CVS health faces a new wave of disruption

Abstract

Purpose: The purpose of this study is to understand how Amazon’s threat may impact the Pharmacy Industry as a whole and whether traditional drugstore chains such as consumer value stores (CVS) Pharmacy will need to re-think their business strategy, especially in the digital space, to account for potential disruption. Design/methodology/approach: This is a hypothetical case study used as a teaching exercise to guide the learner through a decision-making process. The case starts by presenting a disruption in the retail pharmacy business that the main character must navigate by using real-world data and insights, provided in the case, to formulate a recommendation. Findings: In an extremely competitive and consolidated pharmacy market, Amazon has the potential to change the business entirely. CVS Health will potentially face strong headwinds from Amazon’s PillPack and a downward trend in prescription sales. Regardless of the new competition, CVS Health continues to be innovative in the space. Instead of being a one-trick pony, CVS has encompassed the mentality of becoming a one-stop-shop by expanding into areas such as specialty pharmacy, health clinics, pharmacy benefits management and innovative digital capabilities. Originality/value: This paper provides the reader with existing and known information about the evolving retail pharmacy business and allows the reader to interpret the new information to make their own decision on how a digital business strategy team can account for potential disruption.