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Walgreens, Alliance Boots address merger at analyst meeting

BY Allison Cerra

DEERFIELD, Ill. — Just a few days after announcing their merger, Walgreens and Alliance Boots leaders sat down to discuss the value of their deal before analysts on Friday.

Kicking off the Q&A-style meeting, Walgreens president and CEO Greg Wasson outlined how the drug store chain’s partnership with Alliance Boots came to fruition, noting that the opportunity was identified about 18 months ago. “Along the way … real opportunities began to come to light, [and we learned] how we could create more value for the two companies,” Wasson told analysts.

Wasson also addressed the merger’s two-step structure, saying it was the right approach for both parties, since the plan allows the companies to capture early synergies and procurement opportunities, allows Walgreens to stay focused on its core business and allows both companies to think their strategies through. “It is a really prudent way to do it,” he said. “I don’t know if there are two other brands out there that can create the opportunity we can. [It is and will be] hard to replicate what we were able to do here.”

Alliance Boots executive chairman Stefano Pessina said the company has adapted its business to the needs of the consumers/clients to grow into a global business and noted that Alliance Boots had been interested in expanding its footprint to the United States, but needed a partner. “We didn’t think of coming to the U.S. alone. Coming alone would have been a suicide. We began to search [and found that] this company (Walgreens) is the right package,” Pessina said. “What convinced me to make the investment is the chemistry. The chemistry is very important. A part of that: We understood that this company had value. There is a clear strategy, and they are pursuing these strategies in a consistent way. I believe this strategy will drive share price.”

When asked why the companies didn’t just collaborate to achieve synergies “without cutting a check,” Wasson explained that collaborations don’t often have combined economic interests and that the overall value of Walgreens and Alliance Boots would maximize the benefits and would “make the pie far bigger versus fighting over the pie.”

”It’s difficult to leverage all of these things if we just did a partnership,” he said.

While Walgreens-Alliance Boots has a combined purchasing pool of $100 billion or more, analysts questioned how the deal has a lot of integration risk with a 45% stake by Walgreens in the U.K. retailer, which currently has debt. The executives — which included Walgreens EVP and CFO Wade Miquelon, along with Alliance Boots group finance director George Fairweather — would not argue with the math, but affirmed that the merger set them up to have “competitive advantage for a very long time” and that the “one-in-a-lifetime brand asset” sets the companies up for expansion and diversification growth for the next 10 to 20 years.

Alliance Boots, which credits its success in various markets by hiring local management to operate its stores, is bringing that same notion to its deal with Walgreens. Both Fairweather and Miquelon are working together to bring together a structure that will create a roadmap for these synergies, including generic and branded drug buying, front-end sales and private label, and research and development for new products and innovations.

As previously reported, the two companies together will be:

  • The global leader in pharmacy-led, health and well-being retail, with more than 11,000 stores in 12 countries;

  • The largest global pharmaceutical wholesale and distribution network with more than 370 distribution centers delivering to more than 170,000 pharmacies, doctors, health centers and hospitals in 21 countries; and

  • The world’s largest purchaser of prescription drugs and many other health and well-being products.

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mjbelitz says:
Jun-23-2012 07:16 pm

Boots attempted to enter the Canadian market about 30 years ago, couldn't make and went home. Let's see what happens this time.

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Herborium’s all-natural, herbal energy drinks expected this fall

BY Melissa Valliant

Herborium Group announced today that its proprietary energy drinks, which contain all herbal ingredients, will hit the market this fall and will complement the company’s sexual health product line.

Herborium’s energy drinks are all-natural and contain caffeine, sugar and B vitamins in safe amounts, according to the company. The $8 billion energy drink segment is the fastest-growing niche in the beverage market, according to Herborium, up 16% since last year.

"We are extremely excited to move into the commercialization stage for our unique healthy energy product that can also fight jet lag and has no adverse effects," said Agnes Olszewski, chairman and CEO of Herborium. "Our product contains a proprietary blend of herbal extracts that provide for an immediate lift of energy and alertness as well as for longer lasting beneficial effects, without jittery feeling and a ‘crash’ associated with caffeine and sugar containing drinks."

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Health IT pilot aims to curb Rx drug abuse

BY Allison Cerra

WASHINGTON — A new pilot program that aims to curb prescription drug abuse among patients will be tested in Indiana and Ohio.

Created by the Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology, the projects — funded by the Substance Abuse and Mental Health Services Administration and managed by ONC in collaboration with SAMHSA, the Centers for Disease Control and Prevention and the Office of National Drug Control Policy — will measure the effects of expanding and improving access to prescription drug monitoring programs and are part of the Obama administration’s comprehensive efforts to reduce the prescription drug abuse epidemic.

The pilot project in Indiana will demonstrate how emergency department staff can receive a patient’s controlled substance prescription history directly through the Regenstrief Medical Record System, a care management system used by Wishard Health Services — a community health system in Indianapolis — and other hospitals. The project is a collaboration between ONC, Regenstrief, Wishard, the National Association of Boards of Pharmacy, Appriss and the state of Indiana.

Meanwhile, the Ohio pilot project will test the impact of having a drug risk indicator in the electronic health record and how that affects clinical decision making. The Ohio project is a collaboration with the Springfield Center for Family Medicine, Eagle Software Corp.’s NARxCHECK, the state of Ohio and MITRE.

"Technology plays a critical role in our comprehensive efforts to address our nation’s prescription drug abuse epidemic," said Gil Kerlikowske, director of National Drug Control Policy. "Together with education, proper disposal practices, and enforcement, improving existing prescription monitoring programs is a priority for this administration. We hope these innovative pilots will help usher in an era of ‘PDMPs 2.0’ across the nation to improve real-time data sharing among, increase interoperability of data among states, and expand the number of people using these important tools."


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