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MarketScreener Homepage  >  Equities  >  Nyse  >  Eli Lilly and Company    LLY

ELI LILLY AND COMPANY

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Mail-Order Drug Delivery Rises During Coronavirus Lockdowns

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05/12/2020 | 07:15am EDT

By Jared S. Hopkins

More patients are turning to mail or courier to get their prescription drugs during coronavirus lockdowns, a shift from the traditional visit with a pharmacist that is expected to endure after the pandemic subsides.

While waiting out California's stay-at-home order in March on his brother's house boat near San Francisco, Rich Goldman exhausted his supply of cholesterol and blood-pressure drugs. So he found an online pharmacy that would ship the drugs to him.

"I didn't want to venture out if I could avoid it," said Mr. Goldman, a 60-year-old marketing employee. He said the pharmacy, Genius Rx, sent his prescriptions within several days.

During the last week of March, mail-order prescriptions grew 21% from the previous year to bring their share of the prescription drug market to 5.8%, the highest share in at least two years, according to data from SunTrust Robinson Humphrey analyst Gregg Gilbert.

Drugmaker Eli Lilly & Co., which sees about one-quarter of its U.S. business ship by mail, said more of its products have been processed that way during the pandemic. Pfizer Inc. said that for patients in its assistance program, it is sending more medicines directly and extending shipments from 30-day to 60-day supplies.

"It's clear that the old model from three months ago probably won't simply resume," said Stephen Eckel, an associate dean at the University of North Carolina Eshelman School of Pharmacy.

The increase in mailed prescription drugs is among several changes sweeping through medicine as a result of the coronavirus pandemic, including expanded use of virtual doctor visits. Experts predict many of the changes will become permanent, reshaping care.

Filling prescriptions in person won't disappear, industry experts said. A trip to the pharmacy has been a staple for decades, and many patients with several prescriptions prefer to rely on their neighborhood pharmacist. Whenever the pandemic ends, a significant number of customers are expected to return to stores.

Visits to the pharmacy account for the bulk of the 3.8 billion prescriptions filled each year in the U.S. Prescription-drug sales at pharmacies totaled $336 billion in 2018, according to the most recent data from health-research firm Iqvia Holdings Inc.

Yet the longtime practice has been ripe for a makeover, just like the one retail has experienced. Younger patients, with fewer prescriptions and accustomed to ordering online, are likely to embrace the change and stick with it, industry experts said. Increased use of mail-order pharmacies could spell trouble for independent bricks-and-mortar drugstores, they said.

Locally owned pharmacies have already been struggling to compete against national chains, a situation made worse as some health plans and drug-benefit managers steer patients to large mail-order pharmacies.

To compete, many local pharmacies have ramped up their own mail-order and home-delivery services during the pandemic, said Douglas Hoey, Chief Executive Officer of the National Community Pharmacists Association, a trade group. He said many patients prefer interacting with pharmacists and worry about their medicines arriving on time.

To protect their bricks-and-mortar stores, the big chains had sought to discourage use of mail-order pharmacies by, among other things, giving health plans discounts on drug prices. In recent years the chains set up their own mail-order operations, which stand to benefit now.

AllianceRx Walgreens Prime, a joint venture between retailer Walgreens Boots Alliance Inc. and Prime Therapeutics LLC, a pharmacy-benefits manager owned by health insurers, counts 15% more home-delivery customers and 20% more volume since Jan. 1, with most of the growth occurring after the coronavirus pandemic hit the U.S.

The new customers wanted to try home delivery because they weren't leaving their homes, while existing customers were stocking up on medicines, AllianceRx Walgreens Prime CEO Joel Wright said. He said the firm has hired about 200 new employees to meet the new demand.

"I don't think we'll see the entire increase remain, but I do think we've seen a notable shift in the business," Mr. Wright said.

The shift could benefit new entrants to the pharmacy market such as Amazon.com Inc., said Adam Fein, CEO of the Drug Channels Institute, which provides research on the drug-supply chain. Amazon bought the online pharmacy PillPack in 2018.

Honeybee Health Inc., a startup pharmacy in Culver City, Calif., that mails prescription drugs to patients who aren't using insurance, is processing about 3,000 prescriptions a day, up 50% since early March, said co-founder Jessica Nouhavandi.

Capsule Corp., which provides same-day delivery by courier in New York City, is seeing a fivefold weekly increase in new customers since early March, said CEO Eric Kinariwala. To keep up, employee count has nearly doubled to more than 800, and the firm in April accelerated expansion to Chicago and other cities.

"Doctors are saying to patients, 'Don't come in if you think you have the flu, but also, 'Don't go into the pharmacy,'" he said.

Increased use of mail-order pharmacies has been a long time in coming. Their primary customers have been patients with cancer and other diseases who take drugs that are expensive, can't simply be swallowed and may require special storage.

As use of cancer and other specialty drugs has increased, mail pharmacies have started taking off, capturing more than half of the industry's prescription revenue growth over the past six years, said Mr. Fein of the Drug Channels Institute.

Mail-order prescriptions also found demand, as online pharmacies used lower prices to appeal to patients concerned about drug costs.

The coronavirus pandemic accelerated that increase. New customers, forced to use more digital services, turned to mail-order pharmacy apps and websites for prescriptions, while pharmacies expanded their delivery areas.

Some states and health plans waived refill limits to encourage patients to get 90 days of drug supplies, instead of 30 days. And pharmacies waived delivery fees.

CVS Health Corp. saw a 10-fold increase in pharmacy home deliveries during the first-three months of this year, mostly since waiving fees in early March, a spokesman said. Express Scripts, a subsidiary of insurer Cigna Corp., said it is processing more home-delivery orders since stay-at-home measures began in March. Walgreens is also seeing a boost in demand for prescription delivery during the pandemic, a spokesman said.

Write to Jared S. Hopkins at jared.hopkins@wsj.com

 

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Financials (USD)
Sales 2020 23 942 M - -
Net income 2020 5 861 M - -
Net Debt 2020 10 162 M - -
P/E ratio 2020 25,7x
Yield 2020 1,81%
Capitalization 149 B 149 B -
EV / Sales 2019
EV / Sales 2020 6,63x
Nbr of Employees 33 625
Free-Float 99,8%
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Eli Lilly and Company Technical Analysis Chart | LLY | US5324571083 | MarketScreener
Technical analysis trends ELI LILLY AND COMPANY
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 164,94 $
Last Close Price 163,88 $
Spread / Highest target 15,9%
Spread / Average Target 0,65%
Spread / Lowest Target -26,8%
EPS Revisions
Managers
NameTitle
David A. Ricks Chairman, President & Chief Executive Officer
Joshua L. Smiley Chief Financial Officer & Senior Vice President
Timothy J. Garnett Chief Medical Officer & VP-Global Medical
Aarti S. Shah Chief Information & Digital Officer, Senior VP
Daniel M. Skovronsky Chief Scientific Officer & Senior Vice President
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