Prescription benefit management Essay
CVS Caremark, in an overview, is involved in US retail drugstore industry by selling prescription dugs and other various health products and merchandise to different organization entities and public consumers. For one, CVS has a strong brand recognition making it as one of the leading companies in the industry of retail drugstore. The company, as a matter of fact, has the second largest market share of approximately 75% provided by its network of retail pharmacies (Datamonitor, 2008). This fact is even true in the aspect of the industry of prescription benefit management (PBM).
Nevertheless, even if the company has a strong presence in the retail drugstore industry, taking up 17% of all total prescriptions made during 2007 (Datamonitor, 2008), the company is still vulnerable to the onslaught of marketing and business strategies being done by its rivals to corner some portion of the market share. In a nut shell, CVS experiences a stiff competition in the industry of providing health services to its clients from the wide array of companies and firms which also give the same services as the company provide.
These are drugstore chains, discount retailers, supermarkets, membership clubs, internet or online companies and some large pharmacy benefit management companies.
Need essay sample on "Prescription benefit management"? We will write a custom essay sample specifically for you for only $ 13.90/page
Strong competition in the industry can erode the leadership of the CVS in the market share and to counter act this challenge of competition thrown at its doorstep by its rivals, CVS spurts to devise ingenious business strategies. One of the things that CVS does is to have a strong inventory management. This is a vital business strategy that the company applied to its operational activities. The organization did this by installing CVS Rapid Refill which is a chain of wide digital prescription refill system.
Rapid Refill project gives the company the ability to provide its customers and clients to order prescription refills all day and night, twenty-four hours a day, seven days a week, by using a touch-tone telephone. More than this, CVS also installed an Assisted Inventory Management system. This creates then a line or constant and open communication among stores, suppliers and distribution centers so that the there is a real-time delivery of services.
The company in doing this used the technology available in the market to give solutions for its operation activities like product storage, retrieval and order picking. More than efficient inventory scheme, CVS also did some business maneuvers by engaging AT&T for a contract in providing Pharmacy Benefit Management services to all its employees and those who are about to retire. This contract will be effective starting January of 2009. Moreover, the company also as a strategy opened the CVS Regional Learning Center so that it can spread the knowledge what is in store as career advancement for its employees.
By doing these business tactics and strategies, the danger of CVS being kicked on the pedestal as the leader in drug retailing industry, the company is able to weather the stiff competition thrown by its rivals. To show the product of this efforts, CVS Caremark was able to record a high of $76,329 million in revenues for the fiscal year of 2007. This earnings is an unbelievable increase of 74. 2% compared to what the company had in the fiscal year of 2006. Along with this increase in revenue is the increase in the operating profit of the company that reached $4,793.
3 million in 2007. Again this positive financial outcome is 96% compared with 2006. CVS net profit also shoot up to $2,622. 8 million in 2007, which is an increase of 93. 6% compared with fiscal year 2006 (Datamonitor, 2008). Reference Datamonitor. (July 2008). CVS Caremark Corporation: Company Profile. Retrieved on October 15, 2008 from http://web. ebscohost. com. ezlibproxy. unisa. edu. au/ehost/pdf? vid=5&hid=7&sid=097e8ec8-0078-410f-b2a4-acd0b00c10bd%40SRCSM2