NACDS profile: Chain industry is in good shape

November 7, 2005

In 2004, over 3.2 billion prescriptions were filled—a hike of 62% since 1994. This positive news comes from the National Association of Chain Drug Stores Foundation's recently released 2005 Chain Pharmacy Industry Profile.

In 2004, over 3.2 billion prescriptions were filled—a hike of 62% since 1994. This positive news comes from the National Association of Chain Drug Stores Foundation's recently released 2005 Chain Pharmacy Industry Profile.

The following findings bode well for the retail chain industry:

  • Chain pharmacy represents the largest component of pharmacy practice, comprising 20,800 traditional chain drugstores and an additional 16,600 pharmacies within supermarkets and mass-merchandising stores.
  • Between 2003 and 2004, retail sales in traditional drugstores rose 5.5%, with prescription sales rising even faster. Overall, the retail prescription market topped $221 billion in 2004. Chain pharmacies filled 63% of the dollar volume of retail prescriptions.
  • Of all prescriptions dispensed last year, 41% were filled at chain pharmacies, 18.3% at independent drugstores, 18.7% through mail order, 12.2% at supermarkets, and 9.7% at mass-merchandisers.
  • The chain drug industry employs more than 135,000 pharmacists and over 180,000 technicians.
  • Eighty percent of the chain stores today are in urban areas, while 65% of independents are in urban areas. The states with the largest number of chain drugstores are California, Florida, New York, Pennsylvania, and Texas.
  • California has the largest number of licensed pharmacists, followed by Texas, Florida, New York, and Pennsylvania. Each of these states also has one of the highest numbers of pharmacists working in chain pharmacies.
  • California has the largest number of licensed pharmacists working in independent drugstores. New York takes second place.
  • The average cash price for a prescription drug in 2004 was $51.03. The average price for a prescription paid for by a third party was $63.16.
  • The highest average cash price for a prescription drug in 2004 was $70.71 (Connecticut), and the lowest average cash price was $34.70 (Mississippi). The highest average price for a prescription paid by a third-party program was $78.48 (Alaska) and the lowest was $53.62 (Oregon).
  • Prescriptions account for 68.3% of all sales at chain drugstores. Other categories include over-the-counter items, 6.7%; general merchandise, 3.4 %; toiletries, 5%; cosmetics, 2.6%; food, 5.8%, non-edible consumables, 3.7%; packaged alcohol, 1.9%; vitamins/minerals, 1.4%; photo equipment/supplies, 0.6%; and photo finishing, 0.8%.
  • Per capita sales in all drugstores increased about 91% from 1994 to 2004-a rate of 6.7% per year.
  • The cost of dispensing is very closely related with the cost of living. Alaska has the highest cost of dispensing, at $11.41 per prescription; the next-highest costs are found in New Jersey, Hawaii, Connecticut, and California.
  • Direct-to-consumer advertising rose from practically nothing in 1994 to approximately $4.1 billion in 2004.
  • When it comes to technology, chain pharmacy has embraced the use of the Internet and on-line sales. As of June 2005, there were 222 main home pages affiliated with chain pharmacy companies. Fifty-five of these home pages had an on-line pharmacy with the capability of prescription refills.

  • Fourteen pharmacy Web sites are currently certified under the Verified Internet Pharmacy Practice Sites (VIPPS) program.

  • Many chain drugstores, as well as mass-merchants and supermarkets, distribute their merchandise from warehouses they own and operate. Others purchase products from wholesalers. The average distance from a warehouse to a store is 253 miles.
  • Customers mentioned convenience/location (67%) as the top reason they shop at a particular retail pharmacy. Price was named by 31% of shoppers, insurance coverage was cited by 16%, and customer service was named by 7% of shoppers.
  • In 2004, "new drugs"-those introduced since 1999-accounted for about 54% of retail drug expenditures and 48% of prescriptions. From 2003 to 2004, 50 drugs contributed 95% of total sales.
  • Over the past six years, the percentage of prescriptions paid for with cash has dropped precipitously, from 63% in 1990 to under 13% in 2004.
  • Less than 1% of the prescriptions written by doctors last year were delivered to pharmacies electronically. As of June 2005, electronic prescriptions were allowed in 49 states and prohibited in the District of Columbia. In Nebraska, electronic prescriptions are not addressed in the regulations.