The classic characterization of a pharmacist is someone who just fills your prescriptions. For many people, this is the extent of their interaction with pharmacies - but this only scratches the surface of what they are capable of. Recently, pharmacy has been shifting towards value-based care models and focusing on taking services past just filling prescriptions, or “fill and bill”. Due to the pandemic, these additional services have become even more important. Pharmacists are looking to expand the ways they can serve their communities, especially focusing on COVID-19 point-of-care testing and vaccination. To perform all of these services successfully and incorporate them into workflow, a pharmacy’s software system must be equipped with the right tools and capabilities.
Over the last few years, the independent pharmacy software market has experienced significant shifts among its top vendors. As the industry evolves and pharmacies’ needs grow, customers tend to migrate to vendors that best fit their current needs. Conversion is a common occurrence in the market, as pharmacies ‘convert’ to a different software vendor than the one they are currently using. Conversion can happen for multiple reasons, usually to fill in a gap that a pharmacy is experiencing with their current software system. Due to pharmacies converting vendors and new pharmacies opening their doors, the distribution of stores among software vendors has shifted. This can be seen in the results of an independent pharmacy study by Direct Opinions.
Direct Opinions, an independent market research firm, has conducted 5 annual surveys from 2016-2020. These surveys are double-blind phone interviews with independent pharmacies across the country, analyzing the same metrics each year. Part of the survey includes inquiring which pharmacy software system each store currently uses. By keeping track of the market share of each vendor from year to year, key trends start to emerge. The most significant, overarching change seems to be the concentration of market share to a few key players over time.
In 2016, the market was very spread out amongst vendors, with no significant leaders in market share. The “All Others” category, composed of smaller, less-known vendors, held a high percentage of pharmacies. Essentially, pharmacies were quite varied in the software systems they used. Over the past 5 years, however, this “All Others” category has shrunk as more independent pharmacies have moved from smaller vendors over to industry leaders. This has caused a greater percentage of the market to be held by a handful of companies. As the pharmacy software market has become more robust, these leading vendors have started to make a name for themselves and invested in their unique competitive advantages.
In the most recent 2020 Direct Opinions survey, fully outlined on our Evaluating the Best Pharmacy Software System page, we can see how the independent pharmacy software market has progressed. The graph below shows the top 10 software vendors by percentage of market share, with a 95% confidence interval:
PioneerRx and Rx30 are the leading software providers by market share, holding a respective 21% and 19% of stores according to the survey data. In descending order, they are followed by Micro Merchant Systems, Computer-Rx, QS/1, Pharmaserv, Best Computer Systems, Enterprise, SRS, and Liberty. PioneerRx has seen a steady increase in its customer base over the past few years, as well as a high retention rate with its customers. Micro Merchant Systems has also seen a steady increase in their market share over time. Conversely, McKesson has slowly dropped down from their former position as a leading vendor, as they have reduced their pharmacy software product offerings.
Currently, the top 5 vendors together hold almost 75% of the entire market. These key players now take up a larger share of the market than before, and this can potentially lend them to having a greater scale of influence and resources as their customer base grows. This could be beneficial for community pharmacies if it is used to further their best interests and advocate on their behalf. Moving forward, independent pharmacy’s livelihood and sustainability will depend on whether it will have a loud enough voice to compete with national chains and be called on for government initiatives - such as the administration of the COVID-19 vaccine. Pharmacy software vendors can empower their stores by providing them with the right tools, but also by using their network of stores together as one combined voice that is advocating for their shared interests.