The online drugstore market is down one player as pharmacy benefits manager Express Scripts announced last week it would transfer assets of its online pharmacy, yourPharmacy.com, to Web rival PlanetRx.
The deal renders yourPharmacy.com's intended advertising campaign and original business plan null and void, an executive close to the company said. YourPharmacy in early August opened an ad agency review for an estimated $20 million account.
Separately, PlanetRx last week chose Goodby, Silverstein & Partners, San Francisco, for its estimated $50 million account.
Under the drugstore deal, Express Scripts will get a nearly 20% stake in PlanetRx following PlanetRx's initial public offering of stock, expected later this fall. Also, PlanetRx will pay Express Scripts $11 million annually for at least five years.
Express Scripts, a leading pharmacy benefits manager for health insurance companies and pharmacies, retained ownership of the yourPharmacy.com name, but will reconfigure the site as a source for insurance-related information with links to PlanetRx for e-commerce, an executive close to the company said.
POWERFUL BENEFIT MANAGERS
"The move reinforces the power pharmacy benefit managers have in this market," said David Restrepo, a Jupiter Communications analyst, of Express Scripts' move.
Mr. Restrepo said several players had approached Express Scripts: Soma.com, recently acquired by CVS Corp.; Drugstore.com, partly owned by Amazon.com and Rite Aid Corp.; and PlanetRx all sought access to Express Scripts' network during their development, he said.
CVS has no pharmacy benefits managers its site can access, but Drugstore.com has access to PCS Health Systems, a pharmacy benefits manager owned by Rite Aid.
"Turns out the only way to gain access was by giving up a significant chunk of your company," Mr. Restrepo said.
The deal gives PlanetRx access to Express Scripts' 37 million customers and a stake in what is expected to be a highly successful IPO.
CVS, which acquired start-up Soma.com in June, will promote the revamped site, now under CVS.com, through Goldberg Moser O'Neill, San Francisco. Soma.com had retained Goldberg for its estimated $8 million account. CVS.com's online and offline branding campaign breaks in the fourth quarter.
Copyright September 1999, Crain Communications Inc.