III. Industry Analysis
The Pharmacy industry experienced steady revenue gains, as the number of people with private health insurance increased, resulting in more prescription medications being filled. Moreover, the burgeoning elderly population boosted industry growth, as this consumer bracket generally requires medication to address chronic ailments, resulting in steady revenue streams. As a result, industry revenue is expected to increase an annualized 1.6% over the next five years.
This anticipated growth will follow many operators expanding their stores’ services to include preventive care options and additional front-end offerings. Additionally, as the number of insured individuals is expected to remain high, individuals will continue to experience low out-of-pocket costs and easier access to prescription medications. As conditions for the industry continue to improve, average industry profit is expected to stabilize and rise marginally.
Competition within the industry largely comes from online pharmacies and big-box retailers. In response to the growing external threats, many larger players started offering online and mail prescription services to combat growing competition from outside the industry. Additionally, many large players are adding general health services to their establishments, in hopes of making their stores closer to a one-stop health shop. These stores include more niche and specialized equipment, such as sleep apnea machines, and are expected to offer ancillary health services, such as screenings and a significant number of immunization shots. This is causing operators to diversify and expand their offerings.
