Name: Thomas M. Ryan
Age: 46
Position: President and chief executive officer CVS Corporation, the holding company of CVS Pharmacy, Inc. Woonsocket-based CVS has more than 4,000 stores in 24 states. CVS has annual revenues of $15 billion and fills more prescriptions than any retailer in America.President and chief executive officer CVS Corporation, the holding company of CVS Pharmacy, Inc. Woonsocket-based CVS has more than 4,000 stores in 24 states. CVS has annual revenues of $15 billion and fills more prescriptions than any retailer in America.
Background: Ryan joined CVS in 1975 as a pharmacist. In 1985, he became vice president for pharmacy operations. In 1988, he was named senior vice president for pharmacy operations. Two years later, he was appointed executive vice president of stores. Ryan was named president and chief executive officer of CVS Pharmacy, Inc., in January 1994. At the company’s annual meeting this April, he will become chairman. Ryan also co-chairs — with Gov. Lincoln Almond — the Rhode Island Economic Policy Council. He serves on the board of numerous civic organizations and is the co-chair – along with the governor – of the steering committee for the University of Rhode Island’s new convocation center.
Education: Bachelor of Science in Pharmacy, University of Rhode Island
Family: Wife, Cathy; four children
Residence: Providence
PBN: CVS Corp., has committed $3 million for the construction of the $43.6 million convocation center/athletic arena at URI. What makes this a wise investment for CVS?
RYAN: CVS is a major corporate player in the state. As I have said a number of times, the economic future of the state is dependent in part on the growth of the university. Anything we can do to help the university, helps the state. That helps CVS. This is part of that. Building a convocation and athletic center will help us attract top-end students. Students today look at the entire package. They look at the education, the dorms and the athletic facilities. When my daughter went down to Duke, one of the first things she looked at was the basketball arena.
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When did it hit you that this was the right thing to do – to get involved in building a convocation center/athletic arena at URI? When did you begin to believe this could really happen?
Well, obviously the year the team had last year – going to the Elite Eight helps. Success breeds success. The governor asked me to co-chair. Once I committed, there was never any question about whether it was going to happen. I wouldn’t have committed to something that I didn’t think had a chance of happening – or I couldn’t help to make happen.
You sound confident that we are going to see an arena at URI.
There is no question we are going to see an arena. You are never going to get me involved in a project to co-chair that we are not going to get. We’re going to have an arena. It’s going to be a world class facility that people can be proud of. It’s going to be state-of-the-art. And it’s going to be something that other states look at as an example of a public/private partnership. That should not go unnoticed.
At a recent State House press conference announcing the first major corporate gifts for the convocation center, you drew a huge applause when you said; ‘It is okay to have a world class athletic facility at a world class university.’ Do you get the impression Rhode Islanders are feeling better about themselves?
They are beginning to. There is a sense in Rhode Island I don’t know if it is an inferiority complex. But there is a sense in Rhode Island — certainly with this project — that you can’t really talk about it as a basketball facility, because it wouldn’t get pushed through that way. That’s not the case. It’s a convocation center. It’s more than a basketball facility. At the same timeone of the strengths and one of the reasons we are going to raise this money is our basketball team. The team is going to bring money back into the university. In addition, the added benefit is to all the other social and extra-curricular activities at the university and the environment and culture down there. And secondly, for the community.
At the same press conference, you said: ‘You can’t have a successful state without a successful state university.’ How important is URI to CVS?
On the pharmacy side, we hire the largest percentage of their graduates. The quality and caliber of those people has been outstanding. In addition, we get people from liberal arts. Upwards of 90 percent of our store managers are college graduates. And obviously, all of the pharmacists.
Is this something you make a concerted effort to do – hire primarily college graduates?
We’re aggressively moving toward that.
Are you finding you are able to – or is it a challenge?
It’s a challenge. But so far, we have been a preferred place to work. That has allowed us to attract the top talent. In addition, we work with URI in terms of research. A chair that we just funded revolves around pharmaceutical/economics and the value of pharmacy and pharmacy services. Not only do we get people from the school, we get intellectual capacity.
CVS has expanded its headquarters in Woonsocket. What exactly are you doing?
We have 250,000 square feet here and satellite facilities in Worcester, North Attleboro and Andover, Massachusetts and in Lincoln. We’re adding another 200,000 square feet here so we can build a campus and bring 300 or so people back to Rhode Island. In addition to that we will add 400 jobs here over the next five years.
So many companies have left Rhode Island in recent years. Why is CVS recommitting to the Ocean State?
We were founded here. It’s our home state. Our workforce is here. Having said that, when we purchased Revco, which was based in Ohio, we doubled the size of our company. We had a fiduciary responsibility to see what the financial options were. We spent a lot of time with our board, looking at alternatives. We were courted by Ohio and both Carolinas. I’m happy to say Rhode Island won on its own merits. Obviously my heart was here. I wanted to stay here. But the economic package that the governor and the legislature put together was the key. There were incentives for research and development and incentives for training. It made economic sense to stay here.
Are you confident the economic landscape has significantly improved here?
I think there is a new willingness on the part of the administration and legislature to think about new business opportunities. To me, it goes hand in hand. I met with the heads of the Senate and House Finance Committees – and we’re talking about developing an economic policy package. There’s going to be a transportation piece and a workforce development piece. There’s going to be a tax piece. I think it’s moving in that direction.
Does the size of the state help – or hurt, in terms of fostering economic initiatives?
The smallness of our state – we can leverage that. I don’t think we’ve done that, quite yet. We have duplicity of administration around the state. We have a lot of overhead. I hesitate to say thisbut I think there are some synergies we have not capitalized on.
The Baby Boomers are getting older – that must bode well for CVS.
The fundamentals of our industry are strong. The demographics are changing – there is an aging population. The average American uses seven prescriptions per year. The average American over 60 uses two-and-half times that. That helps us. The growth of managed care helps us because utilization increases. They understand that pharmaceuticals are cost effective. It’s a bigger part of their spend, but they understand the use of pharmaceuticals keeps people out of the hospital. Pharmaceuticals reduces surgeries – and put people back to work. The second piece for us is the growth of the discovery of new drugs. The whole lipid lowering cholesterol group, the anti-depressant/anti-anxiety group – these are billion dollar drugs. CVS fills more than 10 percent of all prescriptions in the country. It’s good to be in a growth industry.
What is your take on managed care?
It puts pressure on our margins. Significant pressures on our margins. The pharmacy represents 55 percent of our business. It’s a growing business, but the margins are dropping significantly. We’re growing the company for scale. First, for purchasing power. Secondly, to leverage our costs over a broader base of stores and lastly, because of our density and leadership. We are the number one player in 31 markets in the country – more than any other drug chain.
Can we expect to see more CVS stores opening in the area?
We opened 440 stores last year. We’ll open 470 this year. So we open up more than one a day. That will be our continued pattern. If you think about our growth going forward, it’s about 450 stores per year and we’ll start to look outside our footprint.
On a personal level, was there a turning point or defining moment that has fueled your success?
There’s no one moment. Other than when I thought I might want to be a teacher. My father decided that if I wanted to be a teacher, I might as well come home to New Jersey and go to Montclair State. I told him I’d get back to him on that. Then I called and said I had decided to stick with pharmacy. That was the turning point.
