Apothecary Shops thrives on service

Posted: Friday, May 31, 2002

PHOENIX (AP) -- At first glance, John Musil's job seems more difficult than selling furnaces in Phoenix in July.

As owner of seven Apothecary Shops of Arizona, he offers prescription drugs that can be more costly than those found in drug stores. But it's not a tough sell, even though prescription drug co-pays have increased and drug benefits have dried up, said Musil.

There's a big market for his products and services: drugs that are custom-made to be safer and more effective, and counseling to help people better understand their medications. The Apothecary Shops sold more than $12 million in adult, pediatric and veterinary medicine in 2001.

Phoenix resident Barbara Crowell, who's allergic to corn, comes to Apothecary Shops for medicines that won't make her break out in hives. Many pharmaceuticals are made with cornstarch, so Crowell needs an alternative. At the shop, she got a prescription for a penicillin substitute to fight a bone infection.

''It saved my life. What can I tell you?'' she said.

While Crowell's insurance paid for the drug, most insurers consider custom-made drugs nongenerics and require patients to pay extra for them.

Musil's decision to sell compounded drugs, which are made from raw materials at the pharmacy, as well as filling traditional prescriptions has been a success since he launched the business five years ago.

Out of pharmacy school for two years, Musil bought his first store with a down payment from his family. The pharmacist who owned the store carried his note for five years.

''I was 26. I had no credit history. No house,'' he said.

When creating the business, Musil looked to retailers like Nordstrom for tips on service. The emphasis on service has paid off in many ways.

For one customer, Musil researched her insurance and found out that she had $3,000 worth of fertility treatment coverage she was unaware of. The next day, the customer gave him a Mont Blanc pen as a thank-you.

Musil believes such service creates good word-of-mouth for the store. He also works to cultivate good relationships with physicians so they refer patients to him. A three-person marketing team visits with physicians, a small-scale version of what megapharmaceutical companies do.

''Initially, their reaction to compounded drugs was 'What is it?' I don't think they had a very good comfort level with it,'' he said, adding that he nonetheless has seen the compounding portion of his business increase to 50 percent from 15 percent.

Musil focuses on certain segments within the health care market. His central Phoenix store focuses on AIDS medications. The store at Good Samaritan Regional Medical Center, which has a nationally known reproductive medicine program, concentrates on fertility drugs.

Some of the larger drugstore chains refer patients to the Apothecary Shops. Sandra Jolley of Scottsdale heard about them from an Albertson's pharmacy when she was looking for a topical cream to use as part of hormone-replacement therapy.

Musil said the chains recognize that he is not a threat. His busiest store fills 220 to 260 prescriptions a day, low by Walgreen's standards, he said.

Not everything has gone according to formula for the druggist.

In 1998, he opened his second store near a 10-pediatrician practice. Musil thought it would be a natural because he flavors drugs to make it easier for kids to take medicine. But the pediatric practice was dissolved and sales slowed.

So, Musil decided it would handle the production of all infertility drugs to be shipped out of town. Now, the location is the second-best in the chain.

''I do a lot of things by my gut. I don't really go in for the fancy demographics,'' Musil said.

2001 was a good example of seat-of-the-pants planning. A new store, a longtime dream to get out of his cramped original store, had been planned. Then a new location became available, so Musil bought that.

Finally, a Tucson doctor who sends a lot of patients to Musil suggested he plan a store there.

''Things just happen in threes,'' Musil said. He decided to go for all the opportunities, even though it costs $200,000 to $250,000 to open a store.

While there is a national shortage of pharmacists, Musil said he hasn't had problems finding staff because he allows them a lot of say in how the stores are run.

''I tell them, 'Don't call me unless a fire breaks out,' '' he said. Not being micromanaged allows the pharmacists to tap their inner entrepreneur, Musil said.

Musil said he realizes that in the short term, health care will be challenging. Patients may experience more pharmaceutical sticker shock as they take on more of the costs.

But that will lead them to expect more from the medication and the people behind the counters who dispense them, he said.

''People will say, 'Now that I'm paying for it, I really want that service.'''

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