Analysis of The Pharmacy Services Industry Essay

Analysis of The Pharmacy Services Industry - Essay Example These stocks now have more of a growth profile than they had in the past. There is much opportunity for expansion, with billions of dollars in the business up for grabs! Besides, there is greater competition coming from every direction, as non-traditional channels are looking to get in on the act. Below, we discuss an evolving industry and provide a guide as to what to consider before committing funds here. Traditionally, this industry has been divided into two main categories: pharmacy services, which consist of Pharmacy Benefits Managers, or ‘PBMs’, as well as Clinical Services Providers and large drug chains. Although both groups distribute prescription drugs to consumers, they differ in that ‘PBM’s are mail-order operations while ‘chains’ sell from storefronts. The numerical arrays on the Value Line pages of companies in these groups are largely similar. However, the pages of PBMs, which are somewhat more capital intensive, list capital spen ding per share and depreciation; whereas, the pages of drug chains include the number of stores and gross margin. Within the business description on the Value Line page, investors find a company's mix of pharmacy and general merchandise sales. A heavy weighting of wide-margined pharmacy business is vital to a company's wellbeing. Pharmacy business is less sensitive to economic cycles and a sales slowdown here could indicate a serious problem. The prescription growth rate is another noteworthy figure in measuring the health of a company, and it is gaining prominence. Demographics point to a rise in the number of Americans aged 65 and older, over the next two decades. Increasingly, Baby Boomers will require medical care and pharmaceuticals, auguring well for the industry's sales and earnings prospects. The largest pharmacy services providers are best positioned to reap the coming rewards of the industry (Walgreens Co., 2013 www.walgreens.com/ and CVS Pharmacy, 2013 www.cvs.com/). BACK GROUND/HISTORY CVS CVS Caremark Corporation, together with its associates, provides unified pharmacy health care services in the United States. The company’s Pharmacy Services division offers pharmacy benefit management services, including plan design and administration, formulary management, discounted drug purchase provisions, Medicare Part D services, mail order and specialty pharmacy services, retail pharmacy network management amenities, prescription management systems, quantifiable services and disease controlling services (Yahoo finance, 2013). This division sells its products through retail drugstores; the ‘online retail pharmacy website’, CVS.com; onsite pharmacy stores and retail health care clinics. As on December 31, 2012, the company operated 7,458 retail drugstores, 640 Minute Clinic locations, 31 retail specialty pharmacy stores, 12 specialty mail order pharmacies, and 5 mail order pharmacies. CVS Caremark Corporation was founded in 1892 and is bas ed in Woonsocket, Rhode Island (Yahoo Finance, 2013). Walgreens Walgreen is an innovated and intuitive organization that takes ‘the shopping experience’ to another level. The organization has devoted it’s time to being helpful to the consumers and ensures that shopping is made as convenient as possible. With its many divisions, it operates a network of drugstores in the United States. It provides consumer goods and services; it also provides pharmacy, health and wellness services through drugstores along with novel methods such as mail, telephone, and online modes.