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Being a pharmacist is pretty lucrative these days. Average base salaries at chain drugstores have soared 17% over the past two years, to $74,154. Vying for a limited pool of pharmacists, employers pad salaries with cushy benefits and throw money at those who threaten to leave. Because there are more jobs than people to fill them, it's a tough time to be running a drugstore chain.
The shortage of pharmacists, an ongoing problem for the past few years, is starting to become serious. The National Association of Chain Drug Stores estimates there are currently some 12,000 unfilled jobs, or about a 7% shortage. Companies including Walgreen (WAG
), CVS (CVS
), and Rite-Aid (RAD
) count on prescription drug sales for the bulk of their revenue and earnings. CVS' earnings shortfall announcement speaks to the magnitude of the problem.
For the first time, the company said, the dearth of pharmacists forced it to shorten hours at some stores, leading to pressure on the bottom line. "It has impacted every [drugstore chain] and it is going to continue to impact them," says George Thompson, an analyst with Prudential Securities.
RECRUITMENT. How the companies handle the shortage will be important. They are attempting to do so by stepping up recruitment efforts and working to get high schoolers interested in the pharmacy profession long before they reach college age.
Meanwhile, the economic downturn could work in the pharmacy industry's favor in a few years. As a rule, jobs in the health-care profession become more attractive during periods of rising unemployment because they hold the promise of job security. After all, prescriptions need to be filled regardless of the economy's health. The downturn could increase the interest in training for pharmacy jobs.
Running pharmacies is a hot business. The industry is expected to grow quickly as baby boomers age and approvals of innovative new products over the next 10 years keep people heading to the local drug store for prescription refills. The long list of cheaper generic drugs arriving on the market in the next few years could also get more people into the drugstores.
CRITICAL SHORTAGE. The shortage of pharmacists could reach critical levels over the next three years. Between 2000 and 2005, the supply of pharmacists is expected to increase only 4.5%, vs. an estimated 29% increase in the number of prescriptions dispensed. Meanwhile, Walgreen plans to open a net of 400 new stores in 2001 and CVS another 250. Expansion may sound good to investors, but growth means even more pharmacist positions waiting to be filled.
Can the big chains fill the gap? "I suppose, with enough money, anything's doable," says John Ransom, an analyst with Raymond James. But he worries that paying a premium for pharmacists could permanently raise the chains' operating expenses, cutting into margins.
OTHER STEPS. To date, the No. 1 chain, Walgreen, appears to be managing the shortage better than CVS, its closest competitor. Says Walgreen spokesman Michael Polzin: "No doubt it takes more time and energy to recruit, but we've been successful at it." He says that the company offers sign-on bonuses to pharmacists, pays their relocation fees, and has a number of other programs in place, including a prepharmacy scholarship program.
CVS is using the Web to advertise jobs, recently started offering stock options to pharmacists, and has been recruiting overseas and through the military, says Todd Andrews, a company spokesman.
Outside observers think the chains could be doing more. Reaching students early on, at the high school level, is key, says Pete Vanderveen, dean of Mylan School of Pharmacy at Duquesne University in Pittsburgh. "The earlier you get a student working in a pharmacy, the more likely they'll see the opportunities and choose that as a career."
SCHOLARSHIP SUPPORT. Drugstore chains need to take a more active part in this type of recruitment, since it often translates into the student taking a permanent position with the company. It also would make sense for the industry to market the benefits of the pharmacist profession to minority communities, says Lucinda Maine, senior vice-president for policy, planning, and communications at the American Pharmaceutical Assn.
Vanderveen also suggests increased scholarship help from companies. Last year, he had just $133,000 in scholarship money to parcel out among more than 100 students. "If you look at pharmacy-school tuition, that's just a drop in the bucket. Those kinds of things would be very helpful in attracting students to our program." More loan payback assistance would be another big draw, he suggests. For every year of service, a company could help the pharmacist pay back two years' worth of loans.
"Students have great need. Scholarship support is very important," says William Fassett, dean of the College of Pharmacy at Washington State University. With just 82 pharmacy colleges in the U.S., capacity remains a problem in the industry. "I'm waiting for a major chain to open a pharmacy school. It's not out of the question for industry to do this," he says. Companies could also work with universities to develop existing pharmacy schools into joint ventures, he adds.
In the meantime, the National Association of Chain Drug Stores is putting its weight behind a bill introduced June 14 by Reps. Jim McGovern (D-Mass.) and Mike Simpson (R-Idaho). Dubbed the Pharmacy Education Aid Act, the bill would provide more funding for students, schools, and teachers and provide loan forgiveness to those serving as pharmacists in rural and other underserved areas.
WORKING CONDITIONS. Once hired, the most crucial aspect of retaining good pharmacists is good working conditions. Companies should not let cost pressures cut into investments in the newest technology or force cutbacks in technician assistance and other support staff. Without such help, pharmacists end up spending too much time pouring and counting pills rather than counseling customers.
"It's a tough profession. If you talk to pharmacists, they'll tell you working conditions are not that good," says Harold Cohen, editor of Drug Topics, a trade publication for pharmacists. "People are going to work for a company that treats them best -- in a place where they're happy to come to work and feel fulfilled in their professional life."
The shortage of pharmacists isn't going away anytime soon, which means companies will have to fight to stay staffed up. "The answer is going to be a combination of a lot of [initiatives]," Vanderveen says. The big pharmacy chains are already doing a lot to deal with the problem. They know they could wind up with a bad headache in a few years with no one to fill the prescription for relief.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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