Rather than take off for Christmas, the editors of Drug Store News took a look at the year ahead and the stories, issues and trends that will make headlines in retail pharmacy in 2012.
The Economy Game
The slow recovery of 2011’s U.S. economy will be grinding through the gridlock of the 2012 election year as Democrats and Republicans battle it out to be America’s next CEO. But that’s not the worst of it — economists are predicting that a 27-car pileup is on the road ahead as the European Union drives toward recession No. 2. A disassembled EU could mean more layoffs stateside, more uncertainty in the markets, another dive in consumer confidence and less spending.
Many retailers have been going after higher-end shoppers, and with good reason. According to Nielsen Homescan data, both trips and dollars were down for about 80% of shoppers, with only $100,000-plus households showing any growth over a two-year period from October 2009 to October 2011. But what happens if and when those shoppers, too, start running on reserves?
Interactive Customer Experience
We got a glimpse of the future of drug store retailing back in July when New York-based Duane Reade introduced a new, more interactive and luxurious shopping experience. Its 40 Wall St. flagship store features a virtual assistant that greets customers as they enter the store, as well as a digital makeup mirror in the beauty section and a mix-your-own Coca-Cola machine. The developer of the virtual assistant technology, Lawrence, foresees HIPAA-compliant holographic programs to help guide customers’ health and purchasing decisions.
Meanwhile, Rite Aid and Walgreens are putting iPads in the hands of store pharmacists — “Wellness Ambassadors” in Rite Aid’s Wellness stores — and getting them out from behind the counter. Rite Aid also plans to roll out 3-D holographic kiosks under a partnership with Provision Interactive Technologies. Expect to see the use of tablet devices at retail grow in 2012 as the price comes down and the technology becomes more pervasive.
Commerce Moves to Mobile
It’s guerilla retailing, and Amazon.com potentially has as many tributaries as the actual Amazon with the number of shoppers using brick-and-mortar stores as the dot-commer’s virtual 3-D showcase. According to a Verve Wireless survey, more than 60% of respondents used their smartphones for shopping one or more times each month. Of those, 63% were on Amazon’s Web page.
So that makes a smartphone strategy quintessential in navigating through this new retail jungle. According to Drug Store News blogger Moira Koch, those retailers engaging m-commerce with e-coupons and daily deals will reap the benefits with increased loyalty and traction.
Flipping the Switch
Switch epitomizes affordability and access, which are two of the OTC propositions the Consumer Healthcare Products Association is touting on the Hill. And they’ve got the ear of Congress, no doubt, because no matter what version of
ObamaCare, RomneyCare or AnybodyCare health reform is finally adopted, of all healthcare payers, the Centers for Medicare and Medicaid Services will be writing the
And 2012 may be the year a company like Pfizer finally puts a Lipitor statin switch square through the uprights, even though the Food and Drug Administration has iced previous statin kickers four times already. Beyond Lipitor, insomnia may be the next knockout category to be switched.
Retail Giants Shrink Stores
It’s the incredible shrinking retailer! No, it’s not a bad sequel to the 1980s flick “The Incredible Shrinking Woman” — it’s the latest phenomenon to hit the retail industry.
Retail giant Walmart has several variations of smaller formats in play, ranging from its Walmart.com test sites in California, which showcase its online merchandise in small stores, to Walmart Express, which is a further downsizing of the supercenter and Neighborhood Market formats.
Meanwhile, Target and Meijer both have developed smaller-
format stores. Expect to see this trend continue, especially as retailers look to further meet the needs of consumers residing in “food deserts.”
The Brink of Clinics 2.0
With an anticipated growth of consumer-driven care and more of the burden for managing costs falling on patients’ shoulders, expect retail clinic visits to continue to rise, while clinic operators open more locations, services extend beyond treating acute ailments and medication therapy management is further integrated. In fact, during CVS Caremark’s recent Analyst Day in New York, the company noted that nonacute visits are on the rise and, by 2015, are expected to account for 25% of all MinuteClinic visits.
The use of retail-based health clinics increased tenfold between 2007 and 2009, based on the findings of a new Rand Corp. study. Through 2015, retail clinic sales are expected to continue expanding, rising by 19.3% per year to reach $1.7 billion, according to Kalorama Information.
Fists Fly Over ESI-Medco
The punches continue to fly from every direction. And expect the heat to continue on the proposed Express Scripts-Medco merger. In December, ESI honcho George Paz told members of a Senate Judiciary Subcommittee, “I can’t stop certain pharmacies from going out of business.” Paz also suggested Express Scripts would champion independent pharmacy. “My intention is to work a deal with the independent pharmacist[s] and reimburse them at a higher rate than the [big-box pharmacies],” he said.
Expect independent pharmacy to hold him to that promise, and another furious flurry of lefts and rights between now and June when the FTC finally is expected to rule.
Whither Health Reform?
Whatever you want to call it, this all comes back to consumer-directed health care. The individual mandate — the central issue in the case against the Patient Protection and Affordable Care Act for which the Supreme Court has set aside three days in March to decide upon — is a pretty good example of shifting the onus of managing the cost of health care to the consumer. The court’s decision is expected in June and is expected to be a major issue in the fall elections.
Regardless of where the court lands on this, don’t expect the trend toward consumer-directed health care to disappear. You can’t put the genie back in the bottle. That means more clinics, more OTCs, more switches, more incentives for wellness and prevention, and more penalties for unhealthy lifestyles.
Dimes on the Dollar
It’s the dollar channel that nickels and dimes its consumers every which way to Sunday — to the customers’ delight. That channel is expanding its upper-income household penetration because those folks like seeing only the nickels and dimes flowing out of their pocketbooks.
The channel is one to tune into because comp sales across the top three have been up for at least 14 quarters and counting. Additionally, they’re expanding fresh food and consumer packaged goods brand presence, and two of the channel leaders are run by retail pharmacy folk. How soon before one of them hangs a pharmacy shingle?
Nearing Expiration Dates
The Nov. 30 patent expiration of Pfizer’s Lipitor (atorvastatin) was only the beginning. AstraZeneca’s psychiatric drug Seroquel (quetiapine), Merck’s respiratory drug Singulair (montelukast), Takeda’s diabetes drug Actos (pioglitazone) and Forest Labs’ antidepressant Lexapro (escitalopram) will lose their patent protection this year — drugs whose 2010 sales, ranging from $2.8 billion for Lexapro to $4.4 billion for Seroquel, landed them on IMS Health’s top 20 list.
Meanwhile, the Food and Drug Administration brought alleviation of its massive backlog of generic drug approval applications closer to reality last month with a draft of the goals of the Generic Drug User Fee Act. Regulations for biosimilars will take longer, but last month, Watson and Amgen announced a collaboration to develop them.
Companies 'HIT' Big
Allowing patients to arrange medication refills and pickups with their smartphones is close to becoming an industry standard, but it’s likely to become more common, especially with a survey by Insight Express showing that 55% of smartphone owners have used them in a hospital or doctor’s office, while 82% have used them in a store.
Walgreens and CVS have been leaders in this regard, but supermarket chain Winn-Dixie has joined in, too. While still in its early stages, Rite Aid’s partnership with OptumHealth allows patients to interact with doctors and nurses online at some of its stores in Detroit. As society’s embrace of technology has grown ever cozier, retailers have followed suit, taking advantage of everything from high-speed Internet to smartphones to enhance convenience and efficiency.
Canada has been catapulted to the “must watch” list for 2012, and there are several important reasons why.
First of all, leading pharmacy retailers Shoppers Drug Mart and Katz Group Canada have new leaders at the helm. Former McKesson Canada president Domenic Pilla now heads up Shoppers, and rising pharmacy veteran Frank Scorpiniti officially will assume the role of CEO of Katz Group Canada in February. These major executive moves come as the Canadian pharmacy industry navigates the cuts in generic drug pricing.
Meanwhile, many Canadian retail chains have been facing increased competition from U.S. retailers. For example, Target is looking to open its first Canadian stores in 2013.
Make no bones about it — Canada is one to watch in 2012 and beyond.