The Pharmacy Industry: An Analysis Of The Pharmacy Industry

Maria Fernanda Brenes

4750370

CVS in 2015

The pharmacy industry is structured in four major segments: Institutional pharmacies, which distribute drugs for inpatient use in hospitals or long-term health facilities; Retail pharmacies, which fill prescriptions for individual customers in physical stores; Mail order and specialty pharmacies, which permit the patients to have access to larger doses of prescriptions or provide drugs and similar services for specialized medication regimes; and pharmacy services, which gives prescription drug benefit management programs to different government entities, health insurers and large employers. This industry began when benefits of separating prescriptions of medicines from dispensing the drugs were seen.

They employed a good unused resource capacity and had a good economy of scope. They, through one company, offered many resources and services to its customers, making the cost to produce those services more effective than if they have done it separately. Also, by adding so many services within the pharmacy industry, CVS created good synergy between the company and to their customers, where they could get valuable services through one company instead of having to look for them among different companies. Because CVS purchased a big number of already existing companies working in different segments of the pharmacy industry, they were able to put their shared knowledge in the field and, therefore, created more value for the customer. CVS's business model when merging with Caremark was well developed as it took them to be a market leading competitor in the retail and segment of the industry. This move enabled CVS to create value among this merge and to their customers. CVS made some moves in their internal capital market when they purchased soma.com for example, because that purchase was thinking in the future and how there was going to be a dot-com "on the bottom of three-quarters of a billion bags". This was an investment in the business that had a potential growth in the company in the future. CVS's acquisitions throughout the years were "short hops" to a bigger picture in the pharmacy industry. The stepping-stone set the company in a position where it acquired new services to their customers, better technology and an overall growth in the company. Due to CVS's acquisitions, fast expansion and diversification, they were able to obtain the number one place in the pharmacy industry's market even though Walgreens was behind them. Their attainments kept them one step ahead of their competitors. And finally, CVS kept up with the technology developments when purchasing soma.com, an online pharmacy as previously