Fred’s looks to grow through Diplomat Specialty partnership and Drug and Dollar concept pharmacy
MEMPHIS, Tenn. — Any trickle-down of an improving economy hasn’t trickled down to Fred’s consumer base, Bruce Efird, Fred’s CEO, told analysts Tuesday morning in discussing the discounter’s third-quarter results. "During the third quarter we continue to see generally weak economic conditions throughout the Southeast which are clearly weighing heavily on our customers and influencing how they shop for their basic needs," he said. "It’s more evident that things are not getting better for our core customers."
Fred’s is preparing for a highly promotional fourth quarter as retailers fight it out for the customer’s holiday dollar. "We’re seeing our largest competitors ramping up advertising at record rates to capture traffic and anticipate fourth quarter holiday promotional activity to intensify to levels even greater than last year," Efird said, especially as more retailers attempt to turn back the clocks on Black Friday with deals on Thanksgiving Day.
But pharmacy continues to be seen as a growth catalyst for the company — 36.4% of Fred’s sales are comprised of prescription medicines, the Memphis-based retailer stated. In the past quarter Fred’s opened two 8,000 square-foot GetWell Drug and Dollar concept stores with four more pilot openings planned by year’s end. One of the stores is located in Middleton, Tenn., 80 miles east of Memphis.
"The thesis behind it is to drive a growth vehicle in the future for smaller communities where we have either an Xpress Pharmacy or an opportunity to buy a pharmacy, and the community’s not large enough to support the 16,000 square-foot Fred’s store," Efird said. "We’re nine weeks into this. What we’ve seen thus far, we’re pleased with the overall performance of the total combination of general merchandise and pharmacy."
The smaller footprint will serve as Fred’s growth engine going forward.
Fred’s has also realized its share of former Walgreens patients out of that retailer’s now-ended dispute with Express Scripts. "We’ve seen a nice lift in our script comps … and to date have not really seen any loss at all in that [Express Scripts] patient demographic," commented Rick Chambers, Fred’s EVP pharmacy operations.
"Approximately 38% of our pharmacies overlap with a Walgreens pharmacy," Efird added.
Fred’s also spoke to its recent specialty pharmacy partnership with Diplomat Specialty Pharmacy. "They’ll be able to help us with back-end clinical services, support, patient outreach, patient education, all those plug-ins that are required to manage this high-touch patient," Chambers said. "It will definitely, we believe, open up some other drug therapies for us that we’ve not had access to in the past."
In addition to pharmacy initiatives, Fred’s recently launched its Fred’s Smart Card loyalty program, which now boasts 1.2 million active members and represents 8% of Fred’s overall sales. Fred’s loyalty consumer delivers a marketbasket 50% larger than non-loyalty transactions, Efird said. "The information gained from the Smart Card allows us to email and promote directly to these valuable customers, directing the promotion to what the consumer is most likely to purchase."
Fred’s total sales for the third quarter ended Oct. 27 of fiscal 2012 increased 1% to $450.6 million. Comparable store sales for the quarter declined 2.5% compared with an increase of 1.5% in the third quarter last year.
Through the first nine months of the year, the Company opened 27 new locations, comprising 14 new stores and 13 new Xpress pharmacies. Fred’s also closed 13 stores during the year and converted six Xpress pharmacies to full size stores.
How tough should compounding oversight be?
When considering new, stiffer regulations governing the compounding of medicines in the wake of the meningitis outbreak, tread carefully and don’t throw the baby out with the bathwater.
That’s the message chain pharmacy had for Congress as lawmakers mull new restrictions on drug compounding by pharmacists.
Both the House and Senate held hearings last week on a deadly outbreak of a rare strain of fungal meningitis whose origin is tied to several batches of steroids produced by the New England Compounding Center in Massachusetts. Federal investigators found contamination from mold and bacteria at the center, and some congressional lawmakers from both parties are vowing to write new legislation to boost the authority of the Food and Drug Administration over compounding pharmacies.
As of mid-November, the disease had already sickened 438 people in 19 states and killed 32. Members of the U.S. Senate Committee on Health, Education, Labor and Pensions and the U.S. House Committee on Energy and Commerce grilled FDA Commissioner Margaret Hamburg about the FDA’s actions leading up to shipments of the tainted steroids, but Hamburg defended the agency, saying its authority over compounding pharmacies is limited and unclear.
Hamburg told lawmakers the FDA needs the legal power to adopt a tiered approach to overseeing compounding centers that separates them into “traditional” compounders – which fall under the authority of state boards of pharmacy – and “nontraditional” compounding pharmacies. Nontraditional centers like the NECC, she argued, should be treated as manufacturers and required to register with the FDA and forced to subscribe to other guidelines for drug manufacturers.
Chain pharmacy leaders, however, are worried Congress will take a legislative sledgehammer to the problem of poorly regulated compounding pharmacies. In a Nov. 14 letter to the Republican and Democratic heads of both committees, the National Association of Chain Drug Stores reminded lawmakers that compounding is part of pharmacy’s basic DNA and has been a core part of the profession since its earliest days. What’s more, NACDS noted, “Compounding services are the only source of critical medications for millions of patients with unique health needs. For these patients, there are no commercially manufactured preparations available. Through compounding, pursuant to a prescription, pharmacies provide these patients with personalized medications.”
The group also pointed out that “the type of compounding tied to the recent meningitis outbreak — sterile compounding — is a much smaller subset of compounding, and sterile compounding must be performed in very controlled settings. Sterile compounding is not the kind of compounding that is typically available to a patient who walks into a chain pharmacy to fill a prescription.”
Also urging caution at last week’s Senate hearing was David Miller, CEO of the International Academy of Compounding Pharmacists. Miller said he was “very concerned” over calls for a tiered approach to regulation of compounding pharmacies. “The more complex we make this and the more we get into the shuffle between who is accountable…we will not resolve this problem,” he told panelists. “Either you are a pharmacy or you are a manufacturer."
How should compounding be regulated to prevent any future meningitis outbreaks or other tragedies? Click the link below to share your thoughts.
Pfizer, Cystic Fibrosis Foundation Therapeutics partner in drug-discovery initiative
BETHESDA, Md. — The drug-discovery division of the Cystic Fibrosis Foundation is teaming up with drug maker Pfizer to find new treatments for patients with the most common genetic mutation of the disease.
Cystic Fibrosis Foundation Therapeutics announced a $58 million partnership with Pfizer to discover new drugs for CF patients whose disease has the Delta F508 mutation, present in nearly 90% of patients, in which a defective protein called CFTR does not fold correctly and is unable to reach the cell surface so it can maintain proper flow of salt and fluids into the airways. Because of this, thick secretions form in the airways, leading to serious lung infections and damage.
"We are excited to expand our efforts with Pfizer to accelerate the development of more therapies that treat the root cause of CF and benefit the greatest number of people with the disease," CF Foundation president and CEO Robert Beall said. "Pfizer brings impressive technical and scientific expertise, along with its commitment to improving the lives of people with cystic fibrosis."