to hold drugstores liable if overworked pharmacists make mistakes (The News & Observer, 8/3/97). Another significant issue under legislation is a consideration that would extend the life of the patents on some very popular drugs, whose patents are due to expire in the year 2000. The pharmacy industry has been anticipating increased profits that will become available when the generic versions of these patented drugs hit the market. This situation highlights the vulnerability of the drugstore industry when their interests conflict with those of the much more powerful drug manufacturers (Drug Store News, 8/30/99). Future Industry PerformanceThe prospects for continued industry growth are strong due to a number of factors. These include: An increased interest in health and personal care An aging population and longer life span A high number of popular drugs coming off of patent protection to the generic drug and over-the-counter market An increasing use of drug therapies versus hospitalizationThere are issues that will continue to keep profit margins low. More retail segments are recognizing the customer draw of pharmacy services, therefore increasing competition. Price-cutting, lower drug price inflation, and restrictive third-party payment plans will also reduce profit margins. Furthermore, supermarkets and discount retailers have increased their offerings of the health and beauty aids that generated front-end revenue for drugstores (Standard & Poors Monthly Investment Review). There are a number of strategies contributing to the success in the competitive drugstore market. Differentiation and service are strategies critical to the success of independent drugstores. Many independent stores emphasize personal service and counseling provided by a familiar pharmacist. They also strive to provide a product range that reflects the preferences of the demographics in their location. Being small allo...
