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Provident Healthcare Partners Provident Healthcare Partners

Trends in Specialty Pharmacy

Provident Healthcare Partners
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Published May 2018

Specialty drugs represent one of the fastest growing segments in the healthcare industry, with projections estimating that specialty drugs will represent nearly 40% of total drug spend by 2020, relative to 28% in 2016. This rapid growth, especially within the context of a constantly evolving macro healthcare environment, has created a number of new industry dynamics that have radiated throughout the pharmaceutical supply chain. As the direct connection between consumers and the rest of the pharmaceutical system, specialty pharmacies play a significant role in the management of increasingly expanding patient populations and have therefore experienced new risks and new opportunities as a result of broader industry shifts.

From an investor’s perspective, the combination of substantial projected market growth and evolving industry dynamics creates significant opportunities. Although CVS Health Corporation (NYSE: CVS), Express Scripts Holding Company (NASDAQ: ESRX), and Walgreens Boots Alliance (NASDAQ: WBA) account for nearly 60% of industry market share, private equity investors and strategic partners see opportunities to invest in the numerous privately-owned specialty pharmacies to use as a base for increasing the density of their nationwide platforms on a hyperlocal level. Moving into 2018, Provident Healthcare Partners expects buyers to continue consolidating the fragmented specialty pharmacy market as a means of increasing market share, diversifying service offerings, and gaining access to new patient populations. As the owner of an independent pharmacy, recent trends, including private equity interest and a shift toward integrated services, have expanded options when considering an alignment with an outside party.

Report Summary
• Consolidation Trends
• Concluding Thoughts

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