Walgreens, Alliance Boots provide analysts color on global pharmacy opportunity

LONDON — Walgreens and Alliance Boots will generate $130 billion or more in combined sales, Greg Wasson, Walgreens president and CEO, told analysts Wednesday. Walgreens and Alliance Boots offered analysts a firsthand look at the Alliance Boots operation here, beginning with a store tour and then leading into presentations. 

"Together, our goal is by 2016 combined sales of $130 billion or greater," Wasson told analysts. "And adjusted operating income of $8.5 billion to $9 billion. We'll deliver $1 billion or more in combined synergies. And [we have an] operating cash flow goal of $8 billion or more." 

Operating across 25 countries, Alliance Boots provides Walgreens entry into several pharmacy growth markets across Europe and Asia. The global pharmacy picture is fast materializing behind the need to temper healthcare spending across several highly-fragmented markets in terms of retail pharmacy outlets. "The nature of the health sector is changing across the world and being the first global pharmacy [and] well-being enterprises is the best possible place we could be," Stefano Pessina, Alliance Boots executive chairman, told analysts.  

For the Walgreens/Alliance Boots deal, it's the combination of a significant wholesale business with a retail pharmacy operation heritage. 

"This time last year I wouldn't have been too surprised if some of you didn't know much about Alliance Boots," Pessina, one of the architects behind the Walgreens/Alliance Boots deal, told analysts. "Even when we were in the top third of the Fortune 100 we were not very well known," he said. Alliance Boots is presently extending its presence into emerging markets like China, Turkey, Thailand and the Middle East. 

"If we look at what this means for the future, it is that our group strategy will continue to focus on our two core businesses of retailing and wholesaling while increasing and developing internationalized brands to create a third growth dimension," Pessina said. 

The first brand extending into several global markets is Alliance Boots' No7 beauty brand. No7 is presently available in 18 countries. In December, the full Boots No7 department made its first appearance in the United States, at Walgreens' new flagship store in Los Angeles.

Beyond wholesale and established, global brands, Alliance Boots is a fully integrated multi-format, multi-channel insight and customer led brand, commented Alex Gourlay, Alliance Boots chief executive Health and Beauty Division, "Inspiring our customers to feel good, through the unique products services and care we offer. … Over 160 years we have been at the heart of local communities making healthcare and beauty products accessible to people wherever and whenever they need them for generations."

Like Walgreens, Alliance Boots is linking its brand identity to omnichannel retailing — delivering a seamless offer to the consumer whenever and wherever they choose to engage the brand. 

"Our international health and beauty division today has pharmacists, retail stores and joint ventures in 11 countries with over 3,300 stores," Gourlay said. "Further, Boots products are sold in over 20 countries, through retail stores, franchise partners and via third-party distribution. Here in Europe we are the clear market leader in pharmacy and we're driving further growth through our health and beauty stores in Asia — in Thailand, in particular," Gourlay added.

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