Tuesday, March 04, 2014

2013 Pharmacy Market Share for Specialty Drugs—and the Biggest Players

Here’s an Oscar-themed look at the 2013 specialty market, adapted from our 2013–14 Economic Report on Retail, Mail, and Specialty Pharmacies.

Our research shows a booming market:
  • In 2013, retail, mail, and specialty pharmacies dispensed about $63 billion in specialty pharmaceuticals.
  • Specialty drugs accounted for 22% of total pharmacy industry revenues.
  • Three companies—Express Scripts, CVS Caremark, and Walgreens—accounted for 63% of revenues from pharmacy-dispensed specialty drugs. The next three largest players had a combined share of about 5%.
Read on for our market share estimates for the top players, observations on the market's structure, and details of my panel discussion with specialty pharmacy leaders at next week’s sPCMA Business Forum.


A majority of the specialty drugs that pharmacies dispense to patients are sold via self-defined specialty pharmacies. However, any licensed pharmacy can dispense a specialty drug if the product can be purchased from a manufacturer or through an authorized wholesale distribution channel.

The table below illustrates the diverse ownership of pharmacies that dispense specialty medications. As we discuss in “Growing Competition for Specialty Dispensing” (page 152 of our 2013-14 pharmacy report), the specialty market’s projected growth is drawing many companies into the business of dispensing specialty drugs. Pharmacies dispensing specialty drugs are operated by such organizations as pharmacy benefit managers, retail drugstore chains, health plans, pharmaceutical wholesalers, physician practices, and hospital systems. There are also many smaller independent specialty pharmacies.

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The Explosion in Accredited Specialty Pharmacies, our exclusive analysis of URAC accreditation data, illustrates this boom.


Market share for dispensing specialty drugs remains highly concentrated. The chart below shows the estimated pharmacy revenues from dispensing specialty pharmaceuticals. The top three companies accounted for 63% of revenues from pharmacy-dispensed specialty drugs. The next three largest players had a combined share of about 5%.

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  • THE WOLVES OF WALL STREET. The two largest PBMs—Express Scripts and CVS Caremark—remain the largest participants in the specialty pharmacy market. We estimate that Express Scripts’ share dipped due to new competitors and the roll-off of Medco’s OptumRx business.
  • ILLINOIS BUYER’S CLUB. Walgreens has become the third-largest specialty pharmacy by acquiring other specialty pharmacies: BioScrip; Medmark; Schraft’s; Cardinal Health’s SpecialtyScripts subsidiary; and McKesson’s specialty pharmacy. In late 2012, Walgreens acquired a significant ownership stake in Cystic Fibrosis Foundation Pharmacy LLC, giving Walgreens and the Cystic Fibrosis Foundation joint ownership of a specialty pharmacy. In 2013, Walgreens acquired regional chain Kerr Drug, which had a small specialty pharmacy business. Walgreens also dispenses specialty drugs in its retail stores.
  • 20 FEET FROM STARDOM. Diplomat continues to be one of the fastest-growing companies in the specialty market. Diplomat has also expanded its reach with its Retail Specialty Network (RSN) program for such retailers as Fred’s, Safeway, and Target.
  • AMERICAN HUSTLE. Growth in the “all other” category reflects the many pharmacies now competing to dispense these expensive therapies. Consequently, market share has become slightly less concentrated compared with our previous estimates. We previously estimated that the three largest companies accounted for 66% of 2011 revenues from pharmacy-dispensed specialty drugs.

How do PBMs view this evolving market? Find out at next week’s 2014 sPCMA Business Forum, where I will be moderating a panel discussion on “How PBMs are Competing in the Specialty Market.” My panelists will be:
  • Eric Elliott - President & Chief Executive Officer, Prime Therapeutics
  • Dirk McMahon - Chief Executive Officer, OptumRx
  • Jon Roberts - Executive Vice President & President, CVS Caremark Pharmacy Services, CVS Caremark
Hope to see you in Orlando!

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