ther broaden the target market.The sale of pharmaceuticals is considered to be a recession-proof industry, as medications are a necessity. However, drugstores are impacted by factors such as payment rates offered by third-party providers, prices charged by drug manufacturers, and legislation impacting the extension of drug patents. Obviously, the sale of non-drug items is not recession-proof. Suppliers: Drugstores obtain their prescription drug products from the drug manufacturers. Drug manufacturers have been accused of discriminatory pricing due to a practice of selling products to HMOs and mail-order houses at prices 40% to 60% under the price charged to community drugstores. The community drugstores have filed a class-action lawsuit in response to this practice. Many drugstores use large wholesalers as suppliers, obtaining everything from prescription drugs to health and beauty aids from the same supplier. Another supply source includes wholesalers who supply convenience and grocery stores. Employees: The central employee in the pharmacy is the pharmacist. In 1996, pharmacists made up 17 percent of the 605,000 people employed in the drugstore industry. The other 83 percent of the employees worked as store managers, inventory specialists, stock clerks, and cashiers. The industry also employs buyers, merchandising managers, and inventory replenishers at store headquarters. Political/Societal Forces: There are a number of political and societal forces impacting the retail drugstore industry. Lobbying by drug manufacturers for favorable legislation regarding patent extensions has an impact on the profit margins of drugstores by restricting the availability of the more profitable generic drugs. Currently, the state of Maine is attempting to pass legislation to impose price controls on drugs at community pharmacies (Drug Store News, 5/12/2000). Technology is a factor that will be critical to competition and cost control ...
