CVS 2001 Annual Report Download - page 6

CVS fills prescriptio ns at mo re pharmacy
lo catio ns than any o ther retailer. Pharmacy is o ur
co re business, representing 66% o f o ur to tal
revenues. We ho ld mo re market leadership
po sitio ns than any o ther chain, ranking #1 in
35 of the 60 markets we serve.
A Posit ive I ndust ry Outlook
The o utlo o k fo r 2002 and beyo nd fo r the
retail pharmacy industry is extremely vibrant,
and we are clearly well po sitio ned to capitalize
o n the signific ant o ppo rtunities that lie ahead.
Acco rding to IMS Health, the pharmacy industry will
jump from $140 billio n in sales in 2000 to nearly do uble
that by 2005.
The aging po pulatio n is the mo st significant driver of
pharmacy gro wth. While the average perso n has a
prescriptio n filled eight times a year, the average perso n o ver
age 55 has a prescriptio n filled 19 times a year. And the Baby
Bo o mer generatio n is fast appro aching that age range. By
2010, 25% of the U.S. po pulatio n will be o lder than 55.
The co ntinuing disco very of new drug s also has a
significant impact o n pharmacy gro wth. Industry estimates
suggest that by 2002, mo re than 40% o f total U.S.
prescriptio n sales will co me from drugs intro duced since 1998.
Acco rding to IMS Health there are 55 new drug s with
blo ckbuster po tential in the Fo o d & Drug Administratio n’s
appro val pipeline expected to reach the market between 2002
and 2005. Each of tho se drug s is believed to have an annual
sales po tential o f $500 millio n o r mo re.
Sales of higher-margin generic drugs also are expected
to grow, as brand- name drugs representing $35 billio n in
sales are expected to be remo ved fro m the patent list o ver
the next 5 to 7 years. We typically experience high
substitutio n rates when patents expire.
A generic replacement for Pro zac®, fo r example,
became available in 2001, and with it we witnessed the
fastest and mo st substantial co nversio n ever. In 2002,
the patents fo r the gastro intestinal drug Prilo sec®and
the diabetes drug Gluco phage®are expected to expire,
amo ng o thers. These two drugs have been blo ckbusters,
having generated billio ns of do llars in revenue
annually. Other drugs that may co me off patent
during 2002 include the hypertensio n drugs Prinivil®
and Zestril®, and the epilepsy drug Neuro ntin®.
Finally, we remain o ptimistic that Co ngress will
implement a responsible Medicare pharmacy
benefit that serves an unmet need amo ng senio r
citizens. There is gro wing interest in Co ngress to
Working For
CVS/ pharmacy is the leader
in mo re U.S. drugsto re markets
than any o ther chain.