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Merlo lets everyone know why PBM isn’t going anywhere

BY Antoinette Alexander

WHAT IT MEANS AND WHY IT’S IMPORTANT — With all the talk among the investment community and press about what CVS Caremark should do with its PBM business, it really comes as little surprise that president and CEO Larry Merlo hit the topic head on during Thursday’s first-quarter conference call — insisting that there are no plans to split the company.

(THE NEWS: CVS off to ‘good start,’ Merlo says; company committed to PBM biz. For the full story, click here)

Merlo told analysts at the start of the conference call, "Despite conjecture in the marketplace, there are no plans to split up the company. We strongly believe that we have the right assets in place to ensure our long-term success in this changing healthcare environment."

Merlo’s comments came on the heels of much chatter among the investment community and press about whether or not CVS Caremark should spin off the PBM business. And some critics have argued that the two divisions of the company are worth more apart than together.

However, those who insist that CVS Caremark’s parts are worth more than their sum should take a closer a look at how the various parts of the company’s integrated model come together — retail, mail order, PBM, specialty and retail clinics. Each component complements the others, and the PBM is a big part.

Echoing this sentiment, J.P. Morgan issued a report in March — on the fourth anniversary of the CVS Caremark merger — that stated: "In our view, the strategy behind the merger is not inherently flawed, and we believe that Caremark has proven to be a valued asset to the retail pharmacy operation. As such, we think it is unlikely the company would voluntarily spin off the Caremark asset in the near term. That said, while some have argued in favor of separating the two companies to unlock value, we note that a sale would likely have sizeable FTC concerns, while a spin has the potential for negative synergies on both segments."

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Former Supervalu executive joins iControl

BY Mike Troy

ROCKVILLE, Md. — Mike Jackson was named to the board of directors of iControl Systems USA, where he also will serve in the capacity of senior adviser to iControl president and CEO Tal Zlotnitsky.

Jackson is a 30-year veteran of Supervalu who retired from the company in late 2009 as president and COO.

iControl is a supply chain visibility and collaboration solutions provider to retailers and their supply chain partners with a client roster that includes CVS, Safeway, Kroger, Stop & Shop, Rite Aid, Winn Dixie, A&P, Chevron, Hess and other major U.S. retailers.

“Mike is among the few true lions of the industry, a man deeply and rightfully respected across the spectrum of retailers and suppliers for his common sense [and] fair-minded approach to supply chain issues,” Zlotnitsky said. “We are confident that our solution is a game changer, and it is gratifying that someone of Mike’s stature, upon seeing us up close, came to the same conclusion and agreed to put his shoulder to the wheel.”

The addition of Jackson to the iControl board is expected to help the company gain greater insight into the growing issues affecting retailers and their trading partners. “The iControl suite of services, including their thoughtful and ground-breaking approach to scan-based trading, provide for unprecedented collaboration between the direct store delivery supplier and retailer to optimize the business,” Jackson said.

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Shoppers would spend more for good customer service, survey finds

BY Allison Cerra

NEW YORK — Good customer service sells, according to a new study conducted by American Express.

American Express’ Global Customer Service Barometer discovered that 7-out-of-10 Americans are willing to pay an average of 13% more with companies they believe provide excellent customer service, compared with 58% of Americans that echoed this sentiment in 2010. But while Americans put a heavy emphasis on good customer service, most (60%) believed that companies haven’t stepped up their game to improve their focus on providing good customer service. Among them, 26% believed that companies are paying less attention to their customer service.

What’s more, nearly 8-out-of-10 consumers (78%) said they will bail on a transaction or opt not to make an intended purchase because of a poor service experience. American Express also noted that 2-in-5 (42%) consumers said companies are helpful but don’t do anything extra to keep their business, while 1-in-5 (22%) thought companies take their business for granted.

However, 3-in-5 Americans (59%) that have a better service experience said they would try a new brand or company.

For adult shoppers seeking a company that puts a great emphasis on customer service, 81% of respondents said that small businesses are the way to go.

"Getting service right is more than just a nice-to-do; it’s a must-do," American Express EVP world service Jim Bush said. "American consumers are willing to spend more with companies that provide outstanding service, and they will also tell, on average, twice as many people about bad service than they [will] about good service. Ultimately, great service can drive sales and customer loyalty."

The American Express Global Customer Service Barometer research was completed online among a random sample of 1,000 U.S. consumers ages 18 years and older.

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