Businessmodel of Express Scripts

Customer Segments

Express Scripts provides healthcare management and administration services to a range of customers, primarily within the healthcare sector. The Company’s customers include:

• Medical and Healthcare Organisations, including managed care organizations, healthcare providers, clinics, and hospitals;
• Other Organisations and Groups, including health insurers, third-party administrators, employers, union-sponsored benefit plans, and workers’ compensation plans; and
• Government Bodies and Agencies, including government health programs. Express Scripts provides pharmacy network services and home delivery and specialty pharmacy services to the US Department of Defense through its TRICARE Pharmacy Program, the military healthcare program serving active-duty service members, National Guard and Reserve members, and retirees, as well as their dependents. The Company also provides distribution services to office and clinic-based physicians who treat patients with chronic diseases and regularly order costly specialty pharmaceuticals.

Express Scripts principally serves customers across the US. The Company also provides a home delivery service to customers in Canada.

Value Propositions

Express Scripts provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as one of the largest and most recognisable companies of its kind in the world, with a track record for providing efficient and reliable services;
• Its specialist personnel, with the Company employing highly-trained technical staff, including healthcare professionals that provide clinical support and specialised care for patients with chronic and complex conditions;
• Its research and analysis operations, with the Company using comprehensive research to support its pharmacy benefit management services, evaluating clinical, economic and member impacts; and
• Its technology and IT systems, with the Company employing state-of-the-art pharmacy systems and other management information systems to support its operations. ### Channels

Express Scripts operates a corporate website at www.lab.express-scripts.com, through which it provides information on its various products, services, and operations. The Company also operates a consumer website at www.express-scripts.com, which offers certain online services, such as organising home deliveries and managing customer accounts. Express Scripts also offers similar functionality through its mobile apps, which are available to iOS, Android, and Windows Phone users.

Express Scripts operates its own in-house sales team, which markets and sells pharmacy benefit management solutions to customers directly. This team is supported by a team of client service representatives, clinical pharmacy managers, and benefit analysis consultants, which provide medical and pharmaceutical advice. The Company also operates a CuraScript Specialty Distribution business, which provides distribution services directly to office and clinic-based physicians who treat patients with chronic diseases and regularly order costly specialty pharmaceuticals.

Customer Relationships

Express Scripts provides a range of services to customers on a self-service basis, through its online portal at www.express-scripts.com and its mobile apps, which allow customers to access certain products and services without interacting directly with members of the Company’s sales and marketing team.

Express Scripts provides the majority its services through its in-house sales team, which deals directly with customers. The Company consults closely with clients to assist in the selection of plan design features, with the Company’s sales team seeking to identify a balance between the clients’ requirements for cost control and with choice and convenience. The Company focuses on four interrelated areas – benefit choices, drug choices, pharmacy choices and health choices – with a view to establishing long-term customer relationships.

Express Scripts offers support services to its customers through various online resources, including FAQs. Customers are also able to contact the Company directly over the phone, or can interact with the Company’s support and customer service staff through its social media accounts, including with Facebook, Twitter, and LinkedIn.

Key Activities

Express Scripts is a US-based pharmacy benefit management company, engaged primarily in providing healthcare management and administration services.

The Company operates through two business segments: Pharmacy Benefit Management, which includes the Company’s integrated pharmacy benefit management operations and specialty pharmacy operations, including prescription drug utilization and formulary management; and Other Business Operations, which includes the operations of its group purchasing unit Matrix GPO, as well as its specialty distribution arm CuraScript Specialty Distribution. Express Scripts operates in the US, as well as to a lesser extent in Canada.

It principally serves customers in the medical and healthcare sector, as well as corporate clients and US government agencies and programs.

Key Partners

Express Scripts collaborates with a range of companies across its two operating segments. These partners include:

• Supplier and Vendor Partners, comprising suppliers of tools, resources, and services such as warehousing, technology, drugs, and packaging, that support the Company’s in-house services, as well as certain vendors to which functions can be outsources;
• Pharmaceutical Partners, comprising various pharmaceutical manufacturers and life science companies, with which the Company collaborates on improving the safety and accessibility of medical products, and designing patient access centres; and
• Strategic and Alliance Partners, comprising a range of companies with which the Company shares resources and collaborates on joint projects. The Company recently launched a number of partnerships, including a deal with Imprimis Pharmaceuticals to develop a low-price alternative to Daraprim, and funded a $175,000 partnership between Christian Hospital and Memory Care Home Solutions.

Key Resources

Express Scripts’s key resources are its intellectual properties, its technology and communications infrastructure, its sales and distribution channels, its partnerships, and its personnel – including its clinical staff. The Company also leases a number of offices, distribution centres, and equipment, that are material to its operations.

Searches of records published by the US Patent and Trademark Office identified 10 patent applications filed in the name of Express Scripts, including applications entitled ‘Display with a computer icon’. ‘Paper feed system and method’ and ‘Display screen with a graphical user interface’.

Cost Structure

Express Scripts incurs cost in relation to the maintenance and development of its technology and communications infrastructure, the management and operations of its sales and distribution channels, the operation of its physical infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015, Express Scripts accrued selling, general and administrative costs in the amount of $4.06 billion, including the payment of salaries and benefits to its workforce of 25,900 employees. The Company also accrues rental and lease expenses across its network of properties and in relation to its equipment.

Revenue Streams

Express Scripts primarily generates revenue through the delivery of prescription drugs through a contracted network of retail pharmacies, as well as through home delivery pharmacies and specialty pharmacies. The Company’s revenue is reported in two segments:

• Tangible Product Revenue, from the sale of prescription drugs and from dispensing prescription drugs through its home delivery and specialty pharmacies; and
• Service Revenues, comprising the collection of administrative fees associated with the administration of retail pharmacy networks contracted by clients, medication counseling services and specialty distribution services. In 2015 Express Scripts generated $101.75 billion in revenue, up on the $100.89 billion recorded by the Company in 2014. Revenues from the delivery of prescription drugs to its customers represented 98.0% of the Company’s total revenues in 2015.