America's #1 Specialty Pharmacy: CVS ProCare

ProCare pharmacists are active patient advocates and partner with physicians, pharmaceutical manufacturers and other healthcare providers to offer in-depth patient treatment and counseling services.

    During 2000, we solidified CVS' position as the leading provider of specialty pharmacy services through our CVS ProCare subsidiary. We now operate 46 ProCare apothecaries in 18 urban markets across the U.S., and, with our September 2000 acquisition of Stadtlander Pharmacy, we have established ProCare as the largest specialty mail order pharmacy in the nation. Importantly, we are the only specialty pharmacy provider offering integrated retail and mail order services.
    We launched ProCare with the objective of providing a pharmacy resource uniquely focused on serving patients with chronic conditions, such as HIV/AIDS, organ transplants, infertility, multiple sclerosis and cancer. Estimated at $14 billion in size today, the specialty pharmacy market is growing at an annual rate of 20%, with much of this growth being driven by medical advancements.

ProCare's Unique Business Model

    A major factor differentiating the needs of specialty and traditional pharmacy customers is the cost of treatment. Specialty pharmacy customers often require complex, highly expensive drug therapies over an extended period of time. While it is impractical to stock such medications in more than 4,000 CVS/pharmacy stores, we are able to maintain inventories in our ProCare apothecaries, where we have steady demand for these products. ProCare's emphasis on healthcare is further reinforced in the front of the store, which is stocked with wellness-oriented products such as alternative medications, homeopathic remedies and vitamins.
    Due to the high cost of treatment, there are complex billing procedures associated with specialty pharmacy. ProCare customers often have primary, secondary and even tertiary insurance.
    We have created a sophisticated platform to manage these billing issues, including our customers' insurance claims and our own receivables. This is not only a valuable convenience for our customers but also sets us apart from many smaller competitors that have been unable to develop an effective system for managing receivables and insurance-related billing requirements.
    Our growth strategy calls for the continued expansion of ProCare, with a goal of operating 100-125 strategically located ProCare apothecaries within a few years. These retail stores are an important mechanism for establishing ties with local communities. We have opened ProCare apothecaries in markets not currently served by CVS/pharmacy, such as Texas, Oregon and California, where there is significant demand for specialty pharmacy services. In addition, we will continue to evaluate opportunities to make acquisitions, like Stadtlander, that accelerate our market leadership position.