CVS unveils specialty pharmacy pilot on heels of strong Q1 results
WOONSOCKET, R.I. —CVS Caremark is piloting a specialty pharmacy program in Florida that would enable customers to pick up specialty pharmacy prescriptions in any CVS store in the state—a move that not only speaks to the importance of the fast-growing segment in pharmacy, but also provides a glimpse into the future of how the traditional drug store can participate in specialty pharmacy. The news came as the company delivered solid first-quarter results fueled by the success of its Maintenance Choice program.
“It’s about access and it’s about ease and it’s about low cost, so you have a situation where typically you’d have to call to make sure someone was home as we’re delivering this medication because of the storage requirements, etc. Now they can pick it up in the store,” Tom Ryan, chairman, president and CEO, told analysts during the May 5 first-quarter conference call when asked about the growth of specialty pharmacy and the progress of the integrated specialty management program.
Specialty is the fastest-growing piece of the pharmacy business, said Ryan, and he expects that, overall, specialty will grow in the 14% range. However, facilitating a specialty pharmacy business in a typical community pharmacy setting has been extremely tricky for several reasons, including the cost of inventories and the high-touch patient requirements.
The hub-and-spoke model that CVS is piloting is a glimpse into the future in terms of how the average corner drug store will be able to participate in specialty pharmacy. This participation could manifest as a central-fill type model—such as what CVS is employing, where it will leverage its CarePlus stores and its resources in Caremark to fill specialty prescriptions through its Florida stores—or through some outside network. CVS Caremark also is leveraging its MinuteClinic business, and recently launched injection training around specialty pharmacy, Ryan noted.
The specialty pilot program model is similar to the company’s Maintenance Choice program launched in 2008. Maintenance Choice allows consumers to purchase chronic 90-day prescriptions at CVS stores for the same price as mail, and has proven to be quite successful and profitable to the overall enterprise.
As of April 1, there were more than 200 clients taking advantage of Maintenance Choice, and the feedback has been “extremely positive.” Dave Rickard, EVP and CFO, added that, “Maintenance Choice had a positive effect on our retail comps, benefiting pharmacy comps by approximately 120 basis points and total comps by approximately 80 basis points.”
“CVS Caremark is getting good traction with its differentiated 90-day at retail offering; they are providing a new metric called Mail Choice, which looks at the growth of 90-day scripts whether they are filled at mail or retail. In 1Q09, this metric rose 6.6%, while mail-order scripts rose only 2.6%,” noted Barclays Capital analyst Meredith Adler.
The initiative is one of several the company currently has underway. At the front of the store, it is introducing a new store-brand, proprietary “try me” section in more than 4,500 stores and is adding more private-label products to the mix in an effort to bolster private-label sales and attract new shoppers to the segment.
Revenues in the pharmacy services segment rose 7.2% to $11.5 billion for the first quarter ended March 31. Revenues in the retail pharmacy segment increased 13.9% to $13.5 million. Same-store sales increased 3.3%, while pharmacy same-store sales rose 4.6%. Front-end same-store sales increased 0.7%.
CVS opens Beauty360 No.3 in one of its original Project Life stores
NEW YORK — If anyone thinks that CVS has recast itself solely as a healthcare company, given its string of acquisitions in recent years — particularly, Caremark and MinuteClinic — they probably haven’t seen a Beauty360 store yet. In fact, standing in the middle of one of these 3,000 sq.-ft., high-end beauty boutiques, you might have a hard time recognizing you were in a CVS store at all.
Beauty360 is the culmination of the long-time vision and an awful lot of hard work on the part of several key individuals, most notably, CVS’ top merchant Mike Bloom, VP beauty merchandising Cheryl Mahoney, senior beauty category manager Mary Lou Gardner and Mike LePage, director, retail innovations and store design. Importantly, it is also a very bold statement that, for as much energy as CVS Caremark devotes to driving solutions that save lots of money for big payers of health care, it is very much still focused on its stores, and using other areas beyond health and wellness to spark innovation and create reasons for customers to shop their stores.
You want to talk about growing the market basket? How about adding a whole other basket? With prices on many items topping $100, Beauty360’s contribution to overall store profitability is palpable. According to CVS executives, sales in the two other locations the company operates in Mission Viejo, Calif., and Washington, D.C., are well ahead of expectations.
And why wouldn’t they be? No woman in her right mind, with at least a minute or two to spare, isn’t going to check out Beauty360 — particularly in the ritzy neighborhoods the chain is putting the stores in. The average household income in Mission Viejo is roughly twice the national average; in terms of shopping, Fodor’s calls Dupont Circle “a younger, less staid version of Georgetown — and almost as pricey”; and the newest Beauty360 in Ridgefield, Conn., is surrounded by seven-figure homes. Bloom says CVS is planning to a whole bunch of them into the former Longs stores it is currently converting, which includes many more posh areas to pick from.
With just 30 of the stores planned by the end of the year, and about 50 by this time next year, it likely will be a while before the impact of Beauty360 begins to be seen in CVS’ earnings. In the meantime, you can expect sales per square foot to balloon in the stores that share a roof with a Beauty360.
Beauty360 is an important message to its competitors that CVS hasn’t forgotten about the importance of creating excitement in its stores.
SDI launches iPhone, iPod application for allergy sufferers
NEW YORK The addition of SDI’s Pollen.com allergy applications to the growing number of iPhone/iPod touch-friendly, health-related applications is just the latest example of how an e-health evolution is more and more becoming a part of America’s daily lexicon.
Already, there are more than 100 health-related applications available for the Apple products, including FDA for iPhone and WebMD Mobile. According to Apple COO Tim Cook, those apps are available to some 37 million users — that’s how many iPhones and iPod touches are currently on the market.
Concerned about what exactly those food additives in your favorite snack are? There’s an app for that. Worried about your blood pressure or heart rate? There’s an app for that. Want to know what your blood-sugar level means? There’s an app for that, too.
Indeed, while SDI was preparing for its official Pollen.com iPhone app launch, two Northwestern University teams took home the top two prizes awarded in the Diabetes Mine Design Challenge last week. The challenge? Develop an iPhone app that diabetics could use to help manage their condition.
Next month, Apple plans to release an updated iPhone 3.0 with support for Bluetooth-enabled medical peripheral devices, like Johnson & Johnson’s LifeScan glucometer. And while Apple is updating its iPhone capabilities, Palm will be introducing its Palm Pre, slated to debut June 6 on the Sprint network. The Palm Pre is expected to give Apple’s iPhone a run for its money, but at the very least, it’ll open the door of health-related mobile apps to that many more users.