The Top 15 U.S. Pharmacies of 2019: Specialty Drugs Drive the Industry’s Evolution

Next week, Drug Channels Institute will release our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. It’s the 11th edition of our popular and comprehensive examination of the entire drug pricing, reimbursement, and dispensing system.

The exhibit below—one of 203 in our new report—provides a first look at the 15 largest pharmacies, ranked by total U.S. prescription dispensing revenues for calendar year 2019. I also highlight business developments that shifted market share among the biggest players.

As you will see, pharmacy industry prescription dispensing revenues reached a record $446 billion in 2019. Revenues were highly concentrated due to the rapid growth of large specialty pharmacies and the multiple transactions that we discuss throughout our report.

For a sneak peek at the complete report, click here to download a free pre-publication draft overview (including the table of contents and a list of exhibits). We’re offering special discounted pricing if you order before March 22, 2019.

The table below shows DCI’s estimates of the largest pharmacies ranked by total prescription dispensing revenues for 2019.

[Click to Enlarge]

Observations on these figures:

• The top seven dispensing pharmacies—CVS Health, Walgreens Boots Alliance, Cigna, UnitedHealth Group, Walmart, Kroger, and Rite Aid—accounted for about 70% of U.S. prescription dispensing revenues in 2019. The top 15 pharmacies accounted for more than three-quarters of total dispensing revenues from retail, mail, long-term care, and specialty pharmacies.

• Four of the largest pharmacies are central-fill mail and specialty pharmacies operated by the PBMs Caremark (CVS Health), Express Scripts (Cigna), OptumRx (UnitedHealth Group), and Humana. This reflects the growing role of specialty drugs in the pharmacy and PBM industries. We estimate that specialty drugs account for 60% or more of revenues at these pharmacies.
  
  For 2019, we estimate that PBMs earned more than half of their gross profits from mail and specialty pharmacy dispensing activities. (See Chapter 11 of our new report.)

• During 2019, CVS and Walgreens acquired store or prescription files from at least eight small chains that had collectively operated more than 100 stores. In many cases, the larger chains have acquired smaller chains, shut down the acquired company’s locations, and transferred the prescriptions and patients to existing stores. (See Chapter 2 of our new report.)

• Our 2019 figures reflect the significant pro forma impact of business shifts among the largest PBMs. For instance, dispensing revenues from Anthem and Coventry Health Care transitioned from Express Scripts to CVS during 2019. (See Chapter 5 of our new report.)

• The largest insurers, PBMs, and specialty pharmacies have now combined into vertically integrated organizations. (See Insurers + PBMs + Specialty Pharmacies + Providers: Will Vertical Consolidation Disrupt Drug Channels in 2020?) The revenue figures in the chart above reflect combined dispensing revenues from all entities within these organizations.

• Kroger’s growth was driven by its specialty pharmacy business. Kroger operates nearly 2,300 pharmacies in its 2,800 stores, but we estimate that its retail pharmacy revenues barely grew in 2019. I guess this bad news explains why Kroger no longer bothers to report pharmacy sales in its financial filings.

• In 2019, PharMerica completed its merger with BrightSpring Health Services, one of the largest providers of diversified home and community-based health services to complex, high-cost populations. Our figures include a pro forma estimate of the new company’s combined dispensing revenues.

NOTES FOR NERDS

Our estimated prescription revenue data may not correspond with figures from other public sources. Reasons include:

• We have computed or estimated the figures on a calendar-year basis. The fiscal years for many public retail companies do not correspond to calendar years.

• Many companies do not report prescription revenues. We have therefore used various methods and sources to estimate the data.

• As noted in the footnotes to the table above, we have made various adjustments to account for the pro forma impact of mergers and acquisitions as well as certain client transitions among the largest PBMs. Year-over-year growth rates were also computed based on the prior year’s pro forma revenues. Pro forma revenues are computed based on the year in which an acquisition was completed. Therefore, Diplomat Pharmacy is presented as a separate company for 2019.

CORRECTION: The 2019 revenue figure for Publix was updated after publication.