Prescription Trends

(

trends

PRESCRI

by

William T. Doyle *

IN U.S. drugstores had come from prescriptions;

$165,700,000 in1952 saw this figure soar to $815,000,000. It is significant to point out that in 1939 prescriptions were only 10.6 per cent of total store sales, while in 1952, the percentage jumped to 20.1 per cent. This tremendous dollar increase in the professional side of pharmacy calls for a careful evaluation of the reasons for this phenomenal growth. Certainly, the fact that the average prescription price increased from 91 cents in 1939 to $1.98 in 1952 is hardly an answer to the remarkable upward trend of the prescription business. For many months now, we have been studying trends and what makes them. During this time, we have traveled across the entire breadth of the United States, and have discussed the subject with owners of almost 100 busy prescription pharmacies. Our sales force and a marketresearch organization have given us the benefit of practices of another 418 pharmacies. In addition, through the cooperation of our representatives and field managers, we have been able to learn the attitudes and opinions of over 1,000 physicians as well. This paper is based in a large measure on the results of these field reports plus data supplied by Dun & Bradstreet, the Research Society (a nonprofit pharmaceutical market-research firm of Boston, Mass.), Drug Topics, and the Metropolitan Life Insurance Company. 1939

Population Pattern

At the present time, the U.S. popUlation is estimated at 160,000,000 which is a sharp increase from the 130,877,000 of 1939. The experts say Presented before the Section on Pharmaceutical Economics, A.PH.A. Convention , Salt Lake City, Utah, August , 1953. * Vice-President, Organon , Inc ., Orange, N .J .

November, 1953

the outlook for continued growth is bright, and we shall probably reach the 200,000,000 mark well before the end of the century. In the, pa~t five years, more than 18,500,000 babies were porn in America which is an average of a little under 4,000,000 new additions a year. Current estimates indicate 1953 alone promises to show the ,highest increase in births in our entire history-over 4,000,000! · .. The number of deaths in 1950 totalled 1,456,000 or 9.6 per 1,000 population. · . . Admissions to registered h05pitals exceeded 17,000,000. · .. During the past decade, the number of families increased by 25 per cent- from approximately 32,000,000 to 40,000,000. · .. 1953 shows an average annual-income rate of $3,300 per family unit which is an alltime high. There are close ,to 62,000,000 workers in the civilian labor force at the present time. · .. 19,000,000 married women are working. This constitutes a big potential market, although a less permanent one; as we all know when recessions occur in the economic cycle, married women are affected first. The age distribution of the popUlation has been undergoing significant changes. As a consequence of the recent rise in the birth rate, the proportion of children under five years of age has increased from 8.0 per cent in 1940 to 10.8 per cent of the total population in 1950, thereby reversing the trend in evidence since 1860. The percentage of older people has been rising steadily for an even longer time. In 1950 the proportion at ages 65 and over was 8.2 per cent-exactly twice that at the turn of the century. (Continued on next page)

709

JOURNAL OF THE AMERICAN PHARMACEUTICAL ASSOCIATION

• • • • • • • • • from preceding page

From these figures, it is easy to see that our prosperity is built on the solid foundation of an expanding population that is working hard, making money, and interested in buy.ing products and services that will keep them healthy and give them more time to enjoy themselves. Your Customer

It is a rule of thumb among many sales executives that 25 per cent to 30 per cent of a sales force bring in 65 per cent to 70 per cent of the sales volume. A close analysis of drugstores in any community will reveal that a very small percentage of the total number get the cream of the business. When we asked "why," here is what we learned. 1. Professional Services. When the customer telephoned or visited the store" he was given polite and prompt attention. Above all, the professional dignity of the pharmacy encouraged confidence. It is coincidental and interesting that the recent N .A.R.D. survey showed that 66 per cent of the customers interviewed stated that they preferred to buy their drug products in a pharmacy because they have "faith in the druggist's personal advice." II. Adequate Stocks. All but four of the 500 pharmacies stressed the importance of having adequate inventory. Over one-third of the drugstores believed they had built their success on a well-managed inventory. We were very impressed with the excellent and modern inventory-control systems that even three of the two-man stores had. I t was pointed out by practically all that fresh-looking merchandise, well displayed, helps sell itself. It was stressed, time and again, by the successful owners that a pharmacy should not tie up limited capital in too much dead, slowmoving merchandise. Of course, many pharmacy owners pointed out that the very nature of a drugstore requires some products on which the demand may be limited and sporad~c. However, these should be screened carefully. III. Fair Pricing. It was surprising that over 60 per cent of the pharmacies voiced the opinion that prices should be fair to both the public and the pharmacist-this seemed especially evident in the case of prescriptions. Several incidents were recited by pharmacists of competitors who were pricing the prescriptions so high that customers were taking their business elsewhere. Others pointed out the tendency of some to take all the profit out of some prescription preparations. The cortisone situation was cited the most frequently as an example of some 710

pharmacies actually losing money on cortisone in order to get other customer business. It is evident that the retail drug business is prosperous., However, there are a few danger signs which are worth while pointing out. In the first six months of this year, Dun & Bradstreet report 59 retail drugstore failures involving liabilities of $2,084,000 . At the present rate, the number of drugstore failures for 1953 will total approximately 118 to 120. Below is a table showing retail drugstore failures from 1934 through 1952. I

RETAIL DRUGSTORE FAILURES,

.

1934-52

Year

Number

Liabilities ·

1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952

640 591 438 328 460 539 518 464 450 120 26 12 11 28 50 116 116 108 107

$6,887,000 5,082,000 3,619,000 2,786,000 3,812,000 4,349,000 3,528,000 3,9~1,000

3,155,000 763,000 263,000 134,000 49,000 369,000 904,000 2,232,000 1,714,000 1,845,000 1,908,000

It is also interesting to note that the point at which retail drugstores are most vulnerable to bankruptcy is during the first five years. I t is during this time that the greatest percentage of failures occur. If a retailer is successful in getting beyond the five-year period, the chances are excellent that he will survive the battle of competition. Below is a chart showing the age percentage of drugstore failures by the number of years they have been in business. AGE OF DRUGSTORE FAILURES ' IN

Starting Year

1951 1950 1949 1948 1947 1946 1945 1944 1943 1942 1941 1940 1935-39 1930-34 1925-29

1951

Percent

2.8 18.1 18 . 1 10 .5 7 .6 13. 3 4.8 1.9 1.0 1.0 4.8 5 .7 5.7 2 .8 1.9 Vol. XIV, No. 11

PRACTICAL PHARMACY EDITION

In analyzing the reasons for retail drugstore failures, Dun & Bradstreet has found that the following are the most cOlnmon causes in order of their importance: Inadequate Sales . . . ..... . . . .... . Excessive Fixed Assets . . ..... . .. . Competitive Weaknesses . ....... . Inventory Difficulties ... . . . ... .. . Poor Health ......... ... ........ . Poor Location .... . ......... . . . . . Heavy Operating Expenses . .. ... . Receivables Difficulties .... . ... .. .

46.3% 14.8% 14.8% 13.9% 7.5% 7.5% 5.6% 1.8%

By and large, the public believes the charges on prescriptions are fair. A recent survey among a cross-section of 500 residents of North Carolina (J. A. M. A ., July 18, 1953, pp. 1145- 1149) revealed that 61 per cent felt the prescription ch~rg,es wc;re fair :vhile 39 per cent thought they w~re not:" This compares quite unfavorably wIth the physician. Here, 72 per cent thought the doctors' fees were fair and only 28 per cent did not. It is certainly obvious that almost four out of every ten persons who believe they are being overcharged on prescriptions should be educated to understand otherwise. It is the job of every responsible pharmacist to explain to a customer beforehand that his prescription will be more than the average. In this way, much misunderstanding and ill will can be avoided. Your Physician

Today, there are an estimated 170,000 practicing physicians in the United States. This is quite an increase over the 145,000 of 1939. According to the latest Medical Economics survey of income, general practitioners net themselves $14,098 annually, specialists $17,112, and partial specialists $15,119. The average net income for all physicians is $15,262, which, compared with $4,470 for the year 1939 is proof enough that the public is much more interested in protecting its health than ever before. Now, of course, it is important to know what these,busy, prosperous physicians are prescribing. As we suggested earlier, inventory control is a very important part of successful store management, and since 20.1 per cent of total store sales are prescriptions, it is most vital that prescription trends be known. Probably the most comprehensive continuing study of prescription trends is that conducted by the Research Society Inc., of Boston, Mass. A recent summary of their findings (based on a study of 231,860 prescriptions) showed the following prescriptions by therapeutic classification: November, 1953

25 .88% of the prescriptions called for an anti-infective. 10 .46% called for analgesics and antiarthritics. 9 . 66% were for vitamins- hematinics and related products. 9 .39% for sedatives and hypnotics. 6 .38% antihistaminics. 5.87% for antacids, antispasmodics, and peptic-ulcer therapy. 5.31 % cough preparations and nasal decongestants. The average price for these 231,860 prescriptions was $2.17. Compared with a similar study conducted during 1951, we find anti arthritics on the increase along with products used to lose weight. It is also significant that vitaminhematinic and related preparations are also showing steady progress. By working closely with your doctors and studying your prescription-product movement, as well as the many excellent prescription surveys and articles available in your drug journals, it is not too difficult to keep your prescription department inventory adequate and your profit where it should be. It is well to remember that the average sale for all items in a drugstore is only 49 cents, whereas the average prescription runs between $1.98 and $2.17. This is business worth going after because it is both professional and profitable. Your Manufacturer

The better-known pharmaceutical houses have an estimated 15,000 detail men calling on physicians every working day in the year. These representatives are a well-trained and well-educated group of men. Many of them are pharmacists themselves, with limited-to-extensive experience behind the counter. They are pollenizers of information; picking up good ideas here and spreading them helpfully throughout the country. Much can be gained if the store owner will work hand in glove with these representatives. We did not find one out of the five hundred-odd busy pharmacies we studied that did not associate themselves very closely with the pharmaceutical representatives covering the territories in which these stores were located. The question of whether a reputable pharmaceutical company remains in business is how successful the company's representatives are in creating specifications for their specialty products. The successful prescription pharmacy watches the sales performance of each of the representatives calling on him, and the more (Continued on page 722) 711

JOURNAL OF THE AMERICAN P H AR MACEUTI CAL ASSOCI ATI ON

Prescription Trends • • • • • • • • • • • • • f ro m p age 711

ffJr /)flJ1time SedatifJn SEDAYSON P A TE N T PEND ING

Mild sedative t a blet for on-the-job use. Quiets without incapacitating. Combination of acet y lcarbroma and bromisovalum. Bottles of 100.

ffJr Muscle Spasm LATRODOL PATENT

P~NDING

_

Synergistic tablet and liquid combination of mephenesin, nicotinic acid, and belladonna. 3-way relaxant for muscle spasm and tension. In bottles of 100 and pints of liquid.

ffJf HypertenSlfJn POTENSORS with Phe noba rb ita l and Rutin

Enteric coated tablet, yellow. General vasodilating agents with phenobarbital for sedation and rutin for protection against capillary fragility. In bottles of 100.

POTENSORS FORTE Enteric coated tablet, orange. A full N.F. dosage of 11h grains (100 mg.) chemically standardized veratrum viride. For resistant cases. In bottles of 100.

ffJf Skin Diseflses SUPERTAH White, creamy, non-staining ointment prepared from a concentrate of crude coal tar. Uniformly milled t o equal 5 % and 10 % tar st rengt hs. 2-oz. j aI'S and tubes.

SUPERTAH-S with Sulfu r and Salicylic Acid

Same tar component of SUPERT A H-5.. but in a non-g reasy base especially for dermatitis in hairy areas. Ilh -oz. jars.

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prescription response he gets from the efforts of particular detail men, the more likely he is to go all out with those men in keeping adequate stocks and promoting the physicians. Another sales-producing tool which has been used by many manufacturers successfully is direct mail. In fact, there are several companies who have been able to build a very profitable business with a well-balanced sales force complemented - by some hard-selling direct mail to physicians. Another way for the pharmacist to help determine his stocking requirements on a new product, or an older one being pushed on the detail cycle, is to find out from the representative how much mailing support is being given a preparation. Most companies let their salesmen know about their advertising efforts, but, if not, it is worth while to find out from the home office. Clark-O'Neill, a medical mailing service, reported recently that a busy general practitioner last year received 3,305 separate mailings of which 2,883 were from pharmaceutical manufacturers. And, as might be expected, there was a distinct correlation between the number and frequency of mailings for particular therapeutic classifications and the prescription -trend data we presented earlier; i.e., anti-infectives, antiarthritics and analgesics, and vitamins-hematinics were up front where we would expect them to be. It is clear that many of the important advances in therapy come from the research laboratories of the pharmaceutical manufacturers. Highly paid research teams working with outstanding clinicians are developing new and important drugs every year. These products are then placed in the hands of highly trained marketing men whose job it is to show the representatives how and when the physician should use the drug. Our study among over 500 busy prescription pharmacies and almost 1,000 busy physicians showed that new-product information is remembered as being received most often from the following sources: 41% from the detail man; 38% of the time from the pharmacist; 21 % from direct mail, medical journal, and other sources. It is readily apparent, then, that the pharmacist and the detail man constitute the major sources of information on new products. If the prescription department is to continue its phenomenal growth, the team of the pharmacist and detail man must learn to work closer. Together, these two men assist the medical profession in protecting the public's health and promoting a longer and more productive life for all. Vol. XIV, No. 11