Will pharma chains capitalize on the vaccine surge?

With tens of millions of Americans slated for vaccines in 2021, CVS, Walgreens, and Rite Aid are upgrading their stores to capitalize.

Whatever this South Park “pharma” joke is…it’s def hilarious (Source: Giphy)

Have you ever thought to yourself, “Huh, there’s a CVS on every block”? 

That intuition is actually not too far off. With ~10k stores across America, CVS has a store within 5 miles of 71% of the US population (220m+ people).

As pharma increasingly moves online — from D2C brands like Ro and Hims to a sleepy startup called Amazon — CVS has bet its future on brick ‘n’ mortar.

The walk-in business was hit hard in 2020

But with the vaccine rollout promising millions of people in foot traffic, CVS (along with Walgreens and Rite Aid) are pursuing strategies to woo customers, per CNBC:

  • CVS — which acquired insurer Aetna in a $69B deal in 2018 — wants to become a total health destination that sells drugs, treats chronic conditions, and even offers yoga
  • Walgreens is rolling out 100s of primary clinics and upping curbside pickup for its ~9k stores
  • Rite Aid is restocking its inventory with “holistic” health items (sleep aids, essential oils) and partnering with Instacart on deliveries

These changes come at a tumultuous time for the pharma brands

CVS and Walgreens are both transitioning to new CEOs.

Meanwhile, Rite Aid is the minnow of the group (it has ~2.5k stores and is valued at $1B vs. $100B for CVS, $41B for Walgreens) and has had a number of acquisitions from larger suitors — including Walgreens — fall through.

In addition to the online threat…

… these pharma chains have to contend with big-box stores like Target and Walmart encroaching on their turf.

Further, the vaccine rollout process itself (only in the first of 3 phases) has been bumpy, according to the Wall Street Journal:

  • Miscommunication between federal and state authorities is causing confusion about the vaccination scheduling
  • Pharmacies are receiving far fewer vaccines than they could feasibly give out (e.g., Kroger has given 4.5k COVID-19 doses versus 200k it delivers per week during flu season)

We don’t know if these pharma chains can capitalize from the vaccine rollout, but — at the very least — we know where to find them.

Check out related coverage:

  • 50 new health care billionaires were minted in the pandemic
  • How Ro built a $1.5B telehealth powerhouse
  • Amazon’s pharmacy biz, explained

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