Independent pharmacy figures out how to set itself apart

THE CHALLENGE

The corner drug mart was becoming a rarity as grocery stores and megastores increasingly captured a larger share of the prescription, drugstore products and specialty gift lines of business. Competitors' costs and prices were lower and their advertising budgets were higher. The independent corner drug mart was finding it more difficult to succeed in the shadow of these powerful competitors.

Rob Heaton, a pharmacist and owner of Cambrian Pharmacy in Calgary, realized that a change in strategy was required if his business was going to remain viable.

THE BACKGROUND

Cambrian Pharmacy opened in 1959 in a new neighbourhood in central Calgary. In 1996, Mr. Heaton purchased the store from a pharmacist-owner he'd known since high school and with whom he'd worked since 1990.

Shortly after assuming sole ownership, Mr. Heaton realized that continuing to operate a traditional drugstore was no longer viable. Change was essential for survival.

Big-box stores, like Wal-Mart Stores Inc., had a strategy of ensuring they had the best price on everything from a case of diapers to a children's book. Young families watched their money carefully and were compelled to get the best price.

Traditional drugstores also carried a significant inventory of giftware and home accessories. The opening of stores like Pier 1 and Rafters, part of the Liv Canada Gift Groupmade it difficult to compete with the drugstore's limited product lines.

As a result, Cambrian Pharmacy faced an identity crisis of sorts. Before establishing a new identity and business strategy, Mr. Heaton felt he had to answer two key questions: What are we? What's our business?

He saw himself as a health care professional, leading him to conclude that Cambrian Pharmacy's business was health care. He then had a focus for his strategy.

THE SOLUTION

In 2002, Cambrian began to offer a compounding service, essentially custom-tailoring prescriptions, in precise dosages and forms. Standard products don't work for well for some patients with a unique combination of symptoms, diseases and tolerance levels.

The compounding service started out small, with a small counter space and a simple, new piece of equipment, an ointment mill.

To create awareness of the service, Mr. Heaton held meetings with physicians to discuss their most puzzling patients. "You dream it and we'll find a way to do it," he told them.

Working with physicians created an awareness of the value of the service and helped with word-of-mouth marketing.

The creation of individual treatment plans resulted in a holistic approach to health.

Patients were requesting natural ingredients and fewer chemicals and dyes. They were also were routinely conducting research into their ailments. After validating holistic plans, the pharmacist could work with a patient and his or her physician to develop a treatment plan.

Mr. Heaton also identified a competitive advantage that pharmacists had over their main competitor: health food stores, whose knowledge was limited to naturopathic products. Pharmacists could understand both homeopathic and prescription drug remedies and the complex interactions that might result.

THE RESULT

The role of being a "medication problem solver" is very challenging and satisfying, and fits the business's focus.

As a result, two of Cambrian's pharmacists have pursued specialties relating to their passions and interests, one in diabetes and the other in hormone balancing and reproductive therapy.

The compounding service grew in response to customer demand and Mr. Heaton's increasing experience allowed him to identify additional opportunities.

Over the past decade, new equipment and training have allowed the compounding service to grow from six square feet of counter space to a pharmaceutical lab occupying 400 square feet, and it is able to prepare the most complex and sterile medications (for instance, eye drops and injections).

To increase trust in its products, Cambrian voluntarily sends all of them for testing to ensure quality control. It has also developed a collection of scholarly articles and studies that can be used by physicians considering a novel treatment protocol.

Cambrian's relationship with physicians continues to flourish as it provides unbiased information on new developments and products in the industry.

Cambrian is the pharmacy with the largest selection of homeopathic and complementary remedies in Calgary. It now has three or four pharmacists on each shift, up from one in 1996.

Mr. Heaton has demonstrated a clear strategic vision of a pharmacy providing health care choices and solutions that is built upon four key services: compounding, supplements, natural products and the pharmacy.

His motto of "If you decide to do something, do it right," and having a passion for what he does will continue to allow Mr. Heaton to be creative and innovative.

In addition to providing superior customer service by developing individualized treatment plans, Cambrian will continue to allow patients to make informed choices about their health.

Special to The Globe and Mail

Sandra Martin-Malach is a professor of entrepreneurship in the Haskayne School of Business at the University of Calgary.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.

Join The Globe's Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT