CVS Health, the parent company of CVS Pharmacy, is a dominant player in the retail pharmacy and healthcare industry. With over 10,000 locations across the United States and a revenue of $268.7 billion in 2020, CVS has solidified its position as a market leader. However, the company faces fierce competition from various sectors, including retail pharmacies, healthcare companies, and grocery stores with in-store pharmacies.
In this comprehensive article, we will take a deep dive into CVS Health‘s major competitors, analyzing their market share, strategies, strengths, and weaknesses. We will also examine the evolving competitive landscape, discuss the impact of the COVID-19 pandemic, and explore potential future trends and challenges for CVS and its rivals.
Retail Pharmacy Competitors
1. Walgreens
Walgreens, owned by Walgreens Boots Alliance, is CVS‘s primary competitor in the retail pharmacy space. With over 13,100 stores worldwide, including a strong presence in the United States and the United Kingdom, Walgreens offers a wide range of healthcare services, mail-in, and specialty pharmacy services. In 2020, Walgreens generated a revenue of $139.5 billion, with prescription revenue accounting for $88.6 billion.
Walgreens has been focusing on expanding its healthcare offerings, such as in-store clinics and telemedicine services, to differentiate itself from competitors. The company has also invested in digital initiatives to enhance the customer experience and streamline operations. In 2020, Walgreens launched a new customer loyalty program, myWalgreens, which offers personalized deals, rewards, and health services to members.
According to a 2021 J.D. Power survey, Walgreens ranks second in customer satisfaction among brick-and-mortar pharmacies, with a score of 849 out of 1,000, just behind CVS‘s score of 851.
2. Rite Aid
Rite Aid is another major retail pharmacy chain competing with CVS, although it has a smaller footprint with around 2,400 locations across 17 states. In 2020, Rite Aid reported a revenue of $21.9 billion, with prescription revenue contributing $11.6 billion.
Despite its smaller scale, Rite Aid has been working on improving its customer experience and expanding its healthcare services. The company has partnered with InnovAge to provide senior care services and has launched a digital platform for managing prescriptions and health information. Rite Aid also offers a loyalty program, wellness+ rewards, which provides members with exclusive discounts, personalized offers, and health and wellness resources.
In the 2021 J.D. Power survey, Rite Aid ranked fifth in customer satisfaction among brick-and-mortar pharmacies, with a score of 821 out of 1,000.
Healthcare Company Competitors
1. UnitedHealth Group (OptumRx)
UnitedHealth Group, through its affiliate OptumRx, is a significant competitor to CVS in the healthcare and pharmacy services sector. In 2020, UnitedHealth Group generated an estimated $32.2 billion in prescription revenue, ranking it among the top four players in the industry.
OptumRx offers mail-in and specialty pharmacy services, catering to customers nationwide. The company has been focusing on expanding its digital capabilities and leveraging data analytics to improve patient outcomes and reduce costs. In 2021, OptumRx announced a partnership with Diplomat Pharmacy to enhance its specialty pharmacy services and provide patients with more personalized care.
According to a 2021 Drug Channels report, OptumRx had a market share of 19.6% in the pharmacy benefit management (PBM) industry, ranking third behind CVS Caremark (30.7%) and Express Scripts (23.3%).
2. Cigna (Express Scripts)
Cigna, which acquired Express Scripts in 2018, is another leading mail-in and specialty pharmacy provider in the United States. In 2020, Cigna reported a prescription revenue of $49.9 billion, a 9% increase from the previous year.
With over 49,000 Express Scripts locations nationwide, Cigna has a strong presence in the pharmacy services market. The company has been investing in technology and innovation to enhance its offerings and improve the customer experience. In 2020, Express Scripts launched a new digital health formulary, aimed at providing patients with access to clinically proven digital health solutions.
In the 2021 Drug Channels report, Express Scripts had a market share of 23.3% in the PBM industry, ranking second behind CVS Caremark.
Grocery Store Pharmacy Competitors
1. Kroger
Kroger, one of the largest grocery store chains in the United States, operates more than 2,200 pharmacy locations. In 2020, Kroger‘s pharmacy division generated a revenue of $15.1 billion from regular and specialty pharmacy services.
Kroger has been expanding its healthcare offerings, including in-store clinics and a low-cost prescription drug program. The company has also invested in digital solutions to improve the customer experience and streamline operations. In 2021, Kroger launched a new vaccine scheduling tool, allowing customers to easily book COVID-19 vaccination appointments online.
According to a 2021 Consumer Reports survey, Kroger ranks third in customer satisfaction among grocery store pharmacies, with a score of 86 out of 100, behind H-E-B (89) and Wegmans (87).
2. Walmart
Walmart, the world‘s largest retailer, has a significant presence in the pharmacy market, with a pharmacy in almost every store. In 2020, Walmart‘s pharmacy division generated a revenue of $21.7 billion, offering both specialty and mail-in prescription services.
Walmart is known for its $4 generic prescription program, which provides affordable access to thousands of medications. The company has also been investing in technology and partnerships to enhance its healthcare offerings and improve the customer experience. In 2020, Walmart launched a new insurance education program, Healthcare Begins Here, to help customers better understand their insurance options and make informed decisions.
In the 2021 Consumer Reports survey, Walmart ranked sixth in customer satisfaction among grocery store pharmacies, with a score of 83 out of 100.
Impact of the COVID-19 Pandemic
The COVID-19 pandemic has had a significant impact on the retail pharmacy industry, accelerating the adoption of digital health solutions and changing consumer behaviors. CVS and its competitors have had to adapt quickly to meet the evolving needs of their customers and ensure the safety of their employees.
Some of the key ways in which the pandemic has affected the industry include:
- Increased demand for COVID-19 testing and vaccination services
- Expansion of telehealth and remote care offerings
- Greater focus on home delivery and curbside pickup options
- Heightened importance of safety measures and personal protective equipment (PPE)
- Acceleration of digital transformation initiatives
CVS has been at the forefront of the pandemic response, offering COVID-19 testing at over 4,000 locations and administering millions of vaccines nationwide. The company has also expanded its telehealth services, launched a new Return Ready program to help employers safely reopen their workplaces, and introduced new digital tools to help customers manage their health and wellness from home.
Other competitors have also stepped up their efforts to support customers during the pandemic. Walgreens has launched a new COVID-19 Index to help communities track the spread of the virus, while Walmart has been working with the federal government to distribute vaccines and has introduced a new COVID-19 screening tool in its mobile app.
Innovative Services and Partnerships
To stay competitive in the rapidly evolving retail pharmacy industry, CVS and its competitors have been investing in innovative services and partnerships to enhance their offerings and improve the customer experience.
Some notable examples include:
- CVS‘s partnership with Teladoc Health to offer virtual mental health services
- Walgreens‘ collaboration with VillageMD to open primary care clinics co-located with its pharmacies
- Rite Aid‘s partnership with Amazon to offer Amazon Lockers at its stores for convenient package pickup and returns
- Kroger‘s launch of a new telenutrition service, offering personalized nutrition counseling and meal planning support
- Walmart‘s acquisition of MeMD, a multi-specialty telehealth provider, to expand its virtual care offerings
These innovations and partnerships demonstrate the increasing convergence of healthcare and retail, as companies seek to provide more comprehensive and integrated services to their customers.
Customer Loyalty Programs
Customer loyalty programs play a significant role in the competitive landscape of the retail pharmacy industry. These programs aim to retain customers, encourage repeat purchases, and gather valuable data on customer preferences and behaviors.
CVS‘s ExtraCare rewards program is one of the largest and most successful loyalty programs in the industry, with over 77 million active members. The program offers personalized coupons, discounts, and cashback rewards based on members‘ purchasing habits. In 2020, CVS launched a new paid membership tier, CarePass, which provides additional benefits such as free delivery, 24/7 access to a pharmacist, and discounts on health and wellness products.
Other competitors have also invested in their loyalty programs to compete with CVS. Walgreens‘ myWalgreens program, launched in 2020, offers personalized deals, rewards, and health services, while Rite Aid‘s wellness+ rewards program provides members with exclusive discounts, personalized offers, and health and wellness resources.
These loyalty programs not only help companies retain customers but also provide valuable insights into customer behavior, enabling them to tailor their offerings and marketing strategies to better meet the needs of their target audiences.
The Amazon Effect
The potential entry of Amazon into the pharmacy market has been a topic of much discussion in recent years. In 2018, Amazon acquired PillPack, an online pharmacy that delivers pre-sorted medication packages to customers‘ homes. Since then, the e-commerce giant has been gradually expanding its pharmacy offerings, launching Amazon Pharmacy in 2020.
Amazon Pharmacy offers a wide range of prescription medications, as well as transparent pricing, free two-day delivery for Prime members, and the ability to compare prices with insurance co-pays. The service also integrates with Amazon‘s existing customer base and vast logistics network, potentially giving it a significant competitive advantage.
The entry of Amazon into the pharmacy market has put pressure on traditional retail pharmacies like CVS to innovate and differentiate their offerings. While Amazon‘s market share in the pharmacy industry is still relatively small, its potential to disrupt the status quo cannot be ignored.
To compete with Amazon, CVS and its competitors will need to focus on providing exceptional customer service, leveraging their physical store networks, and investing in digital solutions that offer convenience and value to customers.
Health and Wellness Products
In addition to prescription medications, retail pharmacies have been expanding their offerings in the health and wellness space to meet the growing demand for preventive care and self-care products. This includes over-the-counter medications, vitamins and supplements, personal care items, and health-related devices.
CVS has been at the forefront of this trend, with its "HealthHUB" concept stores that dedicate significant space to health and wellness products and services. These stores offer a wide range of products, as well as in-store clinics, counseling services, and educational resources to help customers manage their health and well-being.
Other competitors have also been investing in the health and wellness space. Walgreens has launched a new line of private-label health and wellness products, Walgreens Finest Nutrition, while Kroger has expanded its natural and organic product offerings and introduced a new line of plant-based products under its Simple Truth brand.
The focus on health and wellness products not only provides additional revenue streams for retail pharmacies but also helps them position themselves as one-stop shops for customers‘ healthcare needs.
Future of the Industry
The retail pharmacy industry is poised for significant change in the coming years, driven by factors such as the ongoing COVID-19 pandemic, the rise of e-commerce, and the increasing focus on preventive care and personalized medicine.
Some potential trends and developments to watch include:
- Further consolidation and partnerships among industry players, as companies seek to gain scale and expand their capabilities
- Continued growth of digital health solutions, such as telemedicine, remote monitoring, and mobile health apps
- Expansion of value-based care models, which tie reimbursement to patient outcomes rather than the volume of services provided
- Increased focus on social determinants of health, such as access to healthy food, housing, and transportation, as key drivers of health outcomes
- Greater emphasis on diversity, equity, and inclusion in healthcare, as companies seek to address health disparities and meet the needs of underserved populations
To succeed in this evolving landscape, CVS and its competitors will need to be agile, innovative, and customer-centric. They will need to invest in new technologies, partnerships, and capabilities to meet the changing needs of their customers and stay ahead of the competition.
Conclusion
CVS Health operates in a highly competitive and dynamic market, facing challenges from retail pharmacies, healthcare companies, grocery store pharmacies, and new entrants like Amazon. While CVS has maintained its position as a market leader, the company must continue to adapt and innovate to stay ahead of the curve.
As the retail pharmacy industry evolves, customers can expect to see more integrated and personalized healthcare services, a greater emphasis on digital solutions and convenience, and an increased focus on health and wellness products and services.
The companies that can effectively navigate these changes, leverage their strengths, and meet the changing needs of their customers will be best positioned for success in the years to come. CVS, with its extensive network of stores, strong brand recognition, and investments in digital health and customer loyalty, is well-positioned to remain a leader in the industry. However, it will need to continue to innovate and differentiate itself to fend off competition from both traditional rivals and new entrants.
For picky shoppers and retail and consumer experts, the key to success in this market will be to stay informed about the latest trends, carefully evaluate the offerings and value propositions of different companies, and make informed decisions based on individual needs and preferences. By doing so, they can take advantage of the increasing competition and innovation in the retail pharmacy industry to access high-quality, affordable, and personalized healthcare services.
