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Cardinal adds muscle to its Leaders

BY Jim Frederick

It may not make a lot of splashy business-news headlines, or wow retail experts with a single glitzy store design or merchandising concept, but with more than 3,000 independent drug stores under its banner, more than $9 billion in combined annual sales and the national marketing, merchandising and technological prowess of a powerful corporate parent behind it, Leader Pharmacies has earned its stripes as a quiet giant of pharmacy retailing.

Cardinal purchased Leader in 1987, shortly after its incorporation as a buying and marketing cooperative for independent drug store owner/operators. Since then, Leader has offered mom-and-pops and single-market pharmacy owners a unified brand and private-label umbrella, expertise in marketing and merchandising, multistore purchasing power and, not least, the promise of safe harbor in stormy economic times.

LEADER

Headquarters: Dublin, Ohio2009 sales: $8.7 billion% change vs. 2008: NA No. of stores: 3,100No. of stores with Rx: 3,100Avg. store size: 2,500 sq. ft.Rx sales: $7.6 billion% of sales from Rx: 87%Sales per store: $2.8 million

Source: Drug Store News

More than 3,100 Leader drug stores now operate in urban, small-town and rural markets, averaging upward of $3 million a year in sales per store, according to one Cardinal executive. Those stores “can take advantage of a vast array of marketing and support services,” the company reported. Armed with marketing support and a steady infusion of new, data-driven technology to streamline their ordering systems and make more intelligent decisions about pricing, purchasing and promotions, Leader owners have merged their strengths to become a widely recognized pharmacy brand.

Behind recent initiatives and sales-driving efforts at Leader is a more aggressive store-support policy from its parent company. Cardinal’s chairman and CEO George Barrett noted that the drug wholesale and health service giant has “made a commitment to rebuilding our retail independent customer base, which is showing early signs of success.”

In 2009, Barrett said, “we launched several exciting new programs to help our customers more effectively market their stores, improve the profitability of their front-of-store operations and provide value-added services through specialized care centers.” In addition, he said, “it will also be easier to do business with Cardinal Health through our commitment to investing in our information technology infrastructure that simplifies interactions with customers.”

Cardinal’s toolkit for Leader includes automated replenishment and pricing systems, exclusive branding programs and product lines, support for immunization programs and other clinical services.

Recently, Leader’s combined store network also is gaining more equal footing with pharmacy benefit managers, according to Cardinal executives, through the application of LeaderNET, a service aimed at putting Leader store owners on a more equal footing with PBMs. The program provides negotiating prowess and expertise, access to new niche markets, membership in a provider network and other services, according to Steve Lawrence, Cardinal’s SVP independent sales. “Customers who use all of our managed care services experience an average annual savings of $42,000 to $70,000 per year,” Lawrence asserted.

As one of retail pharmacy’s largest Pharmacy Services Administrative Organizations, LeaderNET manages network contracting and plan administration for independent operators in the United States, Puerto Rico and the Virgin Islands. The network gives Cardinal and Leader the power to negotiation prescription reimbursement rates with virtually all managed care networks in the United States, including more than 50 Medicare Part D plans, according to the company.

“In the past year alone, Cardinal Health has more than doubled the number of long-term care contracts it offers LeaderNET members,” noted a representative. “The company has recently added contracts for niche markets, including immunizations and 90-day medication supply programs. Cardinal Health also offers participating pharmacies access to a call center support team that can provide audit assistance and answer managed care, reimbursement and other general questions.”

Among the network’s other support services for Leader members:

LeaderOnline, a comprehensive, business-to-consumer Web site program “that makes it easy for Leader members to take their retail pharmacy directly to customers via the Internet,” according to Cardinal;

A broad promotional support system consisting of circulars, radio and television advertising and direct mail;

The Retailing RoadMap, which offers guidance and resources to bolster Leader pharmacies’ customer drawing power, boost inventory turns and make more intelligent decisions about front-end space allocation;

The Source generics buying program, recently upgraded by Leader’s parent company. “We have expanded relationships with our generic manufacturing partners to provide key benefits for our customers, as well as incremental value to both Cardinal Health and our generic partners,” the company reported. “We are committed to higher service levels, greater transparency on customer incentives and generic cost of goods, and a more consistent product supply with fewer market disruptions or product switches should manufacturer supply shortages occur;”

Trustworth, a line of home health products and durable medical equipment, and the expertise to maintain the business; and

MyPharmacyTrainer, a Web-based training program initially developed for Cardinal’s Medicine Shoppe franchise division, and designed to boost Leader owners’ ability to provide immunizations and to help patients with such conditions as diabetes manage their disease.

Cardinal’s toolkit for independents also includes the Leader brand private-label offering, which has grown to more than 670 OTC products that return average gross margins of 50% and feature satisfaction guarantees, according to the company.

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Schnucks’ O’Brien to serve on Department of Agriculture advisory committee

BY Alaric DeArment

ST. LOUIS An executive from Schnuck Markets will serve on an advisory committee of the Department of Agriculture, Schnucks said this week.

Agriculture secretary Tom Vilsack announced that Schnucks VP produce and floral Mike O’Brien would be one of 25 people appointed to a two-year term on the USDA’s Fruit and Vegetable Industry Advisory Committee. O’Brien is also vice chairman of the Produce Marketing Association.

 

“I am honred to represent Schnuck Markets and the retail produce industry as a member of this committee,” O’Brien said. “I am looking forward to the opportunity to contribute and to make a difference for families across the nation.”

The committee, originally chartered in 2001, advises the secretary of agriculture on industry issues related to fruits and vegetables.

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Gilead commences phase 3 trial for single-tablet HIV treatment

BY Alaric DeArment

FOSTER CITY, Calif. Gilead Sciences has started a late-stage clinical trial of an investigational 4-in-1 treatment for HIV, the drug maker said.

Gilead announced the initiation of a phase 3 trial of its “Quad” HIV drug, a single-tablet treatment that combines elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate. The study will compare the Quad regimen with the standard of care among adults with HIV-1 who have not taken antiretroviral treatments. The company is also investigating cobicistat as a standalone boosting agent for antiretroviral drugs.

“We are pleased to announce that the Quad phase 3 clinical program is underway,” Gilead EVP research and development and chief scientific officer Norbert Bischofberger said. “Efficacy and safety results from the phase 2 study suggest that the Quad may represent an important new option for patients with HIV.”

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