New Merger Could Mean Less Competition for Walgreen Pharmaceuticals

by Kayla

A new partnership announced by Walgreen Co. could change supply chain for pharmaceutical sales across the nation. The drug retail chain recently announced a 10-year agreement with Alliance Boots and AmerisourceBergen which analysts are saying could be key in transforming the global supply chain and cutting costs for consumers.

Alliance Boots currently operates in over 25 countries. AmerisourceBergen services the U.S., Canada and some global markets. “...These agreements not only expand our U.S. business, but also provide opportunities to meaningfully grow our specialty and manufacturer services businesses internationally," says President and CEO Steven H. Collis.  USA Today reports that Walgreen Co.’s 12-month revenue is $70.79 billion, and this number is significantly less than competitors like CVS Caremark pharmacy, with revenue of $123.13 billion. Still, Walgreen Co. is the United States’ largest drug retailing chain.  However, Walgreen Co.’s has slightly exceeded its competitors in the last quarter. Tapping into import records of over 79 million shipping manifests from Import Genius, it appears Walgreen Co.’s imports have significantly decreased comparing year-to-year numbers. Imports over the last five years went from over 3,000 shipments received in 2008 to less than 125 shipments in 2012.  In the last quarter, prescription drug sales accounted for 61% of sales in the first quarter, but revenue reported for the quarter ended Feb. 28 was flat at $18.65 million.  According to the CEO, the first quarter’s results proved to be better than competitor’s numbers as other comparable stores saw their prescription drug sales decrease. However, NASDAQ reports that recent pharmacy sales are ‘dismal’ since the “generic wave in the pharmaceutical industry during the last 12 months” has caused pharmacy sales to decrease.  Slowing imports coupled with fluctuating pharmacy seems to indicate that Walgreen Co.’s bottom line could start to suffer. Partnering with both corporations could be key for strengthening numbers across the company. The new deal with Alliance Boots and AmerisourceBergen gives these three bodies combined power to manufacture at lower rates and pass those savings onto consumers.  Sources:

Dismal Feb Results for Walgreens - NASDAQ

The pharmaceutical supply chain undergoes a new competition - America’s Logistics Blogspot

9 Retailers with the worst customer service - USA Today

AmerisourceBergen Announces Strategic, Long-Term Relationship with Walgreens and Alliance Boots - AmerisourceBergen