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Drug Retail Industry Analysis
Transcript of Drug Retail Industry Analysis
Market Info -
Porter's 5 Forces
1. Industry’s Dominant Economic Features
2. Porter's Five Forces
3. Drivers for Change in the Broad Environment
4. Companies in the Strongest/Weakest Positions
5. Key Success Factors For Competitive Success
6. Analysis - Industry’s Prospects for Long-Term Profitability
Threat of Potential
Power of Buyers
Power of Suppliers
Threat of Substitutes
Pharmacies & Drug Stores
Drivers of Change
Companies in the Strongest and Weakest Positions
Key Factors for Competitive Success
Power of substitutes is fairly high
Wide Range of Products-
Companies (Walmart/Publix) sell similar products for cheaper prices
Healthy eating/drinking can be just as beneficial as industry's products
Switching costs for buyers is low
Threat of rivalry is high
"Big Three" hold most of market
Customer can jump ship easily to other competitors
McKesson/Rite-Aid relationship by choice
Walgreens wouldn't be affected by loss of 1 supplier
55.7% of suppliers feel they are not in equally beneficial relationship, indicative of retail pharmacy buying power
Not so many clients for low power
Not so few for high power
Avg. 97% clients are PBMs, Employers, Insurance co., healthcare program
3 components of brand advocacy: Choice, Service, Trust
Difficult for new entrants to secure large clients
Individual clients not enough to sustain business
Successfully appealing to elderly consumers
Taking advantage of newly implemented healthcare laws
Integration of technology and business
“Prescription drugs are considered an essential health benefit under Section 1302 of the Act… Generic drugs will become even more affordable for consumers because of lower out-of-pocket expenses.”
- Kyle Colona,
Obamacare is Good Medicine for Retail Pharmacies
North America # of internet users has grown 153.3% from 2000-2012
Companies like CVS are implementing text message and online programs as well as apps to create greater convenience for consumers in a business environment centered around technology.
Top 3 companies hold ~90% of market
Mature life cycle stage
Industry enterprises -2.1%
Disposable Income -
As per capita disposable income increases,
it improves the industry
Forward Integration -
Health care reform
Scope of Rivalry -
High competition between supercenters, grocery stores, mail order services, etc.
Consolidation intensifies rivalry
Future increase in competition
Key success factors will increase profitability
CVS will see an increase in strategic position
Insulate from unattractive forces through adaptation of technological, legal, and socio-cultural changes
Firms that find large-scale innovations to enhance consumer health are more lucrative
pharmaceutical medications, natural remedies and various consumable goods
Political & Legal
*To a lesser extent; socio-cultural and environmental
Foreign Exchange Rate
*Industry specific- increase in generic drug prices
Political & Legal Examples
Global Political Influence
More Efficient Logistics
CVS Caremark Brands
Staying healthy isn’t easy these days. Health care costs keep rising. People are overwhelmed and confused by all the changes. They’re looking for help. They’re looking for solutions that make a difference. At CVS Caremark, we know that to make a difference, you have to do things differently. So we’re reinventing pharmacy to help people on their path to better health.
mini clinics in urban areas
To be the most trusted, convenient multichannel provider and advisor of innovative pharmacy, health and wellness solutions, and consumer goods and services in communities across America. A destination where health and happiness come together to help people get well, stay well and live well.
Differentiation through strategic geographic easy accesssibility.
Rite Aid Strategy
To improve the health and wellness of our communities through engaging experiences that provide our customers with the best products, services and advice to meet their unique needs.
Differentiation through health and wellness niche, and loyalty membership program.