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Grocery Pharmacies Are Closing As Chains Take Over

February 5th, 2020

As Big Pharma and the entire pharmaceutical sector generally transforms (see our previous articles), so too is the way consumers buy their drugs and fill prescriptions.

For the first time since grocers set-up pharmacies inside their markets, the number of these grocery pharmacies is

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declining. The Wall Street Journal says hundreds of regional markets "are closing or selling pharmacy counters, which have been struggling as consumers make fewer trips to fill prescriptions and big drugstore chains tighten their grip on the U.S. market."

Consolidation has concentrated market share in CVS and Walgreens, which together accounted for more than 40% of all prescription revenue in 2018. Together, the two operate more than 20,000 retail locations. In 2015, CVS acquired 1,672 in store pharmacies from Target. Last year, Walgreens broadened its partnership with the giant Kroger grocery chain spurring speculation it could buy the grocer's 2,270 in-store pharmacies.

Consumer's have also changed how they fill prescriptions, switching to mail order and buying in larger quantities, less often.

The Journal explained that smaller grocers don't have the clout to negotiate higher reimbursement rates from insurers, nor do they have the amenities like nationwide networks and walk-in clinics that the largest chains do. Their pharmacies tend to operate at or below break-even, but served as a customer convenience.

“There is the benefit of having a pharmacy relative to the grocery-sale lift and the convenience factor of having both in the store, but the economics do not work,” Raley's CEO Keith Knopf told The Journal.

With the closing of these grocery pharmacies comes the loss of jobs. Reporting on the update of the Department of Labor's Occupational Outlook Handbook last fall, Drug Channels said jobs for pharmacists is projected to be flat through 2028. But jobs for retail pharmacists will decline by 11,000. Hospitals, outpatient care centers and home healthcare agencies will add pharmacist jobs as will mail order services.

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