No. 1 – Pacific Pharmacy Group
Where: Mission Viejo
12-month sales: $29 million
Two-year growth: 6,944%
OC workers: 19
Business: acquirer, operator of independent pharmacies
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Rolling up small pharmacies has brought big growth for Mission Viejo-based Pacific Pharmacy Group.
The company buys and runs pharmacies found in medical office buildings or near hospitals.
It then consolidates operations as part of a central network and brings in its own managing pharmacists. It keeps most existing workers.
The company ranked No. 1 on the Business Journal’s 2009 list of fast-growing private companies with sales growth of 6,944% for the two years through June 30.
For the 12 months through June, Pacific Pharmacy had sales of $29 million, up from $412,899 for the same period in 2007.
“We’ve been real busy,” said Tom Pascoe, Pacific’s cofounder and chief executive.
Pacific owns nine pharmacies in Southern California, including in Garden Grove, Orange and its lat-
est location, the Newport Lido Pharmacy in Newport Beach near Hoag Memorial Hospital Presbyterian.
Pacific acquired Newport Lido in August from Hoag Memorial, according to Pascoe.
The company also recently bought a pharmacy in Saugus in northern Los Angeles County.
Pacific has 121 workers at its pharmacies and headquarters, with about 20 workers in Orange County.
Pharmacies, like other parts of healthcare, are a stable business that hasn’t been ravaged by the economy.
The company’s pharmacies mainly fill prescriptions and aren’t larger retail operations like stores of Walgreen Co., CVS Caremark Corp. or Rite Aid Corp.
“People need their meds,” Pascoe said.
Pascoe and Scott Tyree, Pacific’s chief operating officer, started the company three years ago.
Pacific provides its pharmacies with services such as billing and collections, buying, marketing, relations with doctors and other healthcare providers and regulatory compliance through its central office operations.
That frees up pharmacists to focus on customers.
The centralization also helps the pharmacies compete with the big chains that dominate the industry.
Pacific stocks its pharmacies by tapping a large drug distributor with an OC history: AmerisourceBergen Corp., a Pennsylvania-based drug wholesaler that bought Orange-based Bergen Brunswig Corp. in 2001.
Pacific promotes its pharmacies as more intimate, personalized alternatives to large chain drugstores. They’re appealing to seniors and other regular patients who may call upon Pacific’s pharmacies after visiting their doctors in the same medical office complex.
“We truly believe that the health of a community is well-served by having independent community pharmacies,” Pascoe said.
More buying is planned.
“There are a lot of independent pharmacies that were built in Southern California 20 and 30 years ago, and a lot of those individuals are in the retirement zone right now,” Pascoe said.
The hard part is picking ones that fit with the company’s strategy, he said.
“Not every independent pharmacy owner is a good fit for us,” Pascoe said.
Pacific is looking to buy pharmacies from owners who have been “long-term successful,” he said.
Recent acquisition Saugus Drugs has been in business since 1984.
Newport Lido has been open since the mid-1980s.
Pacific isn’t interested in buying struggling pharmacies and turning around them, according to Pascoe.
Last year, the company did acquire a troubled pharmacy in northeastern San Diego County.
Regulators forced the prior owner to sell and charged him with excessive dispensing of painkillers, including to customers without prescriptions.
Despite the prior owner’s issues, the pharmacy had a long-term, successful business in a tight-knit community, Pascoe told a local newspaper.
Pacific’s business model is encouraged by some trade groups as way for independent pharmacies to survive, including the National Association of Community Pharmacists, an Alexandria, Va.-based group whose members own more than 23,000 pharmacies.
“We encourage pharmacist owners to sell to other independents instead of a chain,” said John Norton, the group’s spokesman.
The association’s definition of “independent” includes privately held businesses that own 10 or fewer pharmacies, such as Pacific.
Pacific plans to stick to Southern California, according to Pascoe.
The region offers an annual retail pharmacy market of $10 billion to $12 billion, with about 2,000 independent pharmacies.
The goal is to have 15 to 20 pharmacies, he said. The company is talks for potential deals, according to Pascoe.
Pacific’s growth has attracted investors.
Pacific Community Ventures LLC, a San Francisco private equity firm, invested $3 million into the company at the end of 2007.
The money was used to support growth of the chain’s existing pharmacies as well as acquisitions.
Pascoe has worked as an executive and as a consultant.
Earlier in his career, he served as chief operating officer of Costa Mesa’s Tickets.com Inc., now part of Major League Baseball.
From 2002 to 2003, he served as chief executive of Irvine’s HiEnergy Technolo-gies Inc., a maker of airport security gear that’s no longer in business.
