Group Medicine

After cofounding and establishing PrairieStone Pharmacies, a chain located locally inside Lunds and Byerly’s stores that focuses on customer service, Lew Zeidner and Jim Cox left to pursue a new venture.

They stayed in the pharmacy business—by allowing others to stay in it. In 2006, they founded Golden Valley-based ApothecaryRx, LLC, which buys and operates independent retail pharmacies, adding common back-office functions but retaining each store’s familiar retail face.

On the back end, ApothecaryRx upgrades and groups pharmacies’ business functions. Employees get a common benefit program, an improvement for family firms that may have previously offered workers limited benefits, if any. ApothecaryRx installs a common accounting and information technology platform; it also purchases drugs in bulk for all its stores, which allows it to negotiate lower wholesale prices.

“We like to think of it as the best of both worlds,” says Zeidner, ApothecaryRx’s president and CEO. “From a customer perspective, it stays identical. Staff, feel, and service all stay the same.”

The money saved by economies of scale roughly equals the money spent on improved benefits and systems, Zeidner says, so ApothecaryRx’s operating costs for each pharmacy are about the same as they were for the former owner. ApothecaryRx makes its money by purchasing already successful pharmacies—usually those with $5 million or more in annual sales—and retaining the social equity that’s helped make them successful.

“This is not about a turnaround,” Zeidner says. “At the end of the day, our goal is to buy and sustain solid businesses and invest in them.”

A former hospital administrator, Zeidner has been in the pharmacy business for many years. He helped start MedManagement, a hospital pharmacy services firm, in 1996. San Francisco–based McKesson Corporation bought MedManagement in 1998, and Zeidner worked for the merged firm until 2003.

Zeidner met Cox, now ApothecaryRx’s vice president for operations and a trained pharmacist, when the two helped develop PrairieStone, which opened its first store in January 2004. In 2005, Zeidner left PrairieStone to pursue the ApothecaryRx concept, an idea that he’d been considering for several years.

ApothecaryRx has acquired 18 pharmacies in the West and Midwest during its first two years of business, and will likely continue to buy 8 to 10 a year. There are about 17,000 independent pharmacies in the United States, Zeidner says, and approximately 2,000 meet the company’s acquisition criteria.