Meet Tom Ryan, the man behind the CVS empire

WOONSOCKET, R.I. -- During a reprieve from the escalating battle over the pharmacy benefits provider Caremark Rx Inc. last Monday, CVS chief executive Tom Ryan was keeping his cool.

Leaning back in his chair at the company's headquarters here, Ryan insisted he was confident CVS Corp. would fend off a higher, unsolicited bid from rival Express Scripts Inc. for Caremark. The company's board had just reaffirmed its commitment to the CVS deal, hatched over dinner at the University Club in Providence in 2005, to create a drug distribution powerhouse.

"It's breaking new ground. It's never been done, so it's harder for the financial community to understand it," Ryan, 54, said. "But we will reshape and lead the market."

Still, Ryan, often praised for his keen ability to anticipate opportunities and threats, seemed somewhat surprised by the hostile Express Scripts challenge, which grew even nastier when the rival company launched a proxy battle for Caremark.

Caremark is the riskiest deal yet for Ryan, who joined the company as a pharmacist three decades ago and has since stretched the company coast to coast and transformed the drugstore into a $43.8 billion national healthcare empire.

"What's distinguished CVS has been their size and their aggressiveness. When they see an opportunity to purchase more stores or have a bigger presence in an area, they move on it," said Carmen A. Catizone , executive director of the National Association of Boards of Pharmacies, a professional group that represents state boards of pharmacy. Ryan, he said, "pushes others to be survivors outside of CVS -- people try to keep up or follow his lead."

Since taking the helm at CVS in 1998, Ryan has focused on the acquisition of chains and small independent shops, expanding the business 50 percent to 6,200 stores. Today, Ryan views everyone as a potential rival or partner: pharmacy benefits managers that negotiate drug prices, as well as department stores that carry the makeup CVS wants to sell. With last year's takeover of MinuteClinic, Ryan is adding in-store clinics that treat common illnesses, such as strep throat, ear infections, and pink eye -- a move that allows the company to offer accessible and affordable medical care.

Ryan learned about the power of consolidation under Terrence Murray, the banking guru who grew up in Woonsocket and invited the young Ryan to join the board of Fleet Financial Group in the 1990s. There, the New Jersey native watched Murray aggressively snatch up banks the way Ryan would later acquire pharmacies.

As a board member, Ryan had good instincts, figuring out six months before Murray did that an executive at a company Fleet was acquiring wasn't committed to their vision, according to Murray, who now serves on CVS's board of directors.

"Tom fingered it well," said Murray, Fleet's former CEO. "So we accelerated the executive's departure."

Ryan, the son of a homemaker and a machinist at the New York Daily News newspaper, got his first taste of the pharmacy business as a delivery driver in high school for Jay's Pharmacy in Oradell, N.J. (Ryan says it's the one independent he has promised not to buy.)

The former altar boy studied the pharmacy business at the University of Rhode Island, almost quitting in his third year when organic chemistry got too tough. Ryan stuck it out and followed the advice of one of his professors, Norman A. Campbell , to apply for an internship at a small company, now known as CVS.

Ryan says he scored the internship because he was the only applicant who showed up with a tie (borrowed from a fraternity brother). He had some more good luck a few years later, when the company's co founder Stan Goldstein tapped Ryan, then 29, to lead the pharmacy division after an external candidate turned down the job at the last minute.

"Ryan was the kind of guy who benefited from that adage, 'the harder people work, the luckier people get,' " Campbell said. "He's that kind of individual."

Along the way, Ryan took CVS in new directions while keeping his eye on the finer details of running the business. The chief executive earned a compensation package valued at $25 million in 2005 according to the latest data from research firm Corporate Library, but he still makes calls to random CVS pharmacies to see how long it takes for workers to pick up the telephone.

On his way to dinner last month, Ryan left a message for a manager after spotting one of the lights out on a CVS sign on 5th Avenue in New York City.

Given this acute attention to detail, some find it hard to understand how Ryan could overlook major problems at CVS pharmacies. Last year, the Massachusetts Board of Pharmacy said it signed a first-of-its kind agreement with CVS that required its pharmacies be monitored by an independent agency after the state received scores of allegations of prescription errors.

The board's investigation uncovered various deficiencies, including inventory that was improperly labeled, pharmacists who didn't always offer an explanation of medications and side effects, and a ratio of pharmacists to assistants that was sometimes too low. Even since the agreement last February, the state said it has received another 52 allegations of prescription errors at CVS pharmacies.

Ryan said in an interview that he doesn't believe the problems are unique to CVS, but that "you can always look to do better."

Some public officials say Ryan has pushed CVS too fast, too far and in some cases, sacrificed the public's trust to deliver the growth he wants. Several years ago, the company became embroiled in a scandal over payments to a Rhode Island lawmaker to allegedly influence legislation, including blocking a pharmacy-choice bill opposed by CVS that would have opened up an exclusive Blue Cross network and allowed Rhode Islanders to get their prescriptions filled at almost any drugstore.

The controversy ultimately led to the resignations of Democratic state Senate president William Irons and state Senator John Celona, who later pleaded guilty to criminal charges and admitted trading his vote on the pharmacy legislation for a consulting agreement with CVS.

Federal and state investigations continue into the matter. Ryan declined to comment, except to say that the company is fully cooperating with authorities and that CVS changed its policies about doing business with lawmakers.

"Top decision makers knew what was going on," said state Senator Leonidas P. Raptakis, who had supported the pharmacy choice bill. "CVS has done a lot of good, but there's some aspects of them trying to get bigger and better that probably violated the trust of the public."

For all his success, friends and acquaintances say Ryan remains affable and easygoing . When asked at a chief executive round table if he had one last meal, what would it be and where he would eat it -- Ryan, a father of four, claimed "KFC with my family." (He does, however, serve on the board of Yum Brands Inc., which owns KFC).

Outside the office, Ryan likes to attend basketball games at his alma mater, where he persuaded legislators to spend $23 million to help build a 7,600-seat gym and convocation center. The chief executive donated $2 million, and CVS gave another $3 million -- and the facility was dubbed "The Ryan Center."

Campbell, who often sees his former student at basketball games, says Ryan is down-to-earth, the kind of guy that gets in the concession line and buys his own beverages and snacks at a stadium named after himself.

Said Ryan: "I always believe that if you take care of people and produce results, things will fall into place."

Jenn Abelson can be reached at abelson@globe.com.