WAG Q3 call speaks to Boots alliance; many U.K. programs can be replicated in U.S.
DEERFIELD, Ill. — The days of Walgreens quarterly conference calls focusing primarily on lost prescriptions from the Express Scripts pharmacy network soon may be over with the retail pharmacy’s announcement early Tuesday morning that Walgreens and the U.K. pharmacy operation Alliance Boots would merge.
One is not in reaction to the other, however. "It would be very naïve to assume this [Boots transaction] is in response to [ESI]," Wade Miquelon, Walgreens EVP and CFO, told analysts in Walgreens’s conference call to discuss third-qaurter results. "I find it almost silly to believe this [merger] responsive," Miquelon added, noting that the Walgreens-Boots alliance has been on the negotiating table now for more than a year.
The merger also will not impact near-term domestic initiatives, Miquelon said. "This merger will allow us to not only drive those [initiatives] but accelerate [them]," he said. Walgreens and Boots will be exploring ways to parlay core competencies from one country to the other in the months ahead. One of those competencies mentioned on the quarterly conference call was Boots Opticians, a U.K. eye care retailer with around 625 locations, which could catapult Walgreens into the retail eye care business. Another core competency coming out of Boots would be its loyalty card program. That program boasts two-thirds of all English women as members, Miquelon noted. "It’s also very emotive," he said. "That is where we can really learn as we draw the lines as to where we’re going [with] ‘Well.’"
Back stateside, Walgreens third-quarter sales decreased 3.4% from the prior-year quarter to $17.8 billion, while sales for the first nine months increased 0.6% to $54.6 billion. Front-end comparable-store sales decreased 0.9% in the third quarter, customer traffic in comparable stores decreased 2.6% and basket size increased 1.7%, while total sales in comparable stores decreased 6.6%.
Prescription sales, which accounted for 62.9% of sales in the quarter, decreased 6.6%, while prescription sales in comparable stores decreased 9.9%. The company filled 192 million prescriptions in the quarter, a decrease of 8.4% over last year’s third quarter. Prescriptions filled in comparable stores decreased 9.1% in the quarter. Redacting the negative impact of no longer being in the Express Scripts network would net a 1.6% uptick in same-store prescription sales, Miquelon told analysts Tuesday morning. Regarding the potential of lost Medco business with the merger of Medco into ESI, Miquelon reiterated, "As of now we continue to serve those customers." There is no indication that either party — ESI-Medco or Walgreens — will be revisiting those active contracts.
For the third quarter ended May 31, Walgreens posted net earnings of $537 million, a 10.8% decline. Net earnings per diluted share for the quarter decreased 4.9% to 62 cents, compared with 65 cents per diluted share in the year-ago quarter. Compared with the prior-year’s quarter, the impact of no longer being part of the Express Scripts pharmacy provider network as of Jan. 1, 2012, was 6 cents per diluted share net of cost controls.
The Alliance merger also negatively impacted net earnings in the quarter by 1 cent per diluted share.
According to Miquelon, Walgreens delivered a record quarter and fiscal year to date of operating cash flow of $1.9 billion and $3.7 billion, respectively, driven by solid earnings and strong working capital progress. Free cash flow totaled $1.5 billion for the quarter, up 46.8%. Walgreens also announced an increase in its quarterly dividend of 22.2% to 27.5 cents per share from the previous rate of 22.5 cents per share. Walgreens has paid a dividend in 319 straight quarters (more than 79 years) and now has increased its dividend for 37 consecutive years. Over the past five years, Walgreens annual dividend rate has increased from 38 cents per share to $1.10 per share, resulting in a compound annual growth rate of nearly 24%.
The proposed merger may also be seen as a proactive step by Walgreens, anticipating Walmart's global expansion in healthcare, insurance and e-clinics, not to mention the potential re-emergence of so-called re-importation of less costly pharmaceuticals. Ron Hammerle, Chairman and CEO Health Resources, Ltd. Tampa, Florida
MeadWestvaco introduces Shellpak Renew
RICHMOND, Va. — A packaging and packaging solutions leader has introduced a new package designed to meet patient and pharmacist needs.
MeadWestvaco said its Shellpak Renew — which will launch at more than 3,600 Walmart pharmacies this summer and nearly 2,000 other retail pharmacies across the country — features a tear-resistant, recyclable outer carton, an easy-slide blister and an integrated calendar for patients to easily track their medications. The development of Shellpak Renew is part of MWV’s longstanding commitment to further awareness and solutions for poor medication adherence, the company said. The package is based on the company’s original Shellpak, but is sustainable as is made of MWV’s Natralock, an environmentally-friendly paperboard-based packaging solution that maximizes the use of recyclable materials and minimizes waste.
"Among the many adherence solutions that are available to help patients take their medications as prescribed, medication packaging may be uniquely effective as one of the last opportunities to educate patients about how to take their medications safely and effectively," said John Grinnell, VP and managing director for MWV Healthcare’s secondary and adherence packaging division.
No comments found
Sanofi, Joslin Diabetes Center enter collaboration
PARIS — A drug maker and a teaching and research affiliate of Harvard Medical School announced a new collaboration to promote the development of new medicines for the treatment of diabetes and related disorders.
Sanofi and Joslin Diabetes Center said their collaboration will "focus on four key areas within diabetes and related metabolic disorders to identify potential new biologics or small drug candidates for the treatment of late complications of diabetes and new insulin analogs with more targeted efficacy, [while] research will address the challenges of insulin resistance and personalized medicine, with the overall aim of improving the lives of people living with diabetes."
Under the terms of the agreement, Sanofi has options to commercialize the results of the research, while both parties will have access to intellectual property for internal research use. Financial details of the collaboration were not disclosed.
No comments found