SWOT Analysis – Threats: CVS Pharmacy Case


The CVS Pharmacy sells prescription drugs and provides a wide range of other products and services, such as brand-name drugs, beauty and cosmetics products, and seasonal products. At present, pharmacies have faced some challenges. These are increased competition due to the development of online retailers of medicines, the long process of FDA drug approval, and an expected rise in prices, which affect consumer behavior. Therefore, it is essential to analyze these threats, suggesting actions that could be made to reduce adverse outcomes.

Intense Competition

The first threat is intense competition in the pharmacy market because of the growth of online retailers. The increased number of online sales has a significant impact on supply chains, retail formats, and the changes in purchasing behavior patterns (Singh et al., 2020). For instance, CVS opened substantially fewer pharmacies compared in the past. Traditional pharmacy chains are negatively affected by growing competition in online sales of OTC drugs and health products, despite investing in developing their e-commerce channels in recent years.

In addition, due to the COVID-19 pandemic, Americans increasingly rely on ordering medication to avoid coronavirus infection. This new type of service may become permanent as more people learn more about new ways of getting and taking medicine. The main competitor of CVS Pharmacy in this market is Amazon, which is entering the pharmaceutical market with a launch of a new service called Amazon Pharmacy (Terlep & Stevens, 2018).

The latter allows US customers to order prescription drugs with home delivery. The pharmacy market is complex and highly competitive in the US. Therefore, Amazon Pharmacy is built in part on the PillPack infrastructure, including its pharmacy software, order centers, and connections to healthcare and insurers (Terlep & Stevens, 2018). For Amazon, it can be considered a timely action.

Concerning CVS’s further actions to trade successfully online, pharmacies need to ensure the delivery of drugs. Moreover, it is necessary to widely apply new technologies of promotion on the Internet to ensure the speed of searching and receiving services (Singh et al., 2020). The obvious benefits of the transition of pharmacies to online can be enhanced through cooperation with large trading platforms (Singh et al., 2020). So medicines become part of, for example, a grocery shopping cart and not a separate order.

FDA Drug Approval Process

In recent decades, the global costs of companies in the industry for research and development (R&D) have increased significantly. Technological advances have facilitated the creation of medicines, but at the same time, the industry has faced some challenges. A prerequisite for the appearance of a drug on the market is its approval by the national regulator. The Food and Drug Administration (FDA) is in charge of market access procedures in the United States (Darrow et al., 2020). It forces pharmaceutical companies to conduct a wide range of clinical trials and invest in data collection and analysis.

After completing all clinical trials, the regulator receives an application for approval of the drug, the consideration of which can take from 1 year. However, the period is much longer, “total time from the authorization of clinical testing to approval has remained at approximately 8 years” (Darrow et al., 2020, p. 164). As a result, the process of evaluating drugs and their corresponding authorization is characterized by a high degree of uncertainty of the outcome and complex requirements for new medicines.

Therefore, CVS Pharmacy is recommended to enhance its cooperation with small businesses, start-ups, and independent players, and the academic sector is intensifying. It will positively affect financial power, service quality, and workload (Arslan et al., 2017). Businesses are trying to open new markets for themselves and are lobbying for better conditions, primarily in developing countries (Arslan et al., 2017). Furthermore, CVS Pharmacy may focus more on breakthrough areas such as telemedicine, medical services, biotechnology, and personalized medicines.

Rise in Prices

The US government has repeatedly made statements that drug prices are too high. For example, the administration of US President Donald Trump 2019 presented a plan that could legitimize the import of certain prescription drugs from countries where they are sold much cheaper (​​Jaffe, 2019). However, This will have a considerable effect on the pharmaceutical industry. High drug prices reflect the research and development costs the company has incurred in new drug launches (DiMasi, 2020). Many studies show that the cost of developing new drugs only grows every year, and at the moment, each new drug can cost several billion (DiMasi, 2020).

Thus, prices will continue to rise, affecting customer loyalty and profitability. Therefore, CVS Pharmacy and other healthcare organizations may be encouraged to launch the development of new formularies with a rational assessment of the cost-effectiveness of drugs, taking as an example the existing formularies in leading European countries. In addition, it is advisable to initiate programs to inform health professionals about the benefits of specific drugs based on evidence-based medicine.

Thus, such threats as the rise in prices, intense competition in the online and offline sector, and governmental policies may directly affect the company’s performance. The potential outcomes have already been recognized; for instance, the decline in profits of CVS Pharmacy compelled it to revise plans to expand or even reduce the number of pharmacies. In the past, the distribution of medicines was the main business of pharmacies. However, at present, they have to change and adapt to the consumer.


Arslan, M., Tarhan, N., & Şar, S. (2017). Examination of the community pharmacists’ intention to pharmacist partnership using the theory of planned behavior: A structural equation model. Indian Journal of Pharmaceutical Education and Research, 51, 216-225. Web.

Darrow, J. J., Avorn, J., & Kesselheim, A. S. (2020). FDA approval and regulation of pharmaceuticals, 1983-2018. JAMA, 323(2), 164-176. Web.

DiMasi, J. A. (2020). Research and development costs of new drugs. Jama, 324(5), 517-517. Web.

Jaffe, S. (2019). Congress and President Trump take on high drug prices. The Lancet, 394(10204), 1130-1131.

Singh, H., Majumdar, A., & Malviya, N. (2020). E-Pharmacy impacts on society and pharma sector in economical pandemic situation: A review. Journal of Drug Delivery and Therapeutics, 10(3-s), 335-340. Web.

Terlep, S., & Stevens, L. (2018). Amazon buys online pharmacy PillPack for $1 billion. TheWall Street Journal. Web.

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