CVS 2008 Annual Report Download - page 13
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Please find page 13 of the 2008 CVS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Same-store sales in the front of the
store increased by 3.6 percent, and
we gained share in 85 percent of our
front-store categories. Since non-
discretionary items account for the
majority of front-end sales, that part
of our business should prove relatively
recession-resistant. And given the state
of the economy, customers have been
more willing to try our private-label and
proprietary products. Sales of private-
label and CVS-exclusive brands rose
faster than in prior years to more than
16 percent of our front-end total at
year-end. Much like generics in the
pharmacy, these offerings also yield
greater margins.
MinuteClinic’s Expanded Offerings
Bolster Our Health Care Strategy
As part of our broader health care
strategy, we’ve continued to open
MinuteClinic locations and expand their
range of services. They now include
wellness and prevention screenings, and
a larger selection of vaccinations. We
also launched pilot programs to incorpo-
rate MinuteClinic into our PBM offerings.
For example, some of our PBM plan
participants can now stop in for health
assessments at convenient locations.
We’ve noted since MinuteClinic’s
acquisition that its competitive price
can help us lower costs for health plans
and self-insured employers. They have
begun to embrace this model, and
we’ve been able to contract with more
payors as a result. In fact, visits paid for
by third parties amounted to more than
70 percent of our total in 2008.
Our expanded health care focus can
also be seen in the appointment of
Troyen Brennan, M.D., in November
2008 to the newly created role of chief
medical offi cer. Dr. Brennan, a practic-
ing physician, former hospital adminis-
trator and, most recently, chief medical
offi cer at Aetna, has assumed responsi-
bility for MinuteClinic, Accordant Health
Care, clinical and medical affairs, and
our health care strategy.
Broad Industry Trends Will Contribute
to Our Long-Term Performance
With strong execution across our busi-
nesses, we have good reason to feel
optimistic about the future. We expect a
number of long-term industry trends to
work in our favor as well, including ris-
ing use of generic drugs and the aging
of the U.S. population. Well over 60
percent of all drugs dispensed in 2008
across our industry were generics. That
fi gure is likely to rise to 75 percent by
2012 as several blockbuster drugs lose
patent protection.
Looking at the U.S. population, approxi-
mately 38 million people are 65 or older
today. That number is projected to climb
to 47 million by 2015, and prescription
drug use is expected to rise substantially
within this demographic. With leading
market positions in California, Florida,
and other sun-belt states, we stand to
benefi t from this trend to a greater extent
than most other pharmacy players.
Other changes are likely to unfold in the
coming years that should benefi t CVS
Caremark, patients, and payors alike.
Among them, the Obama administra-
tion has already begun exploring ways
in which health insurance can be
broadened to cover a larger portion of
the population. The resulting increase
in access to prescription drugs would
be good for CVS Caremark and good for
the country. Legislation paving the way
for a biogeneric approval process as
well as growth in e-prescribing is also on
the horizon. We look forward to working
with the new administration on health
care reform.
On behalf of the board of directors
and CVS Caremark’s 215,000 col-
leagues across the country, thank you
for your confi dence in our company
and our vision. We are just beginning
to realize the benefi ts of our broader
pharmacy health care mission.
Thomas M. Ryan
Chairman of the Board,
President & CEO
“ With strong execution across our businesses, we have good reason to feel optimistic about the
future. We expect a number of long-term industry trends to work in our favor as well, including
rising use of generic drugs and the aging of the U.S. population.”
2008 ANNUAL REPORT 9