Retail pharmacy industry facing challenges from supply chain disruptions and labor shortages, but CVS and Walgreens are investing in innovations and digital solutions

From Nasdaq: 2024-04-03 08:52:00

The Retail – Pharmacies and Drug Stores industry saw a boost in demand during the pandemic, with mail-order pharmacies incorporating digital health services. However, heavyweights like CVS and Walgreens are facing challenges from supply chain disruptions and labor shortages, as well as Amazon’s entry into the market.

Pharmacy retailers are struggling with low-margin generic drugs and rising medicine prices, leading to reduced demand for prescription and over-the-counter drugs. CVS Health announced plans to change prescription drug pricing. Amazon Pharmacy’s omnichannel performance has increased competition, impacting retail pharmacy market shares significantly. The industry is grappling with a challenging pharmacy reimbursement environment.

The digital pharmacy market is on the rise, with growing consumer preference for mail-order and online pharmacies. Companies are strategically focusing on improving their digital capabilities to meet increasing customer demands. Despite growth potential, the Zacks Retail – Pharmacies and Drug Stores industry ranks low in terms of prospects compared to other industries.

CVS Health and Walgreens Boots Alliance are investing in innovations and digital solutions to enhance customer experiences and drive growth. CVS Health’s solid digital engagement and Walgreens Boots Alliance’s micro-fulfillment centers are key strategies for future success. Both companies have positive long-term earnings growth rates, positioning them as potential outperformers in the industry.



Read more at Nasdaq: 2 Retail Pharmacy Stocks to Watch and One to Avoid Amid Industry Headwinds