First Research US Industry Profile

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Drug Stores
SIC Codes: 5912
NAICS Codes: 44611
Last Quarterly Update: 4/22/2019
Companies in this industry sell prescription drugs, over-the-counter medications, health and beauty products, and general merchandise from physical retail locations. Major companies include Walgreen Co, CVS Health, and Rite Aid (all based in the US), along with Jean Coutu and Shoppers Drug Mart (Canada), China Nepstar (China), AS Watson (Hong Kong), Matsumoto Kiyoshi (Japan), Anton Schlecker and Dirk Rossmann (Germany), and Walgreen-owned Boots the Chemist (UK).
Global retail pharmacy sales were expected to reach $1.4 trillion by 2017, according to Lucintel. Growth drivers include the aging of the population and increased health awareness. North America, with about 40% of worldwide pharmaceutical sales, is the largest market, followed by Europe and Japan with about 25% and 10%, respectively.
The US drug stores industry includes about 48,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $270 billion.
Competitive Landscape
The evolving US health care system and growing competition from online and other competitors are rapidly transforming the retail pharmacy business. Chain stores account for about 50% of the US retail prescription market, according to IMS Health. Mail services account for about 25%, independent drug stores for 15%, and pharmacies at supermarkets for 10%. (Walmart ranks among the top five US retail pharmacies by prescription revenue.) CVS and Walgreen dominate the US chain drug store industry, especially in big cities. In a move that further consolidated the market, Walgreen in 2018 won a hard-fought battle with federal regulators to acquire about 1,900 stores from Rite Aid, giving Walgreen about 10,000 US locations.
As scale becomes increasingly important to success in the drug store business, retail pharmacy chains, including Walgreen and CVS, have spent the past decade bulking up to become integrated pharmacy health care companies by acquiring pharmacy benefits management companies, drug wholesalers, specialty pharmacy companies, walk-in clinics, and other health care-related businesses.
Online pharmacies are growing in reach and popularity, particularly for the refilling of maintenance medications. Amazon already sells OTC medications and medical supplies and equipment online in the US, as well as pharmaceuticals in Japan (with approval from a pharmacist). Despite the complexities and regulatory hurdles to online drug sales, Amazon is making inroads into the online pharmacy market, having acquired the online pharmacy PillPack in 2018. In India, online players are vying for a larger share of the country's fragmented pharmacy market amid an e-commerce boom.
Demand is driven by aging populations in developed nations such as the US and Canada, growth in emerging economies, awareness of health issues, advances in medical treatment, and longer lifespans. 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 locations or special merchandising. The US industry is highly concentrated: the four largest companies generate nearly 75% of revenue.
Drug stores that also sell general merchandise compete with grocery and convenience stores, discount department stores, warehouse clubs, and other retailers.
Products, Operations & Technology
Drug stores sell two main types of products: prescription drugs and "front-store" products, including over-the-counter (OTC) drugs, health and beauty aids, ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

Historical Profiles (PDF format)

01/21/2019
10/15/2018
07/23/2018
04/23/2018
01/22/2018
10/16/2017
07/10/2017
04/10/2017
01/09/2017
10/03/2016
07/05/2016
04/04/2016
01/04/2016
10/05/2015
07/06/2015
04/06/2015
01/12/2015
10/13/2014
07/21/2014
04/28/2014
02/03/2014
10/28/2013
08/05/2013
05/13/2013
02/18/2013
11/12/2012
07/30/2012
05/07/2012
02/06/2012
10/24/2011
07/25/2011
04/04/2011
01/03/2011
10/04/2010
06/28/2010
03/29/2010