Companies in this industry sell prescription drugs, over-the-counter medications, health and beauty products, and general merchandise from physical retail locations. Major companies include Walgreens, CVS Health, and Rite Aid (all based in the US), along with Rexall (part of Canada's Katz Group) and Shoppers Drug Mart (also from Canada), China Nepstar (China), AS Watson (Hong Kong), Matsumoto Kiyoshi (Japan), Phoenix and Celesio (Germany), and Alliance Boots (Switzerland).
Global retail pharmacy sales are expected to reach $1.4 trillion by 2017, according to Lucintel. Growth drivers include the aging of the population and increased health awareness. North America, with about 40% of worldwide pharmaceutical sales, is the largest market, followed by Europe and Japan with about 25% and 10%, respectively.
The US drug stores industry includes about 45,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $250 billion.
Demand is driven by the aging of the US population, awareness of health issues, and advances in medical treatment. The profitability of individual companies depends on access to medical insurance groups. Large companies have economies of scale in purchasing and in access to large groups of customers. Small companies can compete effectively through convenient locations or special merchandising. The US industry is concentrated: the 50 largest companies generate about 70% of revenue.
Chain stores account for about 50% of the US retail prescription market, according to IMS Health. Mail services account for about 25%, independent drug...