The market for limited medical care could provide a significant growth opportunity for public pharmacies, stated Standard & Poorâ€™s Equity Research.
In its semi-annual report released today, â€˜Supermarkets & Drugstores Industry Survey, the New York- based investment research firm believed public pharmacies' decision to roll out in-store clinics, staffed by nurse practitioners, were potential earnings driver.
Currently, 30 percent of the U.S. population does not have a primary care physician or the time to visit one. The in-store clinics represent a potentially viable, and lucrative, service offering. Pharmacies believe this service will lead to increased prescription sales and, more importantly, increased sales of higher-margin, front-end items.
â€œThe large public pharmacies believe they can differentiate themselves from their competitionâ€¦ by targeting the segment of the U.S. population that does not regularly go to the doctor,â€ said Joseph Agnese, Supermarkets and Drugstores Analyst, Standard & Poor's Equity Research Services. â€œThere is a good opportunity for the public pharmacies to significantly grow their business through this service offering.â€
Agnese, however cautioned the pharmacies saying there was also a significant operational risk to executing this strategy. The risks includes; sourcing and staffing nurse practitioners for the in-store clinics, potential malpractice liability and re-designing stores to include space for the new clinics.
CVS Corp was the pharmacy with the strongest potential to benefit from in-store clinics, according to S&P. The pharmacy was expected to roll out the concept in about 1,500 stores nationwide, which was further boosted by its recent acquisition of MinuteClinic, the largest retail based clinic operator in the U.S.
CVS had a history of successfully integrating acquisitions and instituting change through its store network strongly position it to benefit from this new service offering, stated S&P.