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Medicap Pharmacy

22

After three decades, Medicap is feeling a bit nostalgic. The first newsletter of its 30th year features a picture of a pick-up truck, circa 1984, used for deliveries when Medicap was still The Medicine Store. The centerpiece of the vehicle is a 3-foot by 1-foot capsule-shaped sign perched on the roof, a whimsical contrast to the sleek 2000 P. T. Cruisers now part of Medicap's fleet.

The cars may have changed, but marketing vice president Rick Swalwell said the road remains the same for the franchiser. The pharmacy-only model is still the course for Medicap, which saw a record 27 stores open in 1999 and another four since then. One hundred seventy-three stores now operate under the Medicap banner, with another 35 planned in 2001. Medicap also relocated most of its Midland Pharmacy stores in the Milwaukee area.

Despite the steady expansion, Medicap is picky. "Most franchises will and do talk to anyone who can walk, talk, and has money," Swalwell said. "But we found out a long time ago that even if someone is qualified to run a store, the pharmacists themselves must have at least a 25 percent equity interest in the business. Most of our stores are 100 percent pharmacist-owned. We want the smaller, professional apothecaries."

The fruits of the vested interest approach? Average per-store sales topped $1.5 million by the close of fiscal year 2000, with all but 5 percent attributed to prescription drugs. That brought the company's total fiscal year 2000 sales in well over $244 million, an increase of 19 percent from 1999.

But even Medicap's drugs only philosophy benefited from new changes last year. Perhaps one of the biggest was the company's switch to AmeriSource Health as its primary national wholesaler. "Our unique niche of stores--independent pharmacies--continually need attention at the local level," procurement vice president Steve Sisler said. "AmeriSource was able to provide centralized attention through its national service centers, so issue resolution takes place at the local level." Sisler said this change contributed to growth and expedited local problem solving. "Our pharmacists," he said, "like to be in control of their own destiny."

Also in the name of simplifying operations, Medicap boosted technology in several key areas. Among them: a new pharmacy dispensing system, an accounting program for online reports of daily sales figures from each store and an enhanced Intranet to speed communication between home office and franchisees. On the consumer side, customers can order prescription refills online and print out coupons for products and services right from Medicap's Web page.

Swalwell said Medihealth, another year 2000 addition, is thriving. Medihealth centers provide walk-in, pay-as-you-go health screenings and other services by bringing together the services of doctors, pharmacists, nurses and dieticians. Individuals can come in on their own, but division president and cofounder Lindsey Stephens said a number of small business employers use it for health screenings. Centers can either be part of a Medicap Pharmacy or a standalone business.

Twelve Medihealth centers have opened since January 2000, according to Stephens, all but three as part of Medicap stores. Four more centers will open between April and July. While most visitors pay out-of-pocket for Medihealth services, Stephens said the company is considering working with insurers for possible coverage.

Medicap isn't above casting an envious eye at competitors who are better financed. "We would love to have access to instant capital," Swalwell said. "We talk to a lot of pharmacists that want their own business but fall $10,000 or $15,000 short of a down payment. We try to help them find sources of capital, but we're not a bank." Therefore, Swalwell admitted, "going public may be an option" for Medicap.

But for now, the company said it would focus on its existing store base. "We'd rather open fewer stores with good people and good sense," Swalwell said. "But if we can be the flea on the elephant's butt, that's fine, too."

SCORECARD

Headquarters: West Des Moines, Iowa

2000 sales: $265 million [*]

% change vs. 1999: 19 percent on a same-store basis

No. of units: 173

Average store size: 1,500 square feet

Pharmacy sales: $252 million

% of sales from pharmacy: 95 percent

(*.) Calendar year sales. Sales for the fiscal year ending June 30, 2000, were $244.7 million. Medicap projects sales for fiscal year-end July 2001 to be $296 million.

PLAYERS

Bill Kimball chairman and chief executive

Charles Porter president and chief operating officer

Bill Stonebraker senior manager of operation services

Rick Swalwell vice president of marketing

Steve Sisler vice president of procurement services

Darrell Gilbert chief financial officer and vice president of finance

COPYRIGHT 2001 Lebhar-Friedman, Inc.
COPYRIGHT 2001 Gale Group