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PWC on the Pharmacy of the Future

By August 10, 2016Commentary

Pharmacies derive much of their revenue and profit from items other than prescription drugs, many of which are not even health-related (cigarettes and candy might even be viewed as anti-health).  They have become the new version of the old 5 and dime store.  But many have also upped their ambitions in health care, seeking to provide a variety of services through walk-in clinics, call centers and other means.  A Price WaterhouseCooper Health Research Institute report gives its vision for what the drugstore of the future may become.   (PWC Report)   PWC properly notes that pharmacies are already the health services location that many consumers visit most, particularly those with multiple or chronic medical conditions.  And pharmacies are ubiquitous; in urban areas most residents are no more than a couple of miles from a pharmacy.  Pharmacies have faced pressure on the profitability of their core business of filling prescriptions.  All these factors combine to encourage a broader vision that includes a variety of health services.  PWC refers to this as the “hub of personalized health”.

PWC identifies a variety of additional services that drug stores could offer consumers.  These include more educational services, assistance with insurance issues, medication management, help with wearables and fitness devices, monitoring, etc.  PWC also emphasizes the importance of technological interfaces with consumers and on the back-end doing analytics to support creating a better and personalized customer experience.  Sounds good, but I am not sure it really is meaningful to consumers.  While it is undoubtedly the case that the large stand-alone pharmacy chains and the large retail store chains that include pharmacies, as well as many independent drug stores, are looking at expanding their health care reach, whether they can do so in a profitable manner is unclear.  The chains which have retail clinics, for example, have slowed down their growth and have generally reported that they aren’t profitable.  The clinics are attractive to consumers, but that doesn’t help much if you can’t make money operating them.  There is logic to the notion that a pharmacy can be a health care hub, but I think we are a long way from that happening in a profitable manner.

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