rising health care costs. In 2012, CVS pharmacy professionals across the country will continue to demonstrate the value of pharmacy care. Every day our dedicated pharmacists will help the millions of patients on their path to better health by providing flu immunizations at every CVS location, with no appointment needed, as well as expert guidance through innovative programs such as Pharmacy Advisor that create clinical intervention opportunities to drive adherence and promote evidence-based treatment options for chronic disease states." — Mark Cosby, president, CVS/pharmacy
"We have intensified our focus on customer service and patient care to maintain our competitive advantage."
— Joe Courtright, USA Drug
"The maturation process of the U.S. health care delivery model will reveal two notable developments that will lead to expanded roles for pharmacists: Technology will facilitate an explosion in consumer-directed care, and pharmacists will play critical roles in public health. The future of U.S. health care will be a consumer-directed model in which decisions will be most significantly influenced by clinical, financial and convenience factors. Patients will take more responsibility for managing costs, there will be more self-care options to manage a wider range of conditions, and pharmacists will have an expanded role." — Mike Cantrell, president, Good Neighbor Pharmacy
"It is clear that the whole health care system is evolving. In Quebec, this is especially true — doctors are remarkably open-minded about addressing the 'inescapable problem' of overburdened emergency care services in hospitals and medical clinics. Pharmacists and nurses, with their training and desire to unburden the system, can contribute to this very concrete shift, and I am delighted about it." — Francois Castonguay, group president and chief executive officer, Uniprix
THE PBM CHALLENGE
"Pharmacy benefit managers are back to the top of the list of challenges that the industry will face in 2012. Reimbursement for claims continues to be driven downward. PBMs do not seem to care whether a pharmacy chooses not to participate in their network due to low reimbursement rates. MAC (maximum allowable cost) prices on generics are not being fairly maintained, which has also impacted margins adversely. Pharmacies are filling far too many prescriptions at below cost. Medicare Part D, which was supposed to be a source of increased volume, is now seeing preferred networks set up between the PBM and one [pharmacy] retailer. The proposed merger between Express Scripts and Medco Health Solutions will only amplify these issues. These companies own their own mail-order facilities, and it appears their end-game is to drive the business to their mail-order operations." — Rich Grossman, president and CEO, Sav-Mor Franchising
"One issue that dominated 2011 and will carry over into the new year is retail pharmacy’s need for a level playing field with pharmacy benefit managers and other health care groups. This is a tough fight but, thanks to the efforts of the National Association of Chain Drug Stores, is a battle in which I believe we are making progress." — Mark Griffin, president and CEO, Lewis Drug
"One major challenge for the industry in 2012 will continue to be the state of the economy. Unemployment is still high, and the economy is only slowly recovering. Customers are focused on value and will likely continue to maintain that focus even as our region begins to recover. The drug channel is well-positioned to serve the needs of the value-conscious customer through product assortment and convenient locations. Continuing to offer a large variety of products at varying price levels is critical to serving the needs of our diverse customer base. In addition, strong private-label programs serve a great need in providing quality products at a value." — Juan Ortiz, CEO, Navarro Discount Pharmacy
"Nearly four years after the 'Great Recession' began, research shows that value-minded consumers are seeking more than good quality at low prices — they also want connection and community, kindness and empathy, and a positive shopping experience. Patients are seeking value, quality and personal service as the health care system continues to change through both legislation and market dynamics. ... Pharmacy is a key part of the solution — and a leading provider of accessible, affordable health care in communities across the nation. We have set our sights on becoming 'My Walgreens' for everyone in America, the first choice for health and daily living across the nation, and a central part of people’s lives and the communities where they live and work." — Greg Wasson, president and CEO, Walgreens
"One issue that dominated 2011 and will carry over into the new year is retail pharmacy’s need for a level playing field with pharmacy benefit managers."
— Mark Griffin, Lewis Drug
"The economic outlook for 2012 will be similar to 2011, with the same type of roller-coaster ups and downs that the economy and most businesses experienced in 2011. The economy has improved slightly, but consumers will remain cost-conscious when it comes to their spending habits. Unemployment shows no signs of significant improvement and will stay close to 8% as the economy expands at a rate of only 2%. In 2012, the industry faces a significant challenge in making meaningful gains in the areas of total profitability and top-line sales gains as prescription reimbursement rate pressures continue and the industry deals with generic conversions that erode top-line sales." — Mark Panzer, president and CEO, Pharmaca Integrative Pharmacy
"We see the retail outlook for 2012 as improving. 2011 has been better than 2010, and we hear from employers in the our area that they are slowly adding to their workforce."
— Tom McConnell, chief financial officer, Discount Drug Mart
"As the shortage of pharmacists diminishes, we have intensified our focus on customer service and patient care to maintain our competitive advantage. This includes increased focus on medication therapy management and home delivery as well as pilot programs in prescription synchronization and compliance." — Joe Courtright, president and CEO, USA Drug
"The practice of pharmacy continues to evolve within Canada. Pharmacists continue to upgrade their professional skills to adopt their new expanded responsibilities (administration of vaccines, medication therapy management and limited prescribing rights) within the health care team. Some governments and select private (employer) payors are beginning to recognize the value of pharmacy through reimbursement for pharmacy services. For example, in British Columbia, qualified patients on multiple medications were provided personal medication reviews with their pharmacists, whose professional advice was acknowledged by a modest cognitive reimbursement fee by the public drug plan offered by the British Columbia government." — Wynn Powell, CEO, London Drugs
"The days of the community pharmacist being focused on dispensing medicines while patients obtained health care services from a variety of other discrete and segregated health care professionals is going and in some cases is already gone. The depth and breadth of education of pharmacists, their foundation and roots in communities and neighborhoods, and their relationships with patients confirm them as integral members of their patients’ health care teams. And community pharmacy stores are perfect hubs for community health care services." — Sue Paish, CEO, Pharmasave
IN THE STORES
"We remain pleased with the continued improvement in our top-line results. Key drivers have been our well-planned and -executed flu immunization program, our 'wellness store' renovations and the continued favorable customer response to our wellness+ loyalty program. Under our wellness store format, specially trained wellness ambassadors help customers with information on over-the-counter medications, vitamins and supplements.
With our flu immunization program, over 11,000 chainwide immunizing pharmacists have already provided more than double the number of flu shots we did last year, and we are on pace to achieve our goal of administering 1.5 million immunizations for this season. It has helped to increase both script count and pharmacy sales. ... We will continue to enhance the value of wellness+ to members with even stronger, more compelling offerings in the new year." — John Standley, president and CEO, Rite Aid
"We are focused on enhancing our customer and patient experience at our home office and in our stores. We continue to evolve our store layout and design, and the merchandising team will be focused on expanding our product offering to provide a more relevant mix for our value-conscious, solution-focused customers. In our stores, we are driving efficiencies in product and services. In the professional practice, we are taking advantage of the increasing opportunities available through regulation change while seeking to leverage emerging technologies in the pharmacy." — Frank Scorpiniti, COO, Katz Group Canada (Rexall)
"Retail pharmacies of all sizes will continue to innovate in efforts to diversify their revenue beyond filling prescriptions. We’ll see retailers continue to expand the health care services they provide to patients, with an increasing number of regional chains and independent pharmacies offering specialized services like diabetes care, immunizations, cardiovascular health and other comprehensive programs that improve patient health.
Retailers will also continue to expand their front-end offerings — to diversify their revenue mix while also making it as easy as possible for patients to get quick, convenient access to products they need to manage their health." — Steve Mason, vice president of sales, regional chain pharmacies, Cardinal Health
"2012 will see the continuation of many of the programs that are under development to support our growth strategy and continued success. These efforts include gaining the necessary efficiencies needed to offset the reductions in margin prevalent in both the public and private sectors, while expanding our offerings in both the retail and nonretail division." — Craig Painter, chairman and CEO, Kinney Drugs
"The growing adoption of Web-based and mobile health technology creates the opportunity to deliver more personalized, effective communications such as medication or physician-visit reminders, condition-specific health information and clinical-trial locators. The challenge for the industry is to balance the use of technology with high-touch personalized care — one of the cornerstones of community pharmacy." — Darren O'Neill, senior director, McKesson Retail Marketing
*To read the full five-page Retail Forecast 2012 report, please see the Jan. 2, 2012, print issue of Chain Drug Review.