CVS 2000 Annual Report Download - page 8

America’s #1 Pharmacy
Customer-focused, innova-
tive and convenient healthcare
strategies have propelled CVS
to #1 on the list of U.S. drug-
store chains. More people filled
their prescriptions at CVS last
year than at any other drugstore.
Our pharmacy sales climbed
17% to nearly $13 billion, repre-
senting 63% of our total annual
revenues. Moreover, given the
highly attractive fundamentals
of the retail pharmacy industry,
we expect this strong growth to
continue.
Key Trends Driving Growth
The retail pharmacy industry is a $140 billion market
with a projected compound annual growth rate of
more than 13% through 2004. The increases in phar-
maceutical sales are being fueled by the convergence
of a number of positive trends. Drug companies are
introducing a steady stream of new pharmaceuticals
into the marketplace, while investing heavily to
advertise these products directly to the consumer.
It is estimated that 35 “block-
buster”drugs, with the poten-
tial to generate more than $1
billion in annual sales each, are
in the final stages of trial.This
strong pipeline bodes well for
the future, as 40% of pharma-
ceutical sales are historically
generated by drugs developed
within the preceding five years.
At the same time, patents
on an estimated $40 billion
worth of branded drugs are set
to expire over the next 10 years,
opening the door for generic
alternatives. That’s good news
for our customers, who will
benefit from lower prices.
Demographic trends and the expansion of man-
aged care are also playing substantial roles in driving
retail pharmacy
growth. With mem-
bers of the “Baby
Boom” generation
moving into their
50s, demand for pre-
scriptions should con-
tinue to accelerate.
Individuals over age
65 take approximately
16 prescriptions per
year, compared to about
six prescriptions annually
for Americans under age
45. We have found that
when people switch from
no prescription coverage to
a managed care plan requiring
only a customer co-pay, prescription use nearly dou-
bles. These trends, coupled with the possibility of a
prescription drug benefit for Medicare enrollees, pro-
vide further catalysts for continued pharmacy growth.
Positioned for Growth
Demand for prescriptions continues to
rise as the population ages, and CVS
continues to capture an increasing
share of this growing market.
CVS led the industry with an 18% increase
in pharmacy same store sales in 2000.
…the most
customer-focused...
“More people trust
CVS for their
healthcare needs
than any other
drugstore chain
in America.”
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CVS Corporation