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Drug Stores Set for Short Term Vaccine, Flu Season Boost
The Center for Disease Control and Prevention (CDC) officially endorsed booster shots of the COVID-19 vaccines for all adults last week as the holiday season gets underway. Further, millions of children ages 5-11 are also eligible for their first COVID-19 shots and are likely to get them at pharmacies and drug stores.
An official from the CDC reported that nearly 70% of all COVID-19 shots have been administered at pharmacies, while more than 60% of adolescents have received their shots at drug stores.
Around 1,700 CVS stores in the US are distributing vaccines, writes the Wall Street Journal, while Walgreens reports that their pharmacy has administered more than 200,000 vaccines to elementary-age children through November 9th.
Rite Aid is also expected to play a crucial role in the rollout of both booster shots and vaccinations for children, per USA Today.
Meanwhile, flu season is rapidly approaching, and experts are warning of a more severe season than last year, when mask use and social distancing reduced the transmission of viruses. With just about everyone six months and older eligible for a flu shot, drug stores are likely to experience a double whammy of consumer demand for both COVID-19 vaccines and routine flu shots.
Millions of Americans will get their shots at one of CVS, Walgreens, or Rite Aid, bringing elevated foot traffic in each of these stores that get paid for each dose administered. While that’s certainly good news for drug stores, it will likely be a short-term boost for these companies.
Long-term, drug stores will have to adapt to the shift in consumer behavior, as more shoppers than ever are making purchases online and ordering goods to be delivered on their smartphones. Further, pharmacies are also diving further into the direct healthcare sector, a trend that must accelerate in the next few years for drug stores to stage a comeback.
Long Term Growth Awaits in Health Services, Digital Strategy
The short-term boost in foot traffic from vaccinations and seasonal illness’ is unlikely to outweigh the vast shift in consumer behavior toward online shopping and digital care.
MRP recently highlighted US drug store chains expanding their digital care outreach, and that trend appears to be accelerating. Further, the sector is likely to further integrate itself within the healthcare sector. The Wall Street Journal reports that demand for healthcare is booming, due to aging populations, greater access in emerging economies and permanent shifts from the COVID-19 pandemic such as telehealth usage and mental health awareness.
US drug store chains are noticing more people are getting prescriptions filled online as well as visiting doctors through telehealth channels, meaning these companies must prioritize their digital strategies in the coming years.
According to CNBC, CVS announced it will be closing about 900 stores over the next three years, beginning in the spring of 2022, and moving their focus toward online retail.
CVS has roughly 1,100 MinuteClinics, which provide urgent care services for common illnesses and administer flu shots. The company is also expanding their HealthHubs, which sell medical products and offer services like telehealth therapy, screenings for chronic conditions and health and wellness checkups. CVS is aiming to have 1,000 HealthHub locations in the US by the end of the year, notes CNBC.
Both Walgreens and Rite Aid, the top two competitors to CVS, are likely to follow in CVS’ footsteps, closing stores and providing new healthcare services.
Med City News reports that Walgreens has bet all its chips on a new healthcare strategy, opening new primary care clinics, expanding its health services outreach.
Further, Walgreens recently made a $5.2 billion dollar investment into primary care provider VillageMD, advancing its strategic position in the delivery of value-based primary care, the company notes. Walgreens now owns 63% of the company, with plans to open 1,000 ‘Village Medical at Walgreens’ primary care practices.
VillageMD has experienced rapid growth over the last few years, increasing revenues from $217 million in 2017 to $1.3 billion expected in 2021. That growth highlights the rising demand for healthcare and primary care services, both digital and in person.
Rite Aid, meanwhile, has yet to make moves as significant as its counterparts in CVS and Walgreens, but is still striving for a better digital strategy. Per Fierce Healthcare, Rite Aid is hoping to create stores that have sections similar to an Apple Store Genius Bar, with virtual care rooms in each pharmacy as well.
As part of a turnaround bid, Rite Aid is putting its pharmacy business at the forefront, aiming to revitalize the retail and digital experience for consumers while having pharmacists more involved in primary care operations, as they can be looked at as under-utilized providers.
The increased number of retail pharmacies owning and developing primary care businesses highlights the growing demand for healthcare and a clear path for US drug stores to achieve long-term growth.
Walgreens continues to invest heavily in the primary care space, while Rite Aid also plans to provide a greater healthcare experience, diversifying their aging retail pharmacy business.
CVS, meanwhile, is clearly leading the competition as it clearly lays out the strategy for long-term growth. After announcing plans to close roughly 900 stores, CVS focusing on expanding healthcare services both online and in person, while expanding their digital footprint.
While US drug store chains are likely to receive a boost from the new round of COVID-19 vaccines, that effect will be temporary. Capitalizing on growing demand for healthcare and expanding digital strategies appears to be the plan for US drug stores to finally spark a turnaround in the sector. |
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