ing more snack-food and impulse-buy items as well.Industry OverviewThe drugstore industry has moved from being a fragmented industry, prior to the mid-eighties, to one undergoing rapid consolidation driven by several factors. The sales volume of the drugstore industry more than doubled from approximately $40 billion in 1983 to over $93.6 billion in 1995. This growth led large supermarkets and mass-merchandisers to enter the drugstore market, putting more competitive pressure on the smaller independent stores. Profit margins are narrowing, due to attempts to reduce health care costs. In response to these pressures, there has been a wave of consolidation, with regional chains buying out one another out. Other responses to the pressure of competition and decreasing profit margins include: an effort by drugstores to concentrate on customer service, expansion into niche markets, forming partnerships with suppliers and health-care providers, and the use of technology to increase cost-efficiency (Encyclopedia of American Industry). The drugstore industry is considered to be a recession-resistant growth industry, due to the increasing number of aging baby boomers (Fool on the Hill, 5/18/99). BackgroundThe drugstore industry had its beginning in the mid-1800s. At that time, Americans began using more “patent medicines”, reducing dependence on home remedies. Early pharmacists worked in village apothecaries, purchasing chemicals in bulk and mixing them on the premises to fill prescriptions. After the Great Depression, the science of pharmacology developed and pharmaceutical companies grew rapidly, opening sophisticated research facilities. Drug patent issues grew from fewer than 100 before 1940, to over 4,000 by the 1950s. Medications began to be distributed under the manufacturer’s brand name in a final-dosage form, instead of in bulk as generic ingredients that were then combined by the pharmacist. The number of dr...
