McLEAN, Va. -- The rapid growth of mail-order pharmacy has begun to slow, but its future remains bright.
That was the message delivered by Douglas Long, vice president of field services at IMS America, Plymouth Meeting, Pa., at the American Managed Care Pharmacy Association's annual conference held here in October.
Long reported the dollar volume of mail-order pharmacies grew 18.2% for the 12 months ended June 1994, accounting for 7.4% of the U.S. pharmaceutical marketplace. The segment's growth, however, was slower than its 23% surge for the same period the previous year. The performance of mail-order pharmacy has "been disappointing in a sense that it hasn't seen the [same] growth as from 1993. I'd characterize this as a pause-and-catch-the-breath situation," Long explained. "But mail order will still continue to grow throughout the decade, maybe not to the 20% [market share] some had forecast, but perhaps to 10% of the marketplace in the next five years," he predicted.
Supermarket pharmacies, said Long, are not growing as rapidly as mail order, but their dollar volume still rose 13.1% for the 12 months ended June 1994.
"Food stores with pharmacies have flattened out some because a lot of the prime locations have been picked over and now companies are going to smaller, more rural areas of the country," said Long.
Home health care was the fastest-growing segment of pharmacy, up 22.3% for the 12 months ended June 30, compared with the previous year.
Following that segment were miscellaneous (including dollar volume of prescriptions dispensed in prisons), up 22.1%; mass merchant prescriptions, up 21.3%; mail order, up 18.2%; pharmacies operated by clinics, up 17.3%; nursing homes, up 16.0%; staff model health maintenance organizations, up 14.8%; food stores, up 13.1%; chain drug stores, up 11.1%; hospital pharmacies, up 7.0%, and independent pharmacies, up 3.8%. Sales of the entire U.S. pharmaceutical market were up 10.8%, Long said, to $67 billion.
Chain drug, hospital and independent pharmacies continue as the three pharmacy segments with the greatest market share, though, said Long, accounting for 24.6%, 21.9% and 19.7% of the pharmaceutical marketplace, respectively.
"These are the big three," said Long, "representing over 60% of the business. But there are other categories starting to creep up."
Mass merchant and mail-order pharmacies, each with 7.4% of the market, and supermarket pharmacies, with a 7% share, make up the "mid-size and growing" segments of the marketplace, he continued.
As for the decrease in mail order's growth rate, Long said the biggest reason is related to the vertical integration occurring in the pharmaceutical industry.
"As an example, now that Merck owns Medco, they have less vested interest in moving some of those prescriptions to the mail-order class, and they're a little more balanced between mail and the retail segment."
Also, more plans now allow retail pharmacies to dispense a 90-day supply of maintenance medications for chronic conditions, said Long.
Mail-order pharmacies, however, are not ready for the endangered species list, said Long, particularly because nearly 80% of their customer base is age 51 or over.
"The aging of the population is a plus for mail service," said Long.
The retail pharmacy segment as a whole, including chain drug, independent, supermarket and mass merchant pharmacies, is losing some of its share in the overall pharmaceutical marketplace, Long said.
In 1994, the retail segment's share slipped to 58.6% from 63.8% of the marketplace held in 1988. Hospital pharmacy's share has also dropped to 21.9% from 24.6% over the same six-year period. Other pharmacy segments, however, including mail order, clinics and nursing homes, have gained ground and now account for 19.5% of the marketplace, up from 11.5% in 1988.