Michael Christel is Group Managing Editor of Pharmaceutical Commerce, Pharmaceutical Executive, and Applied Clinical Trials. He can be reached at mchristel@mjhlifesciences.com.

Michael Christel

Pharmacies, most agree, are no longer simply just a place to pick up a filled prescription. Even before the COVID-19 pandemic, pharmacy services had begun to expand. The public health crisis, however, would thrust community pharmacies in the US into the spotlight, and they responded. Their offerings—and the reliance on them—exploded. 

Seemingly overnight, retail and community/independent pharmacies introduced virus testing clinics for COVID, then vaccination distributions at a large scale. Community pharmacies in particular have always been in the background, though, supporting doctors, patients, and communities. From prescription fulfillment, to test-and-treat services, to counseling, these entities play a vital role in the patient care ecosystem.

“The pharmacy itself has greatly changed—we're not just the destination you come to after you go to the doctor's office,” says Kathy Collier, DPh, regional vice president of operations, Express Rx Pharmacy. "We've had to shift in the pharmacy to be more of a destination healthcare place. We have had to pivot and become a place where we are part of that healthcare system.”

Pharmacists, of course, play a crucial role in public health. In addition to the COVID immunizations, community pharmacies administer vaccines for ongoing flu seasons, for global travelers, new parents, elderly citizens, and those immunocompromised—dealing with such afflictions as chicken pox to hepatitis A and B virus to yellow fever and respiratory syncytial virus.

Today’s pharmacist focuses on enhancing overall community health through an increasing educational role—offering directives on medication use, preventive care, healthy lifestyle advice, and aiding in chronic disease management for conditions such as diabetes and hypertension by offering personalized care and monitoring.

“In pharmacies at large, not everybody who walks in is sick. A lot of people are there because they're caregivers, so they need counsel just as much,” says Ian Stone, senior vice president of Mesmerize. “They need those five minutes with the pharmacist on how to administer the pill, the liquid, or whatever the drug is. Independent pharmacists do a really good job coaching.”

While many are experiencing unprecedented market and business challenges, such as the emergence of online pharmacies, industry director-to-consumer drug delivery models, and other alternative point-of care entrants, community pharmacies believe they still offer a unique and significant position in the mix. They don’t just serve local communities, they’re often part of them, too. Whether that’s, for example, sponsoring local sports team, building relationships, or being a go-to or trusted source for advice and support. While the dynamic may not be the same as in decades past, their presence and value still resonates in the community and with longtime customers.

“…We've got some pharmacies that have customers that come in every day, literally because they have nothing else to do,” says Laura Edmundson, PharmD, MBA, vice president of pharmacy at Brookshire Brothers, Inc., a Texas-based employee-owned grocery store. “They'll just come and they'll sit down and check their blood pressure on our blood pressure kiosk and say hello. That's part of their routine, visiting the pharmacies.”

Pharmacy deserts has become a popular term in 2024. These are geographic areas—a neighborhood, town, or county—where some or even all of the pharmacies have closed. So what happens when a community pharmacy has to close? In rural towns, the local pharmacy is often the closest healthcare provider for miles. At these locations, people can check their blood pressure, access healthy foods, get advice on over-the-counter (OTC) aids, or better understand their prescription drug interactions and side effects. For patients with unreliable access to transport, local pharmacy delivery and walkability matter most.

“We have a lot of rural locations at Express Rx (based in Little Rock, AR), so it is very important for us to be able to offer some of these services that maybe people in our communities can't get because they don't have a local doctor's office,” says Collier. “It's huge now that we can offer immunizations and some testing that they would have had to drive to another town to get or just not get it at all.”

Adequate access to healthcare is an ever-present challenge. Telehealth boomed during the pandemic —telemedicine use among physicians grew from 15.4% in 2019 to 86.5% in 2021, according to the National Center for Health Statistics.

 But not every patient has reliable internet or the computer literacy necessary for telehealth visits, however. It’s important that pharmacies are there when patients have questions.

“We're the most accessible healthcare provider,” says Edmundson. “You don't need an appointment to ask your pharmacist a question or to get counseling from them.”

As mentioned, nationwide, pharmacies are closing. Across the US, more than 7,000 pharmacies have shuttered since 2019, according to data from Lucas Berenbrok, PharmD, associate professor of pharmacy and therapeutics at the University of Pittsburgh School of Pharmacy. He considers that estimate conservative. Of those pharmacies, 54% were independent drugstores, an AP analysis of Berenbrok’s data found.

 It’s not just the “little guys,” however. In June, CNN reported that Walgreens planned to close a “significant number” of its 8,000+ stores. CVS, reportedly, already closed 244 stores between 2018-2020, and had plans to close about 900 more starting in 2021.

“The biggest thing lagging behind now is that we don't have provider status. We can't bill, in many cases, for clinical services. We can put pills in a bottle, but we can't bill for every sort of point-of-care test,” says Michael Halliwell, director of pharmacy and whole health, Balls Food Stores, a longtime retail grocery chain serving Kansas City, KS

 “The hard part is that pharmacies have been crying about reimbursement for a long time, and it's gotten worse and worse. Over the last five years, there has been a dramatic reduction in what we get reimbursed.”

Halliwell adds that a big issue has been the increasing levels of direct and indirect remuneration (DIR) fees. “We're paying 2020-freeze clawbacks,” he notes. “We’ve been getting hit with DIR fees since January 1—twice the DIR fees, in fact, which literally levels so many independent pharmacies who don't have cash. It’s bad out there.”

The margins, therefore, have gotten smaller and smaller, with more tasks falling on pharmacists’ plates and fewer resources to go around. Every time someone shops online or elsewhere for cheaper prescription or OTC products, the pharmacy loses ground. With rising prices for prescription drugs in recent years and new complexities emerging in payer coverage, pharmacies, much like patients, have felt the squeeze.

There is some help from new advances in technology and automation. Inbound call centers, as well, assist in managing the volume of pharmacy calls and utilize central-fill pharmacies to fulfill recurring prescriptions. This allows pharmacists more room to operate at the top of their license, offering in-person consultations and counseling, testing, and immunizations.

“Community pharmacies are stressed at the moment. We've got a lot on our shoulders,” says Edmundson. “All those patients have to go somewhere, which just puts more workload on the pharmacies that are still here. There have to be workflow adjustments to make offering these types of services viable.”

Without a significant shift, the current trend of pharmacy closures will likely continue. To turn back the tide, experts believe policies need to change, and community pharmacies need stronger support and advocacy to bridge the healthcare gaps that are steadily widening.

Marina Crouse is a copywriter with MJH Life Sciences®, parent company of Pharmaceutical Commerce. She works closely with such MJH media brands as Mesmerize, which specializes in patient education at the point of care.

Michael Christel is Group Managing Editor of Pharmaceutical Commerce, Pharmaceutical Executive, and Applied Clinical Trials.

1. Telemedicine Use Among Physicians by Physician Specialty: United States, 2021. National Center for Health Statistics. February 2024. 

https://www.cdc.gov/nchs/products/databriefs/db493.htm

2. As Pharmacies Shutter, Some Western States, Black and Latino Communities are Left Behind. AP. June 3, 2024. 

https://apnews.com/article/pharmacy-closure-drugstore-cvs-walgreens-rite-aid-91967f18c0c059415b98fcf67ad0f84e

3. Meyersohn, N. Why Walgreens, CVS, and Rite Aid are Closing Thousands of Drug Stores Across America. CNN. June 28, 2024. 

https://www.cnn.com/2024/06/28/business/walgreens-cvs-closing/index.html

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With today's pharmacy landscape shaken by unprecedented and wider disruption to healthcare support and delivery, community and independent entities strive to remain an integral cog in the mix.

Community Pharmacies in Crisis: Navigating the Challenges and Closures

Joerg 5

PC: How are large pharma companies adapting their strategies in product lifecycle management and portfolio development in the face looming headwinds such as the 2030 patent cliff?

 This adaption in lifecycle management and portfolio development by large pharmaceutical companies is currently top of mind and a key priority for many leaders in the pharmaceutical industry. The 2030 patent cliff is a real thing. We’ll see nearly 200 drug products losing their patents over the upcoming years, with 69 of them being blockbusters. Over time, it could be one of the biggest patent cliffs that we’ll observe in the market.

Overall, we can observe two major strategies by biopharmaceutical companies in this area (navigating and absorbing looming patent losses). The first one is an increased focus on making internal development faster, more agile, and less costly. So, therefore, also increasing the ROI on your internal R&D. The next strategy, as we’ve seen in the last few years, is using M&A, external deals, and licensing as further fuel for growth of the market.

Looking at the key blockbusters and doing an analysis, 72% of these products have been developed by smaller companies and then purchased by mostly bigger ones. Therefore, this trend that we’ve observed in last few years will also further prevail, and will have a strong focus on external deals that will continue. That is also backed by the comments we heard at the JP Morgan conference [in January]. For instance, the CEO of Eli Lilly saying we're open to business, and also having a very focused approach in purchasing new assets or companies; but then keeping these companies outside of the Eli Lilly universe in order to also have some additional external/internal R&D.

Other executives, too, from Novo Nordisk, J&J, and others made clear statements that external growth will be a key part of their strategy and they have a key focus on doing BD&L activities, especially in the areas where the company already has a strong foothold and expertise. And then further building this out with these external deals with especially smaller- and mid-sized biotechs.

For more on the changing trends in biopharma dealmaking, read our industry outlook analysis 

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In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, explores the two major strategies big pharma companies are employing amid current macro challenges and efforts to offset looming patent losses to blockbuster brands.

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PC: Which therapeutics settings, or technology/platform areas, are you seeing the most M&A and partnering activity at the moment?

 There are several therapeutic areas and technology platforms where we’ve seen a very strong focus in 2023 and the first few months of this year. In terms of TA, oncology is still, by far, ahead regarding deal volumes compared to all the other therapeutic areas. But then we see neurology and cardiology also being very relevant at the moment. When it comes to more of the individual technologies, I think it's very obvious that ADCs (antibody-drug conjugates) are the hottest topic in the industry at the moment, especially looking at the rise in licensing-deal volume that we've seen in the last year. In 2023, the ADC licensing-deal volume was $43 billion alone. When you look at it over time, [volume] has increased in the last few years by 350%. So, from a clinical as well as deal perspective, this is the hottest topic in the industry.

There’s also cell and gene therapies. [These products] have actually declined in deal value, and not just in 2023; it started beforehand with many gene therapies, in the end, not making it to the market. There’s just a handful of companies and assets that we have seen in the market; therefore, with the higher aversion to risk, we’ve seen investors pulling out a little bit from that area. But cell and gene therapies are still very relevant for the future. We see many promising approaches, such as CRISPR, and dealmaking in this area is still active, just not as big as it used to be in [recent] years.

PC: What are some emerging or hot areas for dealmaking in the future?

 When we look at the next big thing in the industry, one of them could be radioligand therapy (RLT)—as a contender to that title. We currently see Novartis putting its bets on RLT instead of ADCs. We also see other companies going into the RLT area, such as Eli Lilly, and others investing in this new therapeutic platform. The future will bring a lot of changes in this area.

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, discusses the hottest therapeutic settings for dealmaking activity at the moment—and one platform approach in particular poised to be at the center of future M&A and licensing pursuits.

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Emerging Biophama: Striving for Optimal Commercial Positioning

PC: What steps can young innovator companies take to better differentiate their value proposition and attract interest from potential buyers?

 The early-stage companies are phenomenal in one area—they have a great understanding of the clinical value of their asset. The key problem is not the clinical side of things, but more the commercial and market access side that a lot of these young companies are not sufficiently focusing on. Early-stage companies often miss the focus on striving for the optimal commercial positioning [of their potentially approved product]. This can be setting up the ideal LCM (lifecycle management) strategy in their trial program; or to consider payer-relevant evidence-generation to later on convince the different HTA (health technology assessment) and payer bodies of the value of their assets. And then having the right M&A outcomes at hand. That’s kind of the [challenges] that we'll see with a lot of emerging companies.

Therefore, I have three recommendations to these companies.

First and foremost, continue with the focus on the high understanding of your clinical value. That's still your key to success. But then take a further step into understanding the market even more in-depth, looking at all the different levers when it comes to commercial and market access. For example, we just did a recent study looking into how the forecasts of certain companies reflected in the later-on performance and actual sales [produced] by these companies. We’ve seen that the deviation, especially among early-stage companies, has been quite extreme with hardly any meeting their forecasts. In order to extract the full value of your product or your company, it's very important to also have a good grasp of this commercial knowledge of the future markets, preparing your strategies, and optimizing the pricing and access potential for payers for your product in order, then, to have better outcomes in deals later on.

Lastly, be bolder on your go-to-market strategy. We see a lot of companies that directly strive for the exit option and, therefore, leaving a lot of money on the table. We would recommend to the smaller companies to think about and prepare yourself for commercializing your product yourself, because then you have this alternative option. You can still sell your company later on or sell the asset or out-license it in certain geographies. But think about [commercializing] it yourself; then you have this plan B and much better cards to play in future negotiations with potential partners or buyers.

For more on the evolving relationship factors in life sciences dealmaking and investment, read our industry outlook analysis 

In this Pharmaceutical Commerce video interview, Joerg Tritschler, a partner in Simon-Kucher’s life sciences division, discusses the important and often missing element in strategic planning for clinical-stage companies—and ways to close that focus gap.