When we think of CVS, we usually visualize a typical street-corner pharmacy, equipped with every product from makeup to greeting cards to prescription drugs. With more than 9,900 retail locations across the U.S., CVS is a market leader in the healthcare industry, with a strong brand identity that resonates with consumers across the country. Under their guiding principle of “making healthier happen now,” CVS strives to service more than 110 million customers with a broad variety of healthcare products and consumer goods. To continue with this mission, CVS follows an overarching strategy of “improving access, lower[ing] costs, and enhanc[ing] health outcomes” by engaging customers “when, where, and how they desire” [1]. However, the COVID-19 pandemic has fundamentally redefined how people interact with the healthcare system, and CVS needed to significantly change its approach to consumer engagement to remain competitive in a rapidly evolving market.
Like many pharmacies across the world, CVS initially grappled with the challenges of the pandemic. Navigating issues such as skyrocketing infection rates, struggling supply chains, and consumer stockpiling, pharmacies struggled to provide healthcare amenities to customers in a safe and secure environment [2].
Despite these challenges, pharmacies soon adapted to provide a critical set of services at a time when the U.S. healthcare system was thoroughly overwhelmed. According to the National Pharmacy Association, 35% of patient respondents claimed to have visited a pharmacy in place of their general practitioner during the pandemic. Of this segment, 42% were related to minor illnesses and 33% were related to medicine access. Starting at the height of the pandemic, pharmacies acted as a primary point of care for many patients looking for flexible, affordable medical care, with the NPA recently categorizing local pharmacies as “integral to a functioning system of primary care” [3].
Pharmacies like CVS played a key role in COVID-19 treatment and vaccination. In 2021, CVS administered approximately 32-36 million doses of the COVID-19 vaccine [4]. According to Chief Financial Officer Shawn Guertin, vaccine and testing volume in 2021 generated approximately $3B in revenue. Unlike other pharmaceutical companies, which struggled to adapt to the changing market, CVS presented strong growth in the 3rd and 4th quarters of 2021, with revenues being up 10% annually [5]. However, the national decrease in COVID-19 cases in recent weeks suggests a gradual approach towards a post-pandemic world, and analysts predict that revenue from CVS’s vaccinations and testing will decline by 30-40% in 2022 [6]. In order to maintain its current growth trajectory, CVS must adjust its business strategy to evolve with the rapidly growing digitized healthcare space.
Two main areas of growth for pharmaceutical companies during the pandemic included rapid healthcare services and digital healthcare technology. Companies such as UrgentCare demonstrate the value of quick, convenient medical care, and online platforms such as Amazon Pharmacy allow consumers to purchase pharmaceutical treatments from the comforts of their own homes. To avoid redundancy in this industry, CVS is working to develop new sources of value by “expanding into next generation primary care delivery and health services” [1]. With artificial intelligence, digital monitoring, and other technologies breaking into the healthcare space, there are many opportunities for CVS to redefine its approach to rapid and direct care. CVS has correctly realized that healthcare, like many other industries, is unlikely to return to its pre-COVID state, and proactivity in adjusting to our new reality will serve to benefit CVS for years to come.
References
1. United States Securities and Exchange Commission. (2022, February 9). CVS HealthCorporation. SEC. https://www.sec.gov/ix? doc=%2FArchives%2Fedgar%2Fdata%2F64803%2F00006480322000008%2Fc vs-20211231.htm#ibab9fb71d67648f0b758869f160b7f4b_13
2. Hayden, J. C., Parkin, R. (2020). The challenges of COVID-19 for community pharmacists and opportunities for the future. Irish journal of psychological medicine, 37(3), 198–203. https://doi.org/10.1017/ipm.2020.52
3. Repko, M. (2021, August 4). CVS Health says the peak of Covid vaccinations has already happened. CNBC. https://www.cnbc.com/2021/08/04/cvshealth-says-the-peak-of-covid-vaccinations-has-already-happened.html
4. Acosta, G. (2021, December 20). CVS makes another big strategy shift. Progressive Grocer. https://progressivegrocer.com/cvs-makes-anotherbig-strategy-shift
5. Khandekar, A., & Mishra, M. (2021, November 3). CVS health sees 2022 profit meeting street estimates as COVID-19 costs subside. Reuters. https://www.reuters.com/business/healthcare-pharmaceuticals/cvsquarterly-sales-rise-10-demand-covid-19-tests-vaccines-2021-11-03/
Comments