Operators are entering the industry to capitalize on positive upstream trends
New York, NY (PRWEB) February 19, 2015
The Pharmacy and Drug Store Franchises industry is composed of operators that retail to customers a range of prescription and over-the-counter medications, beauty items, toiletries and consumable goods. Operators in this industry are not independent pharmacies or drug stores. They are retail locations that operate under franchise agreements that dictate the terms and conditions under which these retailers market themselves and operate. Over the past five years, the industry has undergone vivacious growth.
A large number of franchisees have joined the industry in an attempt to capitalize on a number of positive upstream trends that are driving demand for pharmacies and drug stores nationwide. For example, healthcare reform has increased the number of Americans with private health insurance; the number of adults aged 65 and older, the industry's largest demographic, has grown considerably over the past five years; per capita disposable income has increased over the period; and federal funding for Medicare and Medicaid has exhibited robust growth as well. According to IBISWorld Industry Analyst Farrell McKenna, “though industry growth has been robust, franchisees have still contended with rising external competition from national retail chains and big-box merchandisers, as well as cost pressures from Pharmacy benefit managers (PBMs).” These factors are expected to hinder future growth for the industry.
Over the five years to 2020, the Pharmacy and Drug Store Franchises industry is expected to grow at a more muted rate. “The underlying positive trends that drove industry growth over the past five years will continue to be a boon for industry operators,” says Mckenna. However, the leading franchisors, McKesson Corporation and Cardinal Health, which have exhibited explosive growth in recent years, are expected to reach a point of relative saturation in which it becomes increasingly difficult to compete amid rising costs from PBMs and price-based competition from big-box retailers and national pharmacy chains.
For more information, visit IBISWorld’s Pharmacy and Drug Store Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
The Pharmacy and Drug Store Franchises industry retails a range of prescription and over-the-counter medications, beauty items, toiletries and consumable goods directly to consumers. Reports in our Business Franchise collection focus solely on the operation of franchised outlets and exclude non-franchise data. They show the total number of franchise outlets, total franchise revenue and the average profit margin earned by franchisees. Our reports also highlight the largest franchisors by market share.
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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