PharMerica CEO Greg Weishar said that demographic trends — including a projected rise in the number of older Americans and cancer patients — will present great opportunities for the Louisville-based pharmacy services company.
PharMerica provides pharmacy services, ranging from consulting to on-site medication cabinets, primarily to long-term care facilities, nursing homes and hospitals. Headquartered about a 20-minute drive east of downtown Louisville, the company operates nearly 120 pharmacies, dispensed 34 million prescriptions last year and employs 5,800.
Weishar outlined the company’s growth strategy this week at the UBS Global Healthcare Conference in New York, and said PharMerica has set itself up to benefit from major trends:
- Aging America: The CEO said the number of people in the U.S. aged 65 and older, at about 46 million now, will rise to about 70 million by 2030, according to Census projections. That will help PharMerica’s core business, institutional pharmacy services, which targets assisted living facilities, nursing homes and hospitals.
- Cancer: The number of new cancer cases, which was at 1.5 million in 2013, is expected to grow 50 percent by 2030. Annual spending on cancer drugs, which was at $60 billion in 2014, is expected to rise to about $175 billion by 2020. Those trends will increase demand for services provided by Onco360, a specialty oncology business in which PharMerica acquired a stake in 2013. Weishar also said the complexity of the disease and its treatment will make it difficult for potential competitors to enter the market.
- Care at home: A growing number of patients is receiving infusion therapies — to treat HIV, heart failure, respiratory infections — at home. That will help the PharMerica subsidiary Amerita, which provides pharmaceutical products to patients outside of hospitals. PharMerica bought Amerita in 2012.
All three of the company’s business lines — institutional pharmacy, specialty oncology and home infusion — will benefit from “demographic tailwinds,” Weishar said.
The CEO also said the company plans to continue to boost revenues through acquisitions, with a target of about $100 million per year. The institutional pharmacy and home infusion industries remain fragmented, Weishar said, which should give PharMerica good opportunities to acquire smaller competitors.
PharMerica and Omnicare control about 55 percent of the institutional pharmacy market, which leaves about 45 percent being served by regional and local providers. PharMerica in the last two years acquired six institutional pharmacies with revenues ranging from about $5 million to about $128 million.
Meanwhile, the home infusion market includes about 350 companies, but only 14 companies have more than four sites. Thirty-six companies have between two and four sites, and 300 companies have just one site. The single-site companies includes a lot of “mom-and-pops,” Weishar said, which gives PharMerica an opening to enter new geographic markets.
PharMerica reported about $2 billion in revenues last year, up about 7 percent from a year earlier. Adjusted earnings per share, at $1.69, were unchanged.