Founded in 1986 in St. Louis, Express Scripts (NASDAQ:ESRX) started as a joint venture for a chain of pharmacies. The goal was to better manage prescriptions with software tracking systems, home delivery services and medical data analysis.
To be successful, the company realized it needed tremendous scale, so it focused on acquisitions, with deals for companies like ValueRx, CuraScript, Phoenix Marketing Group, ConnectYourCare and, most recently, Medco.
As of now, Express Scripts is a member of the Fortune 100, has more than 13,000 employees and is the largest pharmacy benefit manager in the U.S. In 2011, the company saw more than $46billion in revenues, which came out to about $1.2 billion in earnings.
There are more than 100 million members in Express Scripts’ system, which accounts for about 35% of the pharmaceutical spending in the U.S.
Still, Express Scripts does face some challenges. For example, the company is feeling the pressure on pricing from retailers like CVS Caremark (NYSE:CVS). It also looks like UnitedHealth (NYSE:UNH) will create its own PBM system within a couple years or so.
But for the long haul, the prospects for Express Scripts look promising. Some of the mega-trends include the aging population, the increase in the availability of generic drugs and the move to improved efficiency in the U.S. health care system.
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Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.