Additionally, Lekarj said Rite Aid has not invested in its 4,600 stores in recent years and Walgreens Boots Alliance will likely have to make costly store improvements if the acquisition is completed.
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The deal might let Walgreens negotiate better prices on drugs, but the benefits for customers are unclear. The deal combines the largest and third-largest USA drugstore chains, based on store counts. The companies, two of the three largest pharmacy chains in the nation, are looking to merge as the Affordable Care Act has overhauled the health care system and fueled consolidation.
Rite Aid stores will initially keep their name after the deal closes, Walgreens said, but that may change over time.
Drugstores also are shifting to serve the Baby Boomers and their health needs, as well as the growing number of people who are shopping around more for health care instead of simply visiting their family doctors. That’s about 64 percent more than the next largest competitor, CVS, not counting that company’s still-evolving partnership with Target. Above that, and regulators take action and force companies to close or sell stores.
While management remained quiet on an exact integration plan for Rite Aid, Lekraj said the move is still “moderately positive” for Walgreens, helping to expand the company’s geographic reach and increasing its drug purchasing power.
But Pessina downplayed this motivation, telling analysts the impetus of the deal was to boost operating efficiencies and broaden its reach in the United States market.
“However, despite these and many other proof points, Medicare does not now recognize pharmacists as full-fledged providers, and does not compensate them for numerous important services they provide”. Those products don’t offer a lot of profit for drugstores in the first place so there isn’t much room to cut prices. See breaking news happening in your town? But prescription prices also can depend on insurance coverage and whether a drugmaker is motivated to lower its prices to fend off competition from competing treatments.
“Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy”, said Stefano Pessina, CEO of Walgreens Boots. “I’m not saying they won’t have to close a few stores – of course they will – but I think this deal will go through”.
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The boards of directors of both companies have approved the transaction, which is subject to approval by the holders of Rite Aid’s common stock, Walgreens officials said.
