Competition will rise as more companies enter the industry for their share of rising revenue
Los Angeles, CA (PRWEB) March 20, 2013
The Pharmacies and Drug Stores industry is growing. Revenue growth is determined by health expenditure, disposable income, the number of people aged 65 years and older, and external competition. During the five years to 2013, industry revenue has grown at an estimated annualized rate of 2.6% to $33.3 billion, including anticipated growth of 2.9% in 2013 alone. Sustained increases in health expenditure, rising disposable income and an aging population have underpinned this growth. “The recession that started in 2008 and continued through 2009 did not hinder the industry; the majority of industry revenue (about 65.0%) derives from prescription and nonprescription drugs, which are typically considered essential goods. Therefore, even during times of weak economic activity, demand for the industry remains stable,” says IBISWorld industry analyst Anna Son.
Although industry demand has risen during the past five years, health expenditure has grown at a slower rate. In 2013, provincial and territorial government health expenditure is expected to grow 3.4%, the lowest increase since 1997, according to the Canadian Institute for Health Information (CIHI) and IBISWorld estimates. “The slowdown in healthcare spending is a result of governments trying to control rising healthcare costs,” says Son. According to CIHI data, Canada has the second-highest per capita drug spending among eight comparative Organisation for Economic Cooperation and Development (OECD) countries. The Pharmacies and Drug Stores industry has a moderate level of market share concentration. In 2013, the largest companies include Shoppers Drug Mart, Katz Group Pharmacies Inc. and Jean Coutu Group PJC Inc. Over the past five years, market share concentration has remained relatively stable. That said, larger companies have been able to gain market share through mergers and acquisitions. For example, in 2012, major player Katz Group Pharmacies acquired Ontario-based Dell Pharmacies. According to the Chain Drug Review, a chain drug store industry news publication, organic growth, store closings or share losses by weaker chain and independent (i.e. non-chain) stores will generate the majority of market share gains over the next five years.
Revenue is projected to continue expanding during the next five years, with health expenditure and per capita disposable income expected to continue rising. As a result, a greater number of companies are likely to enter the industry; over the same period, the number of industry operators is expected to increase. Despite this expansion, competition from alternative retailers will remain a key feature of the industry. For more information, visit IBISWorld’s Pharmacies and Drug Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry retails a range of prescription and over-the-counter medications, health and beauty items, toiletries and consumable goods directly to consumers on a walk-in basis. Industry companies may also provide basic health and photo processing services. The industry includes retail stores with a pharmacy, but excludes mail-order and online retailers, hospitals and clinics.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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