http://www.rx-edge.com

White Paper

Validating the Pharmacy’s Valueas a Media Channel

On the minds of patients…and in the handsof marketers

P h a r m a c y N e t w o r k sRx EDGE®

IntroductionEffective marketing strategies typically involve the use of multiple channels to ensure that the messagesreach and motivate the intended audience. Selecting the appropriate media channels for a marketingcampaign is part of the art and science of marketing. Each platform has its own set of unique benefits aswell as limitations when it comes to reaching a group of potential consumers.

According to BusinessDictionary.com, media is defined as “communication channels through whichnews, entertainment, education, data, or promotional messages are disseminated”.1 In other words, justabout anything and anywhere! You probably can’t go one day without encountering some form of media.From the billboards you pass during your morning commute, to the ads that pop-up while scrolling yourfavorite app, media is everywhere. Including the retail pharmacy.

But not all media is created equal. Even though there are multiple options for pharmaceutical marketersto choose from, the decisions are ultimately made based on quality, not quantity. The key is to reach theright group of prospective patients and to do so when they are searching for solutions, willing to focusattention, and motivated to take action. In view of these parameters, the pharmacy is an ideal mediachannel. As pharmaceutical brands continue to look for ways to meaningfully engage with patients inthis ever-changing healthcare landscape, the retail pharmacy continues to demonstrate effectivenessas a communication platform.

Pharma marketers face unique challenges when they make media decisions. Guiding the prospectivepatients from initial product awareness to filling a script and adhering to a treatment regimen requiresextremely thoughtful consideration of a number of factors. This white paper will examine the pharmacychannel’s effectiveness in relation to many of those factors: audience, ability to educate in a healthcareenvironment, targeting, cost efficiency, and measurement.

12016

http://www.rx-edge.com

P h a r m a c y N e t w o r k sRx EDGE®

Contents

2

Pages

2016

The Pharmacy Reaches a Huge Audience of Potential Patients 3-4

A Convenient Resource for HealthProducts – Close to Home 4-5

Healthcare-Focused Action 5-6

When and Where People are Lookingfor Information and Answers 6-7

Targeting: Matching the Store with the Audience 7

Efficiency Compared with Other Media Channels 7-8

Actionable Measurement 8

Improving for the Future 9

Rx EDGE Pharmacy Networks: Unlocking thePower of an Important Channel 10

http://www.rx-edge.comP h a r m a c y N e t w o r k sRx EDGE®

The Pharmacy Reaches a Huge Audience of PotentialPatientsIn sheer numbers, the magnitude of the pharmacy’s economic value is considerable. In 2014, total U.S retailsales in drug stores totaled $239.8 billion dollars.2 Shoppers are buying more than just Band-Aids and vitamins.They are purchasing everything from batteries and beauty products to cough medicine and groceries. Butwhy do shoppers choose the pharmacy to purchase these products?

32016

http://www.rx-edge.comP h a r m a c y N e t w o r k sRx EDGE®

20

20

10

2010

50

50

50

10

10

10

10

In a word, convenience. The average American lives within 2 miles of a pharmacy3, making it an accessiblesource for necessities of all kinds and the outlet of choice for a variety of health-related items.

that’s close!

PHARMACY

U.S. Retail Sales inDrug Stores

$239.8 Billion

2 miles

42016

21

56

78

9

1213

1415

16

19

4

11

18

2021

2223

3

10

17

2426

25

2728

2930

NOVEMBERRETAIL PHARMACY

Over 275 million people visit pharmacies each week

That’s 3/4 ofthe U.S. population

Off toCVS!

Rite Aidor bust!

Back toH-E-B!

Over 275 million people visit pharmacies each week.4 This creates millions of opportunities to communicatebrand messages when health and wellness are top of mind. The pharmacy is the perfect environment todeliver messaging that is focused on education and awareness.

A Convenient Resource for Health Products –– Closeto HomeU.S. consumers make 26 trips a year to purchase OTC products.5 Many of these purchases occur in thepharmacy setting as people are looking for information and remedies, seeing a pharmacist, picking upa prescription, continuing to use or supplement with OTC’s, and purchasing ancillary products.

52016

81% of adults use OTCmedicines as a first response

to minor ailments

81% of adults use OTC medicines as a first response to minor ailments.6 The pharmacy offers products tomeet the needs of consumers across a range of personal health matters – cough, dry eyes, headache, andstomach problems, to name a few.

The average U.S household spends $340 per year on OTC products.7 Acid reflux, osteoarthritis, diabetes,and adult incontinence are some of the chronic care conditions that index heavily across the OTC aisles.8

Healthcare-Focused ActionThe pharmacy is not only a convenient resource for products of all kinds, it is also a destination for healthcareservices and experiences.

Condition Index

Acid Reflux 119

Osteoarthritis 129

Diabetes 135

Adult Incontinence 138

..... ..... ..... .......... ..... ..... .....

..... ..... ..... .....

RETAIL PHARMACY

VaccinesPharmacists in all

50 states are authorizedto administer vaccines10

Clinics1,800 retail clinics today– up 900% since 20069

Health-relatedproducts

47% of OTC purchasesare made in chain

drugstores13

Rx86% of all prescriptionsare dispensed in retail

pharmacies11

MedicationManagement

60% of pharmacists provide MTM services12

Wellness Services 48% of chain pharmaciesoffered health screenings

in 201414

62016

P h a r m a c y N e t w o r k sRx EDGE®

Jimmy still hasn’tgotten rid of his cough, I

wonder if he has allergies?I need some advice.

Maybe my chronicjoint pain is due to RA, it

does run in my family.

It seems like I'm alwaysbuying heartburn medicine...

could it be somethingmore serious?

Because of my diabetes,my doctor says I should keepmy feet healthy. I'll check theFoot Care section for ideas.

In-store clinics are becoming part of the healthcare mainstream, with 10.5 million visits occurring annually.15

For many people, they provide a valuable resource for quality care. School physicals, routine lab tests, andtreatment for minor ailments are among the multiple services offered.

immunizations are now readily available at pharmacies nationwide. Consumers canwalk in to their community pharmacy, get their flu shot, pick up a few items, thencarry on with their day. 27 million flu shots were administered in pharmacies in the2014-2015 flu season.16

CLINIC CHECK IN

PHARMACY

DROP OFF PICK UP

When and Where People are Looking for Informationand Answers

When considering the stages that people go through on their way to a treatment decision, pharmacy’sadditional value component becomes clear: it is a setting that is conducive to providing information andeducation. For pharmaceutical companies, this information will be most useful when it is delivered at ahealthcare “mindset moment”. It is that point in time when consumers are thinking about their health andconsidering solutions. It happens in the pharmacy.

The Mindset Moment™

http://www.rx-edge.com

72016

Consumers benefit from the many interactions that can take place in the pharmacy, which can occur whenthey have a discussion with a pharmacist, see a nurse practitioner in a clinic, take part in a health screening,or pick up educational information within the aisles. According to a recent survey, 42% of patients had aconversation with their pharmacist about their prescription drugs in the past year, and 26% discussedover-the-counter medicines.17

The pharmacy is a resource for products, information, and answersRx

Targeting: Matching the Store with the AudienceTarget marketing in the pharmacy channel allows marketers to focus their messages on the segments that willbe most likely to respond and benefit. The best stores and store sections can be identified through the use ofa comprehensive set of targeting tools unique to the retail environment. Sources include prescription productdistribution data, audience demographics, shopper traffic analysis, geographic/DMA details, and OTC purchaseinformation. Thoughtful usage of targeting analytics in the planning stages puts marketers in a position toachieve better results.

TARGETING TOOLS• Demographic, geographic factors

• Household income

• Rx/OTC sales data

• Ethnic audience presence

• Rx product distribution

• Online health condition search

• DMA’s

• Category development indices

• Shopper traffic information

• Correlation with OTC/secondary products

Efficiency Compared with Other Media ChannelsCompared to other media vehicles, in-pharmacy programs have a higher ROI and lower CPM thantraditional media.18

In-Pharmacy Programs CPM

$9.38LOWCPM

HIGHROI

TV CPM - Primetime

$38.04 TV CPM - Reality

Competition

$31.90Magazine/Print CPM

$39.87TV CPM - Daytime

$22.29

http://www.rx-edge.com

82016

The retail pharmacy hasan engaged audience

and no fast-forward button

90

80

70

60

50

40

30

20

10

0

1 2 3 4 5 6 7 8 9 10 11 12

Base Period Test Period

Test Panel

Control Panel

Test & Control Panelsmirror each other duringthe Base or Pre-Test Period

Pre

scri

pti

on

s

Weeks

Matched Panel Analysis

RETAIL PHARMACY

Retail PharmacyPromotion Effect

The difference in

Rx sales in the test

panel and the control

panel reveal our

program’s impact

TESTPANEL

CONTROLPANEL

Statistically reliableresults based on actual

script sales data

People can flip through the pages of a magazine or try to bypass television commercials, but they won'tgrab the remote and skip a message that really means something to them. When consumers are walkingthe aisles of the pharmacy, they are seeking solutions and are more open to the information that theyencounter.

Actionable Measurement Techniques Because it accommodates matched-panel research methods, the pharmacy provides an excellent foundationfor program measurement. This allows marketers to precisely evaluate sales effect. Matched-panel analysisis one of the most effective assessment models currently available, because it allows for the isolation of thevariable (the in- pharmacy program) to the test panel. Actual prescription sales data is used, which meansthat the results are quantifiable and specific. Any increased volume in the test stores can be attributed to theprogram. From that number, a dollar-to-dollar ROI – the essential standard for determining effectiveness – can be calculated.19

92016

P h a r m a c y N e t w o r k sRx EDGE®

Our complementary retail pharmacy footprints in the U.S. will create an even better network,with more health and wellness solutions available in stores and online"

Pharmacists can also hasten the shift to value-based care by helping patients avoid gettingsick in the first place. America's more than 290,000 pharmacists interact with patients everyday. They're uniquely positioned to both deliver preventive care - like immunizations - andeducate patients about making healthier lifestyle and food choices.

I think everyone could relate to the effects of tobacco and how it may have affected a familymember or a loved one.

– Larry Merlo, President and CEO, CVS Caremark Addressing the decision to end the sale of tobacco products – January 2015

“”

“

“

”

”

– John Standley, President and CEO, Rite Aid On how pharmacists improve patient care – August 2015

– Stefano Pessina, Executive Vice Chairman and CEO, Walgreens Commenting on the future outlook for Walgreens – October 2015

Improving for the Future Progressive retailers are embracing strategies that expand their function in health and wellness. These effortsare translating into increased shopper traffic, heightened consumer interest, and changes in perceptionsabout how, where, and by whom healthcare should be delivered.

Bridging the gap betweenquestions and solutions

RETAIL PHARMACY

http://www.rx-edge.comP h a r m a c y N e t w o r k sRx EDGE®

102016

SOURCES 1. Business dictionary, 2016 2. Fierce Retail – Consumer Trends February 2015 3. Drug Store News, Rx Impact, 2012 4. Public Health Report 2013 5. Consumer Healthcare Products Association6. Consumer Healthcare Products Association 7. IRI, 2015 8. Drug Store News, Capturing chronic care market share, August 2015 9. Forbes, Retail Clinics Hit 10 Million Annual Visits But just 2% of PrimaryCare Market, April 2015 10. American Pharmacist Association, October 2015 11. IMS Health, National Prescription Audit, Jan 2015 12. 2014 National Pharmacist and Workforce Survey 13. Drug storechannel of choice for OTC buyers”. November 27, 2012. AccentHealth poll 14. Drug Topics, The changing face of pharmacy, June 2015 15. Forbes, April 2015 16. McKesson Smart Retailing Rx, 2015.17. Consumer Reports, Pharmacies 18. Magazine numbers were collected by publication's media kit (People, Good Housekeeping, Ladies Home Journal, Better Homes and Gardens, and Marie Claire) 19. Matched-panel research conducted by Retail Intelligence Inc. for Rx EDGE retail pharmacy programs. ROI calculated using script lift and client supplied pricing data.

We understand the importance of retail pharmacy and its emergence as a critical healthcare destination.Through our work with 150 pharmaceutical brands encompassing 74 therapeutic categories, we havegained considerable insights and we leverage this comprehensive knowledge to create programsthat have a quantifiable impact on prescription sales.

Michael Byrnesmichael.byrnes@rx-edge.com

610.431.7606

Kathleen Bonettikathleen.bonetti@rx-edge.com

847.879.6036

Rx EDGE Pharmacy Networks: Unlocking the Powerof an Important ChannelHealthcare in the United States continues to evolve, as well as the way health information is accessed. Patientsnow seek out information about conditions and treatments from multiple sources in an effort to be betterinformed and to communicate effectively with their healthcare providers. Reaching the right consumer withappropriate information when they are searching for a solution is an important step in creating a well-informedpatient who will interact successfully with the healthcare system.

Since 2000, Rx EDGE Pharmacy Networks has helped multiple pharmaceutical brands achieve success bypromoting their products in a nationwide network of retail pharmacies. The Solutions at the Shelf™ marketingprogram delivers actionable information at the Mindset Moment™, helping current and potential patientsbetter understand their symptoms and move more knowledgeably through the awareness-to-treatmentexperience.

P h a r m a c y N e t w o r k sRx EDGE®

Where consumers find health solutions

rx-edge.com