Specialty pharmacy is the fastest growing pharmacy segment and it is estimated that specialty drugs accounted for nearly 70% of prescription-dispensing revenues in 2018. However, even with this strong representation, the past 12-24 months experienced slowing M&A activity. The number of transactions in 2019 for specialty and infusion pharmacies fell by nearly 15% from 2018 levels and by more than 30% from 2017 levels. Acquirers are finding synergies more challenging and a closer look at the space reveals some clear headwinds. First, DIR fees (and now GER fees) continue to plague the space. In fact, 2019 saw a record level of DIR fees totaling over $9 billion3. Second, payor networks and contracts made competing in the space very challenging. Over 50% of pharmacists reported insurance companies and exclusions from networks, PBMs and PBM practices as their greatest challenge to growth10. With so many challenges in this competitive segment of pharmacy, is there a guiding light for the space? Luckily, there are a few revenue generators that offer solid margins and opportunities for growth.
