Tuesday, August 18, 2015

2014’s Fastest-Growing, Private Specialty Pharmacies (From the Inc. 5000 List)

Time for our annual review of the Inc. 5000 list, the magazine’s annual ranking of the fastest-growing private companies in the United States. While the list includes only those firms that submitted data to Inc. magazine, it offers a useful snapshot of the dynamic world that lies beyond the top 10 specialty pharmacies.

We have identified 10 specialty pharmacies on the 2015 list, which is based upon revenue growth through 2014. Annual revenues range from $11 to $800 million. The pharmacies and key stats are listed below.

Given specialty drugs’ growth prospects, there is an active market for the buying and selling of specialty pharmacy companies. Diplomat Specialty Pharmacy, now that it has gone public, no longer appears on the list. Below, I review the fate of other companies from recent lists that have been acquired. Given Diplomat’s sky-high valuation, consider this year’s ranking to be a shopping list.


The 2015 Inc. 5000 list ranks companies based upon percentage revenue growth from 2011 through 2014, shown in the table below. Inc. requires that ranked companies be based in the United States, be privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2014.

As I note above, companies must apply to Inc. to be considered for the list. Therefore, it does not include every specialty pharmacy in the country and may exclude some fast-growth businesses. Neither Pembroke Consulting nor Drug Channels collected the Inc. data.

Translation: Please do not email me and complain that I omitted your company.

Here are links to our previous analyses:


The Inc. 5000 lists hundreds of companies in its “health” category. Based upon the magazine’s company descriptions, we identified 10 firms this year whose primary business is dispensing specialty pharmaceuticals.

[Click to Enlarge]

FYI, the chart above updates Exhibit 36 (on page 46) of our 2014-15 Economic Report on Retail, Mail, and Specialty Pharmacies.

The average 3-year revenue growth rate of these 10 pharmacies is an impressive 326%. Note that some have other revenue sources besides specialty drug dispensing.

URAC, the most widely recognized accreditation organization, reports that 5 of the 10 companies have “Full Accreditation” as a “specialty pharmacy,” “mail service pharmacy,” or both. For background on the growth of URAC accreditation, see The Specialty Pharmacy Boom Continues.


Here is the fate of seven specialty pharmacies that no longer appear on the Inc. 5000 list:
  • Amber Pharmacy was acquired by Hy Vee in 2014.
  • Axium was acquired by Kroger in 2012.
  • Diplomat Specialty Pharmacy became a public company in 2014.
  • MedExpress Pharmacy was acquired by Avita Pharmacy in 2014.
  • Onco360 received a significant minority investment from PharMerica in 2013. (PharMerica has an option to acquire the whole company over the next few years.)
  • Pharmacare was acquired by Centric Health in 2015.

Diplomat’s stock price is up almost 180% since its public debut last October. With a $2.8 billion market cap, the company has every specialty pharmacy seeing dollar signs. Private company valuations are less robust, per my comments in the June 2015 news roundup about the Burman’s specialty pharmacy acquisition. However, plenty of money will be spent on M&A as the industry grows.

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