Report: Union, Mo., passes new PSE legislation
ST. LOUIS The St. Louis Dispatch on Tuesday morning reported that a second Missouri city, the city of Union, on Monday passed an ordinance requiring that pseudoephedrine products only be sold with a prescription.
The ordinance is effective immediately.
The prescription-only requirement for pseudoephedrine products is similar to legislation passed earlier this year in Washington, Mo. After coming under heavy criticism for passing such legislation, the Washington council considered repealing the ruling. However, on Aug. 3, the council voted not to repeal.
The Dispatch listed the Missouri Medical Association, Missouri Retailers Association and Missouri Pharmacy Association as opposed to the measure. They favor a statewide database that would track consumers’ pill purchases.
Beyond an inconvenience to consumers in these two municipalities, the ordinances raise a greater concern — whether or not local governments have the authority to decide what is prescription-only and what isn’t. The consequence would be the creation of a Byzantine pharmaceutical legislation matrix that would be both expensive and difficult for pharmacy retailers and their suppliers to navigate.
The Consumer Healthcare Products Association had begun negotiations with Kansas and Missouri state governments around bankrolling a linked electronic database. Once implemented, the database will tie Kansas and Missouri into similar databases in Arkansas, Oklahoma and Kentucky.
The systems are expected to go live late 2009 or early 2010.
On the state level, both Oklahoma and California are considering the reverse-switch of pseudoephedrine, in other words making the common decongestant available only with a doctor’s prescription, in an effort to stem methamphetamine production.
Rep. Lucky Lamons, D-Tulsa, Okla., announced plans to introduce the reverse-switch legislation in 2010.
Oregon is currently the only state that requires a prescription for pseudoephedrine products.
What game are you watching?
“So, who’s bigger—CVS or Walgreens?”
I was at the ECRM Disease State Management show in St. Petersburg, Fla., just a few weeks ago, when a supplier in one of our meetings asked me the question. It was a funny thing, really, and not just because CVS executives, that very day, were up in Little Canada, Minn., to celebrate the grand opening of the company’s 7,000th store; and not even because I knew that within a week, Walgreens would be cutting the ribbon on its 7,000th store. Or even because at the time, both companies already each operated more than 7,000 stores.
It’s because it really doesn’t matter anymore who has the most stores. That’s only one way to measure these companies—the stores are just one component of a much bigger healthcare play.
Think of it as a wheel: The stores are one spoke; the clinics are another; specialty pharmacy, another; mail-order, another; for CVS, a huge PBM is another; for Walgreens, a major presence in work-site care and home infusion is another spoke. The stores, in themselves, do not drive the wheel any more than any other single spoke on the wheel. Health care, and the delivery of it, is what drives the wheel. And that, ultimately, is how these two companies will come to be measured.
Just listen to what the leadership of these two companies has to say about it. Walgreens talks about leveraging 8,000 points of care. “With that foundation, we’re taking Walgreens directly to employers, government entities, managed care companies and PBMs,” Walgreens president and CEO Greg Wasson told analysts during a Sept. 28 earnings call. Its new deal with Caterpillar is a prime example of that.
So, who’s bigger? For the record, Walgreens was at 7,042 stores the day it celebrated in Brooklyn, N.Y. As of the date of this issue, CVS had 7,017 stores.
But if that’s the way you’re keeping score, you’re watching the wrong game, my friend.
Shoppers to add retail space, new concepts
TORONTO —Pushing back forcefully against an economy still struggling to regain its momentum—and capitalizing on the steep drop in real-estate prices spawned by that struggle—Canada’s largest chain drug store brand aggressively is building, expanding and relocating drug stores.
The expansion campaign marks a bold bid by Shoppers Drug Mart to position itself for the eventual recovery that will come to Canada, which has been hard-hit by the worldwide recession. Shoppers president and CEO Jürgen Schreiber outlined the company’s plans at a retail investment conference sponsored by Scotia Capital Sept. 22.
Shoppers will expand or relocate more than 60 stores in 2009, Schreiber said, and another 71 next year. The chain also will continue to build new stores, with a particular focus on western Canada and Quebec province, both of which he said are “under-represented” by the Shoppers brand.
The company also will continue to dense up in the nation’s top 10 urban markets, Schreiber told analysts. Noting the company’s “strong balance sheet and cash flow,” the CEO said the store-construction and acquisition campaign would be “largely financed with operating cash flow.”
As of the end of the second quarter, Shoppers’ sales were up 8.5% year-to-date, with same-store pharmacy sales growing 5.7% and revenues up 4% at the front end. In spite of the recession, Shoppers also grew its net earnings 6.9% over the same period last year, to $243 million Canadian.
Shoppers has worked steadily to boost both its store count across Canada and the size of its stores. Since 2002, the company has grown from 844 drug stores averaging 6,900 sq. ft. to 1,119 stores at the end of 2008, averaging 9,400 sq. ft. As of September, Shoppers operated 1,191 drug stores and 66 home healthcare outlets coast to coast, easily making it the nation’s largest single drug store chain. (Katz Group Canada owns more than 1,800 drug stores across Canada, but it operates under a variety of banners.)
Underscoring Shoppers’ determination to position itself for the next economic recovery, Schreiber pointed to an accelerating growth rate in retail square footage. In 2008, the chain grew its square footage by 11.9%, compared with a growth rate of 6.4% in 2002.
The chain also is pursuing new formats. Among them: Murale, a new beauty store concept featuring what the company described as “an unprecedented assortment of luxury, dermatological, fragrance and niche brands from around the world.”
“Murale is unlike any other beauty offering in North America with its unique combination of leading beauty and dermatological products, and professional, expert services and consultation,” Schreiber said.
Shoppers has opened three of the new-concept beauty stores, including its newest unit, which opened in Toronto Sept. 4. The concept is “performing in line with expectations,” Schreiber said, and four more Murale stores will open this fall.
The company also has unveiled another new concept, Shoppers Simply Pharmacy, which company representative Tammy Smitham described as “a 1,000-sq.-ft. format located within medical buildings and adjacent to medical clinics.” Shoppers now licenses or owns more than 32 of the medical clinic pharmacies, with more on the way.
Shoppers also is ramping up in other ways. More than 400 of its units across Canada are now open to midnight or 24 hours, and full-scale convenience foods departments are now offered in more than 600 Shoppers stores. Nearly 600 stores also provide postal service.
Responding to what Schreiber acknowledged is a “flat” market for in-store photo services and the continuing need to upgrade the stores’ appeal, Shoppers also is embarking on a program to transform the photo departments in its stores to a “services corner” that features a broader array of customer services, the executive said.
“Shoppers is about service, and service areas are winners,” Schreiber said. Such ancillary categories as cameras, batteries, games and accessories continue to perform well at the photo department, he added.
Schreiber sees plenty to like in Shoppers’ future. Among the company’s strengths driving sales, he told analysts:
Shoppers is “uniquely positioned in the marketplace” with a “core offering focused on health, beauty and convenience. We continue to gain share in a growing market,” he noted.
The chain’s Optimum shopper loyalty card has enrolled 9.7 million active cardholders and added a new, co-branded credit card offering in partnership with MasterCard. Optimum now accounts for 65% of all scanned customer transactions, according to the company, and cardholders are growing their shopping baskets at a faster rate than those not participating in the Optimum program, Schreiber said.
Like their American counterparts, Canadian consumers have been hit hard by the recession. But they’re stocking up on Shoppers brand products and treating themselves to “small luxuries” in the stores, Schreiber said, adding that the dismal economy has been “good for private label,” as consumers have become “price-sensitive and promotion-driven.” What’s more, he added, the consumer “loves Optimum more than ever.”
Shoppers has expanded its lineup of prestige beauty and skin care products, with the addition of 15 more prestige brands in 2009, bringing to 117 the total number of high-end items in the beauty and dermatology departments of the store. Shoppers now operates Beauty Boutique departments in more than 200 of its drug stores, with 30 more planned by the end of the year. That gives the chain “more points of distribution than department stores combined” in Canada, Shoppers’ CEO said.
The company’s stake in the total Canadian pharmacy market continues to climb, IMS Health reported, from slightly more than 18% of total prescriptions sold in 2003, to nearly 20.3% as of July 2009.
Shoppers’ market share also has grown steadily for categories sold at the front of the store, according to AC Nielsen, with the chain now accounting for a 14.9% share of total market.
Canada’s population continues to age as more baby boomers enter the years of high prescription drug utilization. The number of Canadian seniors ages 60 to 79 is projected to rise from 5.1 million in 2008 to 8.7 million by 2026, Schreiber said.
By 2011, Canada’s total retail prescription sales are projected to rise to $25.1 billion from $21.5 billion in 2008, according to Shoppers’ president.