Merlo to investors: CVS Health is at ‘forefront of changing healthcare landscape’
WOONSOCKET, R.I. — What is the CVS Health competitive edge? To answer that question, CVS Health president and CEO Larry Merlo took the stage Wednesday during the UBS Global Healthcare Conference, a three-day conference in New York City that brings together investors and more than 200 companies across a variety of healthcare sectors.
During his presentation, which was webcast, Merlo provided a recap of the CVS Health business and shared what he believes sets the company apart from rivals.
Kicking off his remarks, Merlo revealed that the PBM business has more 71 million members, with about 25% share of the U.S. PBM market. This year, the company expects operating profit for the PBM segment to be about $3.8 billion, which represents growth of more than 70% since 2011.
The 2015 selling season proved successful as the company won $7.5 billion in gross new business. Net new business for 2015 totals just over $4 billion. Meanwhile, the 2016 selling season is off to “a good start.”
It comes as no surprise that Merlo sees the specialty pharmacy market growing “dramatically,” climbing from $86 billion in 2014 to more than $150 billion by 2018. With the growth will come challenges for clients looking to control spend and for patients looking for greater access to cost-effective solutions.
“When we meet with clients by far and away their biggest concern is the accelerated growth in specialty pharmacy spend,” Merlo said, who noted that the company has been in the specialty business for more than 35 years. “Again, we are well positioned to help manage this trend through our broad specialty capabilities. Those capabilities have led us to become the largest specialty pharmacy in the United States, dispensing about 25% of all specialty scripts.”
Merlo noted that the company generated about $31 billion in enterprise specialty revenues last year, which is expected to grow to about $37 billion this year.
Merlo also stated that company’s retail pharmacy business continues to enjoy strong growth.
“Our growth is outpacing the market as we have not only grown faster than the overall retail market but nearly three times faster that other drug chains,” Merlo said.
Then there’s MinuteClinic, the company’s retail clinic business, which has nearly 1,000 clinics in 31 states and District of Columbia. The goal: to operate 1,500 clinics by 2017.
As previously reported by Drug Store News, CVS Health is not only focusing on expanding MinuteClinic’s geographic footprint but also its scope of services to include chronic condition monitoring and wellness programs. Meanwhile, the company has established affiliations with more than 50 major healthcare systems nationwide.
“That has enabled us to further expand our platform that supports primary care both conveniently and cost effectively,” Merlo said.
Looking ahead, CVS Health, which considers itself to be at the forefront of a changing healthcare landscape, will continue to deliver breakthrough products and services, Merlo told investors.
“We are the only company that has the ability to impact consumers, payors, providers with innovative, channel-agnostic solutions. And our unique products like Maintenance Choice, Pharmacy Advisor, and now Specialty Connect, they remain unmatched in the marketplace,” Merlo told investors. “We have broad and deep specialty capabilities. We are a leader in that space, providing unmatched tools to holistically manage the specialty patient. We have unrivaled scale and expertise, which allows us to be a low-cost provider. Additionally, I mentioned that we are the largest retail clinic provider and the only PBM that can offer reduced or zero co-pays at MinuteClinics, again providing high-quality, cost-effective care in driving down the overall healthcare costs for payors. And finally our robust suite of assets combined with our deep clinical expertise enables us to deliver superior outcomes at lower costs.”
Staring cockeyed into the future
“When Opti-Grab came out, I thought it was the greatest thing ever. And I bought a pair. And this is the result, ”a badly cross-eyed Carl Reiner says during his mock press conference in Steve Martin’s 1979 comedy classic “The Jerk.”
“This little handle is like a magnet. Your eyes are drawn to it, and you end up cockeyed.”
I remember thinking about that scene when I first heard about Google Glass a few years ago. Like the little handle Navin R. Johnson solders on to the bridge of Stan Fox’ glasses to keep them from slipping off his face, it seems like a great idea until Carl Reiner winds up on national TV announcing a $10 million class action suit against you.
Don’t get me wrong — particularly, any of you lawyers over at Google. I am not saying Google Glass is going to make you cross-eyed. But let’s just say I wouldn’t want to find out the hard way.
It’s just too much to look at less than an inch from your eyeball — kind of like when I was a kid and I thought it was a good idea to see movies like “Star Wars” in the front row of the theater. It’s just too much.
Which is kind of how I feel about the Apple Watch, too. Again, don’t take this the wrong way — particularly, the legal department in Cupertino this time — but it’s just an awful lot to pack into a screen that only measures 1.49 inches diagonally.
I think there is a big future for wearable technology, particularly as it relates to health care. But I am not convinced that watches or eyeglasses are the right application.
I know that the technology is going to continue to evolve at an alarming rate. I understand that the lousiest smartphone you can find is smarter than the computers that guided the Apollo moon landings.
And for that kind of money, I think a watch needs to look good. I am not alone. According to a survey of more than 1,000 consumers conducted by Carlisle & Gallagher, 53% say a wearable device should “look attractive.”
Smaller isn’t necessarily better when it comes to a watch face, but we are probably not too far off from the device itself to be able to self-contain into your watchband — or even just the buckle.
Frankly, if I am spending $10,000 for a watch, it better be a Breitling.
Hey, a guy can dream can’t he?
DSN, Mack Elevation launch New General Market platform
The New General Market Leadership platform — a Drug Store News and Mack Elevation Forum co-produced industry platform — kicked off before NACDS Annual Meeting with a special reception featuring guest speaker Michael Yormark, president of Jay Z’s Roc Nation. Yormark’s talk, “The Power of Authenticity and Experience in Reaching Today’s Diverse Consumer,” explored why real consumer intimacy and authenticity are core to creating an “emotional connection” with today’s consumers.
Yormark’s presentation was introduced by Rich Dennis, co-founder and CEO of Sundial Brands, a leader and pioneer in identifying and responding to this cultural shift, and a core partner in the development of the New General Market platform. Dennis shared Sundial’s history and vision for creating products for diverse consumers based on unique, unmet needs; focusing on fair trade practices, natural and certified organic ingredients; and doing business under the model of community commerce, sourcing ingredients from seven women’s co-ops in Northern Ghana.
The New General Market Leadership platform was developed behind a mission to bring together leading companies that have demonstrated commitment to building a strong community and thought leadership with a diverse consumer base.
Next up, the program heads to Chicago on May 27, for an exclusive one-day industry forum aimed at helping leading CPG companies forge strong, emotional connections with today’s changing New General Market consumer. Hosted by Drug Store News and Mack Elevation Forum, the one-day forum will include a presentation from Sundial’s Dennis and Walgreens GVP/GMM for beauty and personal care Shannon Curtin, on their companies’ shared vision for connecting with today’s New General Market Consumer. In addition, the May 27 forum will focus on eight key pillars:
- Identifying the New General Market — who are they, how do they think and what are their unmet needs?
- More than just diversity of color or race, the New General Market is about diverse views.
- How millennials are influencing and inspiring the New General Market.
- Rethinking the in-store experience, product groupings and activation.
- Creating authentic brand communities with the New General Market.
- Building cultural competency and influence in a changing world.
- Creating an holistic brand investment strategy with the New General Market.
- Measuring success with the New General Market.
“We have brought together companies who are very open and have built relationships with consumers based on their aspirations and values — not just their demographic profile,” said DSN publisher Wayne Bennett.
Mack Elevation Forum managing director Dan Mack added: “We hope to spark a conversation with the industry … sharing how some of the top brands are building authentic, emotional relationships with today’s changing consumer and the in-store implications, product groupings and activation that are a part of that.”
Participating companies include Sundial Brands, Beiersdorf, Paris Presents, Wahl Home Products, Unilever, Fleet, Hello Products, Mentholatum, Kao Brands, Ansell, Combe, Dentek and others.
The collective insights from the forum will be summarized in a series of special DSN reports.