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Executive Summary

LONGS DRUG PHARMACY SALES TOP $ 385 MIL. IN FY 1989 (ended Jan. 26) and generated 20% of the firm's $ 1.9 bil. in corporate revenues, Longs said in its recently-released annual report. By comparison, sales of prescription drugs represented 18% of the total in the previous year, or roughly $ 319 mil. The $ 385.1 mil. in 1989 revenues includes prescriptions filled at retail, by Longs' mail-order pharmacy service and through third parties. During the last five years, pharmacy revenues as a percent of the total has increased from 10% to 20%., which is "more than double the rate" of all drug stores combined, Longs told analysts in California April 11-12. To augment the growth of the pharmacy business, the chain opened a pharmacy distribution center in southern California during the fourth quarter and is looking to further expand its prescription-by-mail and third-party payment services. "We believe controlled growth of third party business will provide additional opportunity to service this important segment of the pharmacy market and contribute to further increases in sales and earnings," the report notes. Longs is preparing for the implementation of the full drug benefit under the Catastrophic Care Act in 1991 by creating "super pharmacies" and bolstering its computer network's capabilities. Longs "expects to be part of the Pharmacy Provider Network which will be used by Medicare," the company noted. Longs installed 22 super pharmacies in its 236 drug stores last year and more will be added in high volume pharmacies. Super pharmacies are computerized and semi-automated facilities designed to help pharmacists fill prescriptions more efficiently and provide greater customer access for consultations with the pharmacist, the company said. Longs upgraded its existing Hewlett-Packard pharmacy computer information system "to permit virtually instantaneous communication from store to store and between all stores and the General Office," the annual report notes. Each store can now also access purchase information for its suppliers. The chain is already one of the largest Hewlett-Packard computer networks in the world, the annual report notes. In FY 1990, the chain plans an additional 11 to 14 new stores, boosting the overall number to 247-250. California remains Longs primary geographic focus; 200 of the firm's 236 drugstores are located there. The chain opened 11 new stores in FY 1989: 10 in California and one in Hawaii.

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