Caremark Pharmacy Services Competition
Now Viewing Caremark Pharmacy Services's competition in: Drugstores
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How large an area does the company service? - Convenient location is a major factor in attracting customers.
How many other drugstores are in the company's market? - Most drugstores have several competitors in the same area.
How does the company distinguish itself from competitors? - Lower prices, more merchandise, and special services are common methods of differentiation.
Who are the company's main competitors (direct or indirect)? - Supermarket-based pharmacies are pushing into the drugstore market. Institutional pharmacy companies have taken over much of the drug dispensation for nursing homes and other institutional care facilities that retail drugstores used to handle. Encouraged by some HMOs, new and growing competition is also coming from the prescription mail-order business.
How will the company meet the threat of low-cost pharmacies, like mail order or online? - Online drug sales are one of the fastest-growing parts of the industry. Online pharmacies offer simpler service and fewer restrictions, although they've had problems with service quality, especially in terms of responsiveness, reliability, ease of use, credibility, and perceived cost.
How have institutional pharmacies affected company revenues? - Institutional pharmacy companies, like Omnicare and its subsidiaries, have taken over much of the drug dispensing for nursing homes and other institutional care facilities that retail drugstores used to handle.
In how many third-party payer programs does the company participate? - Third-party payers often account for the majority of prescription drug sales.
What percentage of prescription business comes from MCOs? - Above 80 percent at large chains is not unusual.
Does any third-party payer account for more than 10 percent of pharmacy revenue? - Some drugstores rely heavily on a few payers.
How is the mix of front-store merchandise determined? - OTC drugs, health and beauty items, and high-margin items like greeting cards are common front-store items.
Competitive Landscape
Demand is driven by the aging of the US population and advances in medical treatment. The profitability of individual companies depends on access to medical insurance groups. Large companies have economies of scale in purchasing and in access to large groups of customers. Small companies can compete effectively through convenient location or special merchandising.
Business Challenges
CRITICAL ISSUES
Lower Margins for Prescription Drugs - The share of prescriptions paid for by insurance or other third parties has grown in recent years. To control their costs, insurance companies often negotiate discounts with drugstores, resulting in lower profit margins for the drugstores. Low margins on prescription drugs may push drugstores to expand front-store merchandise sales, where they compete with discount stores, or into related businesses such as pharmacy benefit management (PBM).
Regulatory Pressure to Contain Drug Prices - The continuing rise in prescription drug costs has encouraged proposals to control drug prices, either through legislation or the formation of large public buyer groups that can negotiate lower prices with drug suppliers. Controls on drug prices cut drugstore margins.
Industries Where Caremark Pharmacy Services Competes
- Health Care
- Health Care Services
- Prescription Benefits Management(primary)
- Health Care Services
- Pharmaceuticals
- Retail
- Drug Stores & Pharmacies
