Say Hello to the 12 Fastest-Growing, Private Specialty Pharmacies

Back to work! Time to check in with the new Inc. 5000 list, Inc. magazine’s ranking of the 5,000 fastest-growing private companies. Once again, the list highlights the boom in specialty drug dispensing.

The 2013 Inc. 500 list, which is based on 2012 revenues, includes 12 specialty pharmacies. The pharmacies and their key stats are listed below, along with recent specialty forecasts. Diplomat Pharmacy again topped the specialty pharmacy list, with revenues of $1.1 billion, up 42% vs. 2011. The other 11 pharmacies had total revenues of $1.3 billion.

Pay attention: these companies are the vanguard of tomorrow’s pharmacy industry.

THE DATA

The 2013 Inc. 5000 list ranks companies based on percentage revenue growth from 2009 through 2012, shown as “3-Year % Growth Rate” in the table below. To qualify, companies must be based in the United States, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2012. Companies must also apply to be considered, so secretive or shy specialty pharmacies do not appear on the list.

The Inc. 5000 lists 355 companies in the “health” industry. Based on the magazine’s company descriptions, we identified 12 companies whose primary business is dispensing specialty pharmaceuticals. Note that some of these companies have other revenue sources.

THE TOP TEN

The table below lists the 12 independent specialty pharmacies on the 2013 Inc. 5000 list. You can review last year’s list here: The 13 Fastest-Growing, Private Specialty Pharmacies.

Fun facts about the specialty pharmacies on the 2013 list:

• The average 3-year revenue growth rate of these 12 pharmacies is 352%. All but three of these companies were founded more than 10 years ago.

• URAC, the most widely recognized accreditation organization, reports that 6 of the 12 companies have “Full Accreditation” or are “In Process.” Visit the URAC Directory of Accredited Companies and search for “Specialty Pharmacy Accreditation.”

• Compared with last year’s list, there are three new companies on the 2013 list—HealthStat Rx, PharmaHealth Specialty Pharmacy, and TNH Pharmacy II. These companies replace four smaller pharmacies that appeared on last year’s list.

• Axium Healthcare Pharmacy, which appeared on last year’s list, was acquired by Kroger and is no longer eligible for inclusion. See Kroger Makes a Big Specialty Pharmacy Play. 

• In 2012, Diplomat grew an eye-popping 42%, due partly to its innovative Retail Specialty Network (RSN). Under the RSN program, retail pharmacies rely on Diplomat for such specialty pharmacy services as prior authorization, adherence calls, copay assistance, injection training coordination, and pharmacist consultations. Diplomat’s retail clients include Fred’s, Safeway, and Target. This arrangement constitutes one of the 5 primary ways that retail pharmacies are participating in the specialty market. For more, see my Pharmaceutical Commerce article Managing the specialty pharmacy channel's evolution. 

• Many smaller pharmacies appear to be focusing on specialty products in open distribution. Any licensed pharmacy can dispense a specialty drug as long as the product can be purchased from a manufacturer or through an authorized wholesale distribution channel. Unlike specialty products in a limited pharmacy network, almost all pharmacies have access to open distribution products, because they can be purchased from a full-line wholesaler.

FYI, our chart above updates Exhibit 13 (on page 21) of the 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies.

THE SHIFT TO SPECIALTY

Revenues in the pharmaceutical industry will shift from traditional brand-name drugs to specialty drugs over the next few years. A few tidbits from recent Drug Channels articles:

• Spending for specialty drugs continues to grow at 15% to 20% annually. See Insights from the 2012 Express Scripts Drug Trend Report. 

• By 2018, 6 of the 10 best-selling drugs by revenue are projected to be specialty drugs, compared with 3 drugs in 2010 and 5 in 2012. See Meet the Top Ten Drugs of 2018.

• Prime Therapeutics projects that specialty drugs will account for 50% of combined pharmacy and medical benefit U.S. drug spending by 2017. See More Drug Trend Forecasts: An Exclusive Look at Prime Therapeutics vs. the Big Two PBMs.

The top 10 pharmacies on Inc.’s list are leading the shift. Stay tuned for more acquisitions and the new crop of high-growth, small pharmacies.

NOTE: An earlier version of this article incorrectly stated that Pentec Health was a newly-added to the Inc. 5000 list. In fact, Pentec has appeared on the Inc. 500 list for the past four years. We apologize for the error.