Walgreens has been one of the most successful retail operators since its founding in 1901 and has remained a major player within the pharmaceutical supply chain for many decades.
The firm processed approximately 20% of total U.S. prescriptions during fiscal 2017, which makes it one of the largest retail pharmacies. With the acquisition of Europe-based Alliance Boots, the firm is now a premier global retail powerhouse. The firm recently received regulatory approval for the acquisition of half of Rite Aid’s store fleet, which will solidify Walgreens as the largest retail pharmacy chain in the U.S. This acquisition will not only increase its volume and geographic reach, but also materially augment its global generic purchasing volume. Walgreens will also be better-positioned to build on its preferred pharmacy strategy. This strategy entails the retail pharmacy discounting its generic drug inventory to become a preferred pharmacy in PBM retail networks and to drive store foot traffic. Walgreens is the largest retail pharmacy, with approximately 10,000 U.S.-based stores. This vast network gives the firm the ability to reach 75% of U.S. consumers, giving it excellent scale and convenience advantages. Pharmaceutical spending will grow solidly during the next several years, given demographic shifts and the expansion of medical coverage to many uninsured individuals, driving demand for Walgreens’ core back-of-the-store pharmaceutical products. Recent partnerships have the potential to provide improved results for the retail pharmacy.