The Cvs Web Strategy: an Evaluation of the Challenges and Advantages of Integrating an Online Pharmacy

Only available on StudyMode
  • Topic: Pharmacy, Disruptive technology, CVS/pharmacy
  • Pages : 9 (2489 words )
  • Download(s) : 205
  • Published : March 24, 2013
Open Document
Text Preview
THE CVS WEB STRATEGY: INTEGRATION OF AN ONLINE PHARMACY

THE CVS WEB STRATEGY: AN EVALUATION OF THE CHALLENGES AND
ADVANTAGES OF INTEGRATING AN ONLINE PHARMACY

By
Leah Bouk
Wingate University

1

THE CVS WEB STRATEGY

ABSTRACT
This paper discusses the considerations surrounding CVS Pharmacy’s initiative to become a part of the virtual drugstore industry. Specifically, the organizational structure, fundamental design of the autonomous innovation, and strategic positioning of CVS.com were considered in evaluating the drug store’s ability to react to the disruptive technology. This paper serves to evaluate the effective initiatives, problems, and possible solutions to the considerations outlined above. As a result of this analysis, one can deduce that acquiring the web company Soma.com, instead of creating its own online component, was a successful strategy for the autonomous innovation. Shortfalls include not executing a strategy to circumvent the MerckMedco mail order dilemma. Ultimately, a recommendation is that CVS.com differentiate itself by personalizing customer home pages and by fostering relationships with prescribing healthcare providers.

2

THE CVS WEB STRATEGY

TABLE OF CONTENTS

Abstract…………………………………………………………………………….2 Introduction………………………………………………………………………..4 Landscape…………………………………………………………………………5 Organizational Structure…………………………………………….…………….6 Autonomous Innovation…………………………………………………………...8 Strategic Positioning……………………………………………………………….9 Summary…………………………………………………………………………..10 References…………………………………………………………………………11

3

THE CVS WEB STRATEGY

THE CVS WEB STRATEGY: AN EVALUATION OF THE INTEGRATION OF AN ONLINE PHARMACY

INTRODUCTION
Strict regulation throughout the healthcare and pharmaceutical industries arguably slows the advancement in technological innovation, especially when compared to the computer and automobile industries. Therefore, innovation in a multiproduct, integrated and hierarchical organization, like CVS Pharmacy, can be slow moving or non-existent. Nevertheless, the healthcare industry is a money-making giant and companies like CVS, which was rated number 47 on CNN’s Most Profitable Companies in 2011, help justify this point (cnn.money.com). This paper discusses the considerations surrounding CVS Pharmacy’s initiative to cope with the disruptive technology created by the virtual drugstore industry. Specifically, I will discuss the organizational structure by virtue of the autonomous innovation and the strategic positioning of CVS.com. This paper serves to evaluate the effective initiatives, problems and possible solutions to the issues surrounding the onboarding of CVS.com.

4

THE CVS WEB STRATEGY

LANDSCAPE
It is important to understand the complexity of the healthcare and pharmaceutical industry at the time the CVS drugstore chain was exploring the idea of acquiring an online option for its customers in 1999. The process of diagnosing, prescribing, dispensing and delivery was, and still is, extremely regulated. As an example, only licensed physicians have the capability to prescribe medications and only licensed retailers are able to dispense them. In addition, Pharmacy Benefit Managers (PBMs) have already monopolized the management of drug prescribing and dispensing by1999. PBMs put together formularies, through negotiations with the pharmaceutical companies, the retail pharmacies and the employers’ Managed Care Organization (MCO), that mandated which drug could be prescribed for a certain disease. Furthermore, many PBMs require that all 30 day supply prescriptions for chronic diseases be dispensed through mail order and many of the PBMs acquire their own distribution centers to provide this service. Thus, the Managed Care Organizations, physicians, retail pharmacies and the patient all rely on PBMs to ensure the lowest cost and best care for all involved (Reinke, 2009).

Like PBMs, retail pharmacies also enjoy the market power they generate. The...
tracking img