Jan 9, 2006 7:21 am US/Central
CVS Buying Up Independent Drug Stores
Minneapolis (AP) ―
Josh Lemm hoped to pass his business on to his three children one day when he bought a small pharmacy in Chanhassen, Minn. two years ago.
But sales of the store fell 20 percent, after CVS Corp. opened a much larger store three miles away last summer, offering people $25 gift cards to switch their prescriptions to the new store. And seven months ago, he got a letter from CVS offering to buy his store.
"We're going to try our best to stay open, but this is a business, and at some point you've got to make a business decision," said Lemm, who also owns pharmacies in Edina and Hopkins.
Rhode Island-based CVS came to Minnesota in September 2004 and has been buying up locally owned pharmacies and adding others. It has 18 stores in the state -- 15 within 50 miles of downtown Minneapolis.
Though much smaller than Walgreens, which has 96 stores in Minnesota, CVS is a bigger threat to independent pharmacies because it is focused on drug sales, which is the main source of income for independent pharmacies.
Many independent drugstore owners who once swore they would never sell to a chain admit CVS offers a wide range of services not available at some other chains, and a growing number of them are selling.
"There is no reason to believe that our customers won't be treated well at CVS," said Ron Johnson, who sold Bober Pharmacy & Gift -- together with prescription drug records of about 5,000 customers -- to CVS last month.
The pharmacy, which has been a fixture on St. Paul's Grand Avenue, will be replaced by a larger CVS store across the street later this month.
Some say the chain can offer better services -- from walk-in clinics staffed with nurse practitioners to online refills -- than the independent pharmacies.
"Certainly, CVS is a behemoth," said Michael Steinhauser, who has sold two drugstores to CVS in the past 18 months. "But it's also a company that's trying very hard to be more like a Main Street drugstore."
Independent store owners and their customers are concerned about the expansion of chains like CVS. The number of chain pharmacies operating in Minnesota nearly doubled between 1996 and 2005, while the number of independent stores declined 13 percent. As of March, there were 610 chain drugstores statewide, compared with 476 independents, according to the Minnesota Board of Pharmacy.
"We think it's unfair to characterize us as just another chain," said Mike DeAngelis, a CVS spokesman. "Our pharmacists live and work in the community just as any other local pharmacists do."
(© 2006 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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