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Competition is heating up in the specialty marketplace as investment capital is drawn in and the pharmaceutical industry shifts from traditional brand-name drugs to specialty drugs over the next few years.
Competition is heating up in the specialty marketplace as investment capital is drawn in and the pharmaceutical industry shifts from traditional brand-name drugs to specialty drugs over the next few years.
Below are 7 key reasons behind the coming boom in specialty drug dispensing. As I see it, the projected growth in specialty drug dispensing is encouraging market entry, drawing investment capital into the pharmacy industry, and increasing competition for specialty pharmacy services. Dispensing of specialty pharmaceuticals will become less concentrated as regional chains and independents penetrate this market.
SPECIALTY PHARMACY TODAY
Revenues in the pharmaceutical industry will shift from traditional brand-name drugs to specialty drugs over the next few years. Within 4 years, specialty drugs will account for 40% to 45% of pharmaceutical manufacturer sales. According to EvaluatePharma, 7 of the top 10 bestselling drugs (by revenue) are projected to be specialty drugs in 2016, compared with 3 in 2010.
Retail and mail-service pharmacies dispense primarily traditional pharmaceuticals but not exclusively, whereas specialty pharmacies focus on the selfadministered (oral and injected) specialty pharmaceuticals that are covered under a patient’s pharmacy insurance benefit. 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. Other pharmacies dispensing specialty drugs are operated by such organizations as health plans, pharmaceutical wholesalers, retail pharmacy chains, home health care providers, and other PBMs. There are also many independent specialty pharmacies.
Right now, 3 companies—Express Scripts, CVS Caremark, and Walgreens— generate about two-thirds (65%) of revenues from pharmacy-dispensed specialty drugs. Smaller competitors include Diplomat Pharmacy, Omnicare’s Advanced Care Scripts, The Apothecary Shops, ICORE, and many more.
THE SPECIALTY DISPENSING BOOM
In 2011, spending on specialty drugs grew by 17.1%, according to Express Scripts’ latest drug trend report. Specialty drug trend is projected to rise 17.1% in 2012, 19.0% in 2013, and 22.0% in 2014.
This projected growth in specialty drug dispensing is encouraging market entry and will increase competition for specialty pharmacy services. In addition to the many pharmacies that already have specialty capabilities, new sources of competition are rapidly emerging. Here are 7 reasons why.
THE OUTLOOK
A key hurdle for new entrants will be gaining access to manufacturer and payer networks. The manufacturer of a specialty drug limits the number of pharmacies eligible to dispense its specialty product. Manufacturers strategically choose pharmacies with the distinctive capabilities required to efficiently and effectively serve patients, providers, and payers.
Given the growth and number of new entrants, manufacturers will face enormous pressure to broaden limited distribution networks. Looking forward, dispensing of specialty pharmaceuticals will become less concentrated and limited distribution networks will become larger and more open.
SPT
About the Author
Adam J. Fein, PhD, is president of Philadelphia-based Pembroke Consulting, Inc. He blogs at Drug Channels (www.DrugChannels.net).