In a February 10, 2003, BusinessWeek article, "CVS's Potent Growth Potion," Joseph Agnese points out that the retail pharmacy sector has remained relatively strong throughout an extended period of general economic downturn. Pharmacy sales of nearly $200 billion reflect this sector's recent double-digit percentages in annual revenue growth. Of this nation's leading retail pharmacy chains, CVS Corporation has emerged as being one of the most successful and progressive. The company currently holds either the no. 1 or the no. 2 market-share position in 70 percent of the country's top 100 markets.
For background, read the BusinessWeek article cited in the case study. To access the article, use the EBSCO Academic Search Premier database available through VALE. (See sidebar at right for information on how to access VALE and search for an article using Academic Search Premier.)
Prospects for CVS Corporation appear to be very strong. However, some analysts believe that a shift in CVS Corporation's sales mix to increased pharmacy revenue from third-party insurers could put pressure on the company's gross profits margins. Explain what is meant by these analysts. (Hint: Refer to exercise 6.11.)