Monday, November 09, 2015

Drugstore and Pharmacy Business: Rite Aid To Merge With Wallgreens

It is very interesting what is going on in the healthcare retail business. Indeed, we can clearly see a lot of transformation into this business:
  • Less regulation, and the will of governments to empower more retailers in order to ease the access to medications.
  • New category approaches by market leaders, especially CVS
  • A lot of new competition coming from other retailers, especially FMCG specialists such as Walmart or Target.
Recently, Rite Aids and Walgreens have agreed to merge their business, to create a healthcare tycoon counting for 40% of market shares.

Obviously, the terms are still discussed, especially as antitrust regulation will probably apply. But why this deal? Primarly because the market is getting tougher, and in order to secure high profitability for both companies, they'll need to leverage synergies, especially in terms of negotiation powers against the major pharmaceutical companies.

This merger has also a strong goal:
“With the physician shortage, the access to primary care physicians will likely be lowered for many patients,” Turk said. “Instead of seeing your primary care provider, you may have to interface with someone at Walgreens to help you dispense your medication.”

Obviously, it is a main trend going on in the healthcare business, and having a strong network of pharmacies with skilled and trained employees to help you with your medication is a key in order to keep groing the business and also to answer some real questions about what the future of health care will look like.