Growth Strategy

CVS has managed to successfully grow its company ov er the past few decades both organically and throug h the acquisitions of beneficial companies. It has a proven track record of successfully integrating these companies into its operations and creating synergies to drive higher margins and greater econo mies of scope.

According to CVS’s top management it expects in 2008 to earn around $700 million dollars in cost saving sy offering customers the simplest solutions to health care related problems. It sees growth in a number o f different aspects of business: 1. Store Development – CVS’s long term grow market share in the retail pharmacy industry.

One w ay to accomplish this is by opening up more stores in top drugstore markets. CV S plans to continue their strategy of increasing the number of pharmacy store s across th the right shows the current locations of CVS pharmacy stores and provides the reader with a visual representation of CVS’s presen ce in the U.S.

Another strategy to increase profitability has been the move to free standing locations for pharmacy stores. This is designed to improve convenience for custome rs and provides them with more square- footage per store to add new services such as its M inuteClinic and drive thru accommodations. As of October 2008 Management has g otten a sol to continue this strategy throughout 2009 and 2010.

2. Acquisition Growth – Since its formation, CVS has grown primarily throug h acquisitions. From its start as a small discount value store to becoming the l attractive businesses and integrate them successful ly into their operations. In the past couple years CVS has acquired businesses from Albertson’s, Save- On, JC Penny, Caremark, Long successful in capturing more market share and incre asing customer satisfaction. I expect CVS to contin ue to look for beneficial businesses in which it can improve its o perations.

Because CVS is now a PBM firm as retail firm, I believe them to look in both these i ndustries for successful acquisitions. Management a nnounced that it would continue to fund acquisitions primarily with the use of cash flow and some amounts of long term debt. I believe this to be the best way for CVS to continue industry.

3. Lower Cost Approach – CVS has taken an aggressive cost management approac h for the start of 2009. It plans to reduce the costs of pharmacy prod ucts by offering new generic made drugs which tend to have higher margins, and through new technology they will be able to offer t heir services quicker and more efficient. So service tests to improve: costs to fill profitability of sales growth declines in 2009. CVS also plans to increase savings benefits for custom ers through their ExtraCare reward program and continue to expand its market share.

4. MinuteClinic Expansion: CVS plans to expand its Min uteClinics operation making it a broader healthcare offering. 2009 Guidance estimated that it was planning to inv est $.05 a positive impact on ea rnings in 2010 (Latest Earnings MinuteClinics in 25 different states. I expect this number to be significantly larger by the end of 20 08 and into 2009. By expanding its health clinics, CVS will be able t o provide more healthcare services in house synergies by offering customers both clinical assis tant and a place to fill their prescriptions I believe CVS’s long term growth strategy wi industry.

By making their pharmacies and clinics co nvenient, cheap, and beneficial to their customers, I believe they will continue to capture market share across the U.S. I expe into the future. U n i v e r s i t y o f O r e g o n I n v e s t m e n t G r o u p CVS has managed to successfully grow its company ov er the past few decades both organically and throug h the acquisitions of record of successfully integrating these companies into its operations and creating synergies to drive higher margins and greater econo mies of scope. According to CVS’s top management it expects in 2008 to earn around $700 million dollars in cost saving sy nergies from the Caremark merger alone.

CVS maintai ns its profitability by offering customers the simplest solutions to health care related problems. It sees growth in a number o f different aspects of CVS’s long term grow th strategy focuses on increasing its market share in the retail pharmacy industry. One w ay to accomplish this is by opening up more stores in top drugstore markets. CV S plans to continue their strategy of increasing the number of pharmacy store s across th e nation.

The map to shows the current locations of CVS pharmacy stores and provides the reader with a visual representation of CVS’s presen ce in the U.S. Another strategy to increase profitability has been the move to free standing locations for all their This is designed to improve convenience for custome rs and footage per store to add new services such as its M inuteClinic and drive thru accommodations. As of October 2008 Management has g otten a sol id positive response from its customers and plans to continue this strategy throughout 2009 and 2010.

Since its formation, CVS has grown primarily throug h acquisitions. From its start as a small discount value store to becoming the l argest retail Pharmacy Company it has shown its ability to find unique and attractive businesses and integrate them successful ly into their operations. In the past couple years CVS has acquired On, JC Penny, Caremark, Long s, and more. Each of these successful in capturing more market share and incre asing customer satisfaction. I expect CVS to contin ue to look for beneficial businesses in which it can improve its o perations. Because CVS is now a PBM firm as retail firm, I believe them to look in both these i ndustries for successful acquisitions.

Management a nnounced that it would continue to fund acquisitions primarily with the use of cash flow and some amounts of long term debt. I this to be the best way for CVS to continue to grow and become the dominan t CVS has taken an aggressive cost management approac h for the start of 2009. It plans to ucts by offering new generic made drugs which tend to have higher margins, and through new technology they will be able to offer t heir services quicker and more efficient. So fill , cost to administer , and cost to call programs that will continue to p rovide profitability of sales growth declines in 2009.

CVS also plans to increase savings benefits for custom ers through their ExtraCare reward program and continue to expand its market share. MinuteClinic Expansion: CVS plans to expand its Min uteClinics operation making it a broader healthcare offering. 2009 Guidance estimated that it was planning to inv est $.05 – $.06 per share in its MinuteClinics and expects it to have rnings in 2010 (Latest Earnings Guidance).

As of 2007 they owned and operated 462 MinuteClinics in 25 different states. I expect this number to be significantly larger by the end of 20 08 and into 2009. By expanding its health clinics, CVS will be able t o provide more healthcare services in house synergies by offering customers both clinical assis tant and a place to fill their prescriptions . I believe CVS’s long term growth strategy wi ll allow them to continue to expand and become the dominant player within the industry.

By making their pharmacies and clinics co nvenient, cheap, and beneficial to their customers, I believe they will continue to capture market share across the U.S. I expe ct the retail pharmacy segment to continue to drive revenue growth U n i v e r s i t y o f O r e g o n I n v e s t m e n t G r o u p 3 h t t p : / / u o i g . u o r e g o n . e d u