• by Sarah Mahoney  @mahoney_sarah, October 8, 2010

CVS Caremark says it has successfully positioned itself to pounce on new business created by health care reform: It estimates the federal expansion of health coverage will affect 32 million Americans, generating upwards of 200 million prescriptions a year.

"We think this is a big opportunity for us," CVS Chairman/ CEO Tom Ryan told analysts and investors in a presentation in New York, which was also webcast. "The key driver is the alarming growth of chronic disease in the U.S., with 140 million already affected by chronic disease, and 170 million going forward." Among those with these illnesses, which include cancer, diabetes, hypertension, depression and heart disease, "more than half are either not adherent or have gaps in care," he says, "and 16% aren't even medicated."

That greater need for care "will improve our Maintenance Choice business, our Minute Clinic business, and our pharmacy sales."

Ryan says the Woonsocket, R.I.-based company also stands to benefit substantially from the $90 billion of branded drugs scheduled to go off patent between 2010 and 2016, "advancing the use of generics, a key driver of both improved health outcomes and cost savings."

The graying population is also a plus for CVS, with 55 million Americans reaching or surpassing the age of 65 by 2015.

The company says its MinuteClinic network of retail health clinics inside its CVS stores is projected to remain "the far-and-away leader of its sector," and it will expand the brand through 2015.

Meanwhile, its front-of-store operations are also gaining market share, Mike Bloom, EVP/merchandising, tells analysts, as it continues to find new ways to serve "our time-starved customer. She wants to use our stores for fill-ins between her regular grocery trips, and so we replaced over 500 items with frequently purchased grocery items," he says, increasing both size of basket and number of trips.

And while dollar stores have been gaining traction, "that is at the expense of Walmart and grocery stores, not CVS."

Bloom says private-label products continue to be a key growth driver, with about 900 new products added each year. Private-label now accounts for 17% of sales.