Tuesday, June 12, 2012

2011 Pharmacy Market Share for Specialty Drugs

As part of my ongoing efforts to illuminate the drug channel, here’s a look at the 2011 specialty pharmacy market.

According to Pembroke Consulting's research, the specialty market boomed last year. In 2011:
  • $46.9 billion of specialty drugs were dispensed by retail, mail, and specialty pharmacies.
  • Specialty drugs represented about 17% of the pharmacy industry’s total revenues.
  • Pharmacy revenues from specialty drugs grew by $7.7 billion (+19.7%).
  • Three companies—Express Scripts, CVS Caremark, and Walgreens—generate about two-thirds of revenues from pharmacy-dispensed specialty drugs. The next two largest players had a combined share of less than 4%.
Read on for market share estimates for the top 7 (now top 5) players, along with observations on the market's evolution and implications for manufacturers.


Although a majority of specialty drugs dispensed by a pharmacy to a patient are sold via a specialty pharmacy, any licensed pharmacy can dispense a specialty drug as long as the product can be purchased from a manufacturer or via an authorized wholesale distribution channel.

As a result, numerous pharmacies with specialty drug capabilities compete vigorously to dispense these expensive therapies. Pharmacies dispensing specialty drugs are operated by such organizations as health plans, pharmaceutical wholesalers, retail pharmacy chains, physician practices, and PBMs. There are also many independent specialty pharmacies.

Here’s a brief summary illustrating specialty pharmacies' diverse ownership, along with some examples. (Please don't take it personally if your company wasn't included!)

New companies are entering all the time. Check out 7 Reasons Why Specialty Drug Dispensing Will Boom, my just-published article from the latest Specialty Pharmacy Times.


Despite this diversity, market share remains highly concentrated. If we account for the 2012 combinations (Express Scripts/Medco and Walgreens/Bioscrip), then the top three companies accounted for about two-thirds of 2011's specialty drug revenues via pharmacies.

  • Pharmacy Benefit Managers (PBMs) remain the largest participants in the specialty pharmacy market. In 2011, the combined market share of Express Scripts and Medco Health Solutions was 30.5%, slightly down from 2010’s combined share. This figure will decline further in 2013 due to Medco’s contract losses, especially the OptumRx business now migrating in-house to UnitedHealth.
  • Omnicare's Advanced Care Scripts pharmacy appears on the list for the first time. However, I wonder about Omincare's strategy given yesterday's executive departure. On Monday, CEO John Figueroa unexpectedly "resigned."
  • Pharmacy revenues from specialty drugs exclude specialty pharmaceuticals utilized at non-retail outlets such as clinics and hospital pharmacies. Specialty distributors typically handle office-administered agents (infused or healthcare-practitioner-administered medications) covered by a patient’s medical benefit vs. the self-administered agents dispensed by specialty pharmacies. These channels are starting to compete more directly, as I discuss in New Data on Specialty Pharmacy’s Challenge to Buy-and-Bill
Given the diverse ownership illustrated in the above table, manufacturers will need cross-organization coordination as specialty customers, service providers, and channels consolidate. For instance, manufacturer can limit undue influence from organized customers by maintaining internal firewalls and separate account responsibility based on functional roles within the specialty channel system.

Specialty drugs are fast becoming the pharmaceutical industry's future, so stay tuned to Drug Channels for further updates.

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