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Alliance Boots deal changes the game for WAG

BY Michael Johnsen

Walgreens and Alliance Boots — it’s a trans-Atlantic retail pharmacy game-changer. 


As the largest single purchaser of prescription drugs in the world, with 11,000 retail pharmacies in 12 countries that currently dispense more than 260 million prescriptions a year, and a global pharmaceutical wholesale operation to match, serving more than 180,000 healthcare outlets worldwide, the new company will have a whole lot more leverage on that side of the business. 


And the area in which Walgreens will benefit immediately is private brands. While Walgreens has beefed up its private-brand development in recent years with brands like Delish and Nice!, it will benefit greatly from the 400-plus associates Boots currently has dedicated to private-brand innovation. Boots has long been acknowledged for private brands, most notably the venerable No7 beauty brand, but also Soltan (sun care), Botanics (natural skin care) and Boots Labs (anti-age partnership with Procter & Gamble).


And given the market for multisource generic pharmaceuticals and future projections, having an in-house generic pharmaceutical manufacturing capability — Alliance Boots’ Almus division currently makes generic pharmaceuticals in five European countries — could be a decided advantage for a drug store operator.


Two more areas where Walgreens might be able to learn from Boots: optical — Boots operates some 625 optical stores in the U.K.; and loyalty cards — approximately two-thirds of U.K. women are members of Boots’ program, and Walgreens is expected to roll out its own card in September. 


How transformational is this deal? Consider Walgreens’ revenue mix today and how it expects that to change over the next five years. Currently, about two-thirds of Walgreens’ $73 billion in sales is in pharmacy. In 2016, sales of the combined companies are projected to top $130 billion, with only about one-third coming from the U.S. pharmacy business. 


As an encore, Walgreens celebrated Independence Day by buying USA Drug’s 144 stores for $438 million.

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Macy’s creates skin care man cave

BY Antoinette Alexander

PHILADELPHIA — The men’s grooming market is poised for further growth as more than 9-out-of-10 men are using some sort of grooming product today, according to a recent report by the NPD Group. Looking to further tap into the growing segment, Macy’s in downtown Philadelphia has opened a “men’s grooming zone” on its beauty selling floor. The space — which carries high-end grooming brands for men, such as Lab Series Skincare for Men, Shiseido Men and Jack Black — is an ideal “man cave” complete with a flat-screen TV, free wireless Internet and a Keurig coffee maker.


It is “almost a men’s skin care man cave,” Muriel Gonzalez, EVP cosmetics, fragrances and shoes, told the Wall Street Journal. A similar space opened in the Macy’s in San Francisco in June. According to NPD, the men’s facial skin care market has grown 11% in dollar sales in 2011 compared with 2010.

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Par to be acquired by investment firm

BY Alaric DeArment

WOODCLIFF LAKE, N.J. — An affiliate of private investment firm TPG will acquire Par Pharmaceutical Cos., the drug maker said Monday.

Par said it had entered into an agreement to be acquired for $1.9 billion. Par shareholders will receive $50 per share, representing a 37% premium over the company’s Friday closing price.

"We are excited about this transaction as it delivers compelling value to our shareholders," Par chairman and CEO Patrick LePore said. "While my focus and that of the Par board of directors was on shareholder value, we are very pleased that Par will be acquired by TPG, a leading global private investment firm whose substantial resources and healthcare experience will enable Par to continue to invest in its future long-term growth."


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