Pills pop: Rising drug prices increase competition and revenue

The Pharmacies and Drug Stores industry in California has exhibited growth despite some negative side effects from the regulatory environment and increased competition. For example, the industry has grappled with changing generic drug prices to reflect reimbursement rates. As a result of this trend, the industry has contended with PBMs not updating their payment benchmarks, and the industry has not received an adjusted reimbursement rate for their previous prescription sales as a result, which has cut into industry revenue. However, the patent cliff, which caused many blockbuster drugs to lose their patent exclusivity, has bolstered industry revenue...read more.

Industry Statistics & Market Size
Revenue
$33bn
Annual Growth 12-17
4.5%
Forecast Growth 17-22
Profit
Employment
81,081
Businesses
5,968
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Industry Threats & Opportunities

  • The industry is highly sensitive to swings in drug prices and regulatory risk
  • Due to low co-payment costs, more individuals have been able to afford their medications, benefiting the industry
  • A projected shortage of primary care physicians will enable industry operators to provide preventive care services
  • Industry Report - Industry Investment Chapter

    The Pharmacies and Drug Stores industry has a low level of capital intensity. In 2017, for every dollar spent on wages, an estimated $0.04 is spent on capital. Labor costs are substantial in this industry, accounting for an estimated 11.4% of total revenue, though over the five years to 2017, wages have declined as a share of industry revenue. The average wage slightly declined, despite pharmacists and technicians commanding higher wages than front-end sales employees. Due to rampant industry consolidation, demand for pharmacists and other specialized employees has been limited. Nevertheless, the anticipated shortage of pharmacists over the next five years will cause the average wage to increase as operators aim to attract and retain their pharmacists. Add...purchase to read more.

    Additional Insights for the Pharmacies & Drug Stores in California Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Pharmacies & Drug Stores in California Industry are

  • Ability to control stock on hand
  • Participation in pharmacy benefit management (PBM) networks
  • Superior financial management and debt management
  • IBISWorld analysts also discuss how external factors such as Total Health Expenditure in California and Number of adults aged 50 and older in the Pharmacies & Drug Stores in California industry impact industry performance..

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    What is the Pharmacies & Drug Stores in California Industry?

    Pharmacies and drug stores retail a range of prescription and over-the-counter medications, health and beauty items, toiletries and consumable goods directly to consumers on a walk-in basis. Industry companies may also provide basic health and photo processing services. The industry includes retail stores with a pharmacy but excludes mail-order retailers, hospitals and clinics.

    Industry Products
  • Branded prescription drugs
  • Generic Drugs
  • Nonprescription Medications
  • Personal health supplies
  • Groceries and food items
  • Vitamins, minerals and dietary supplements
  • Cosmetics
  • Industry Activities
  • Preparing and selling prescription and nonprescription drugs and medicines
  • Retailing basic consumable goods
  • Selling other miscellaneous items, such as candy, cosmetics, magazines and light refreshments
  • Advising customers on the use of both prescription and over-the-counter drugs
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Total Health Expenditure in California
  • Number of adults aged 50 and older
  • Per Capita Disposable Income in California
  • External competition for the Pharmacies and Drug Stores industry

  • Current Performance
  • Maintaining consumers
  • Industry Landscape
  • Chart: Revenue Growth

  • Industry Outlook
  • Patent cliff
  • Competition and consolidation
  • Table: Pharmacies & Drug Stores in California Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Pharmacies & Drug Stores in California Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers

  • Key Selling Industries
  • Brand Name Pharmaceutical Manufacturing
  • Camera & Film Wholesaling
  • Chocolate Production
  • Cosmetic & Beauty Products Manufacturing
  • Drug, Cosmetic & Toiletry Wholesaling
  • Generic Pharmaceutical Manufacturing

  • Products & Services
  • Branded prescription drugs
  • Generic Drugs
  • Other
  • Nonprescription Medications
  • Personal health supplies
  • Groceries and food items
  • Cosmetics
  • Vitamins, minerals and dietary supplements
  • Chart: Pharmacies & Drug Stores in California Industry Products and Services Segmentation

  • Major Markets
  • Consumers aged 45 to 64 years
  • Consumers aged 18 to 44 years
  • Consumers aged 65 years and older
  • Consumers aged 17 and younger
  • Chart: Major Market Segmentation for the Pharmacies & Drug Stores in California Industry

  • Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Profit
  • Purchases
  • Wages
  • Other
  • Chart: Cost Structure Benchmarking – Sector vs Pharmacies & Drug Stores in California

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Pharmacies & Drug Stores in California Industry

  • CVS Health CorporationThe Walgreen CompanyRite Aid Corporation
  • Table: CVS Health Corporation - financial performance
  • Table: The Walgreen Company - financial performance
  • Table: Rite Aid Corporation - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Pharmacies & Drug Stores in California Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Pharmacies & Drug Stores in California Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Blockbuster Drug
  • A drug product that generates annual sales in excess of $1 billion.
  • Formulary
  • A list of medicines that are covered by a health insurance plan and always meet Medicare's requirements.
  • Front-End Sales
  • Sales of products from the front of the store or products sold separately from the pharmacy.
  • Over-The-Counter (Otc) Medications
  • Medicine that can be purchased without a prescription.
  • Pharmacy Benefit Manager (Pbm)
  • A third-party administrator of prescription drug programs.
  • Prescription Drug
  • A licensed medicine that can only be obtained with a doctor's approval.
  • Why buy this report?

    IBISWorld’s Industry Market Report on Pharmacies & Drug Stores in California is a comprehensive guide to market size and growth prospects. Ensure due diligence in your research with our strategic analysis of the factors influencing companies, including new product developments; economic, lifestyle and demographic influences; distribution and supply chain factors; and pricing issues.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Pharmacies & Drug Stores in California:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Pharmacies & Drug Stores in California market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Pharmacies & Drug Stores in California, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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