CVS 2006 Annual Report Download - page 9

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6 CVS Corporation
CVS fills 16 percent of all U.S. retail drug prescriptions, and we stand
to benefit from several long-term trends driving their increasing use.
According to industry sources, U.S. pharmacy sales are expected to continue growing at an annual
rate of 5 to 8 percent for the foreseeable future. With more locations than any other U.S. pharmacy
retailer, CVS stands to be among the chief beneficiaries of this long-term trend. An aging population,
rising use of generic drugs, the Medicare Part D prescription drug benefit, and new discoveries are
some of the key factors driving the greater demand for pharmaceuticals.
According to the U.S. Census Bureau, approximately 40 million people in the United States will be
65 or older by 2010 as baby boomers begin to reach that age group. That figure will jump to roughly
55 million in 2020, which should lead to significant growth in our industry. That’s because this age group
fills more than 25 prescriptions annually – 30 percent more than people between the ages of 55 and 64.
Furthermore, roughly $50 billion in branded drug sales will lose patent protection over the next five
years. The increasing availability of low-cost generics will translate into good news for CVS and the
U.S. healthcare system in general. We benefit from the higher margins generic drugs provide. Their
lower cost also puts many potentially live-saving medicines within reach of people who otherwise
might not have found them affordable.
Meanwhile, we’re doing our part to make it as easy as possible for our customers to order and pick
up their prescriptions. More than 65 percent of CVS locations offer 24-hour or extended-hours service
in the pharmacy, and approximately 55 percent of our stores offer drive-thru pharmacy windows.
RapidRefill makes it easy to reorder prescriptions over the telephone or through CVS.com. Most
importantly, approximately 20,000 highly trained CVS pharmacists stand ready to answer questions
and provide helpful advice.
< 5
5–14
15–24
25–34
35–44
45–54
55–64
65–74
75+
3.0
2.6
3.3
4.3
7.2
12.2
19.5
25.3
29.4
PRESCRIPTION UTILIZATION BY AGE*
* number of prescriptions per year
Source: 2006 NACDS Chain Pharmacy Industry Profile
2000
2010
2020
2030
35.0
40.2
54.6
71.5
POPULATION AGED 65+*
* millions of people
Source: 65+ In The United States: 2005,
U.S. Census Bureau
25 35 45 55 65 75