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CVS Expands Pharmacy Services to the Web

CVS Corp. has launched CVS.com, which is designed to extend the company’s reach as a national pharmacy brand. The new site is the result of a $30 million stock buyout of Seattle Internet pharmacy Soma.com.

“The integration of CVS’s offline presence with its online component only strengthens the pharmacy offering that CVS has already proven effective,” said Rachel Templeton, spokeswoman for CVS.com. “We’ll remain a leader in the online space, as we have in the offline arena.”

The untapped potential of the online market has attracted other marketers. PlanetRx.com on Aug. 31 announced the acquisition of yourPharmacy.com. GreenTree.com recently renamed itself More.com. CVS rival Rite Aid in June bought 21.6 percent of drugstore.com for $234 million, and Walgreens.com is set to launch this week.

Consumers spend $230 billion a year on prescription medication and other health and beauty products, according to Cyber Dialogue, New York. The market researcher estimates online pharmacies will be a $4 billion niche by 2001.

“At CVS.com, we think this makes sense considering that research has shown more than 17 million U.S. adults sought medical and health content online in 1997 and that nearly half those people are interested in purchasing medical products online,” Templeton said, adding that CVS.com’s prime demographic target is women.

Projections from Forrester Research, Cambridge, MA, are more optimistic than Cyber Dialogue’s. It estimates the online health and beauty category will grow from $509 million this year to $10.4 billion in 2004, accounting for 5 percent of the total market.

According to Evie Black Dykema, senior analyst at Forrester, four key attributes will define online pharmacies in the year ahead: health-insurance plan coverage, personalized advice, content and privacy, convenience stemming from offline and online retail integration, and streamlined administrative processes surrounding paperwork and medical records.

The analyst sounds a note of caution for CVS.com.

“[CVS.com] continues to run into a brick wall when it comes to achieving coverage, and in this important respect it’ll find it difficult to compete with PlanetRx and drugstore.com,” Dykema said.

But Woonsocket, RI-based CVS Corp. has much to its advantage. It boasts a $200 million ad budget for an entrenched brand, bargaining clout with suppliers, more than 9,000 insurance plans, and a network of 4,200 CVS/pharmacy drugstores in the Northeast, Mid-Atlantic, Southeast and Midwest.

CVS revenues last year rose 11 percent to $15.3 billion. Operating profits were $772.2 million, up from $510 million in 1997.

Consumers can order a prescription online, which CVS.com will verify with the physician who prescribed the medicine, and choose between same-day in-store pickup or optional delivery to the consumer’s home or office. Another feature is a 24-hour call center staffed by qualified CVS.

“We also decided that because we were a full-service pharmacy, we’d fill all prescription medications, including strong painkillers, or Schedule II’s – medications you would normally receive after major surgery,” Templeton said. “Our online competitors did not do this.”

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