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Farmacia Remedios eyes doubled store count

BY Doug Desjardins

LOS ANGELES —Independent pharmacy chain Farmacia Remedios has ramped up expansion in California, and will more than double its store count in 2008, including its first pharmacy inside a supermarket and another that features all-natural products.

All and all, it’s been a busy year for the small but growing chain, which opened its second Southern California store in Long Beach in July, and has three more on the way.

“We’re going to open our 10th store in Santa Ana on Aug. 29 and have stores due to open in Bell Gardens and El Monte by the end of the year,” said president Ben Singer. “We’ve been very busy.”

The chain operates small, 4,500-square-foot stores in Hispanic neighborhoods. All of its stores feature bilingual signage—with Spanish on top and English below—and bilingual pharmacists and employees.

“About 90 percent of our customers are Hispanic,” said Gregory Tertes, pharmacy director for the Farmacia Remedios store in East Los Angeles, which opened in November 2007 and marked its Southern California debut. The stores currently generate about 55 percent of their revenue from prescriptions, and Singer said mature stores are expected to produce $2.5 million in total sales per year.

While Los Angeles is a key market for Farmacia Remedios—it has the largest Hispanic population of any city on the West Coast—the chain continues to expand in the Bay Area where it started out. It has stores in Oakland and San Francisco, and four stores in San Jose, including one that opened in May inside a Hispanic supermarket called Suvianda, a small chain it hopes to grow with in the future.

“So far, that store is not producing as much traffic as we would like, but it’s an idea we wanted to test and we’ll continue to work on it,” said Singer of the store-within-a-store format.

The chain is also testing an experimental store that sells all-natural products and homeopathic medicines. The 1,500-square-foot store that opened in Redwood City in April is also its first without a pharmacy. “There’s no prescriptions, and it specializes in natural products, herbal remedies and vitamins and supplements,” said Singer. “It’s something different and we’re going to give it a try.”

Like other pharmacy chains in California, Farmacia Remedios is dealing with fallout from the state’s 10 percent cut on Medi-Cal reimbursements, a ruling that’s still being challenged in courts.

“We’ll be affected by it like everyone else, but not to the same degree, since we have a very high count of cash customers,” said Singer.

That’s because a large percentage of its customers have no health insurance, a trend that’s evident at its walk-in health clinics operated by QuickHealth. The clinics are a standard part of Farmacia Remedios stores and offer a slate of services common at most walk-in clinics.

“We’re serving a market of uninsured consumers,” says QuickHealth president David Mandelkern. “Hispanics in California are twice as likely to be uninsured as non-Hispanics.”

Farmacia Remedios plans to double its store count again in 2009 with 12 planned openings, and is generating interest among private equity firms looking to invest in a new retailer with potential. “We’ve had conversations with several private equity and investment firms,” said Singer. “And it’s something we may look into if we want to ramp up expansion.”

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Court rules against Watson in Naprelan case

BY Drew Buono

CORONA, Calif. The United States District Court for the Southern District of Florida ruled that Watson Pharmaceuticals’ naproxen sodium extended-release tablets, a generic version of the pain medication Naprelan, infringes the brand drug manufacturer’s patent, Watson announced Wednesday.

Elan initially brought the suit in October 1998 after Andrx filed an application for a generic version of the drug. In March 2002, the District Court ruled that Elan’s ‘320 patent was invalid. Watson acquired Andrx in November 2006.

In May 2004, the United States Court of Appeals for the Federal Circuit reversed the District Court’s finding of invalidity and remanded the case for further proceedings. In January 2005, Elan filed a related case against Andrx in the United States District Court for the Southern District of Florida alleging that Andrx’s generic drug infringes the patent and is seeking damages for willful infringement. In late 2005, the parties completed briefing the District Court on the validity of the patent and whether Andrx’s product infringes it, and the matter has been under submission to the District Court since then.

Watson said it intends to appeal the ruling.

Watson’s naproxen sodium tablets had sales of $4 million over the year ending June 30, according to IMS data.

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Medicare officials predict lower 2009 Part D costs than expected

BY Alaric DeArment

WASHINGTON Monthly premiums for Medicare’s Part D prescription drug program next year will be lower than expected, Medicare officials announced Thursday.

Based on bids submitted by Part D plans, the Centers for Medicare & Medicaid Services estimated that the average monthly premium that recipients will pay for standard Part D coverage will be $28 – lower than the $44.12 predicted in 2003.

At the same time, it is $3 more than the premium for this year, mainly because of rising drug costs and higher plan estimates for catastrophic coverage and the phase-out of a CMS demonstration project.

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