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Super-Sized Pharmacy Will Alter US Drugs Market

Drugs

The terrain of pharmacies and drug dispensing has shifted in the US following the announced merger between Walgreens and Rite Aid.

The Walgreen Company (Walgreens) is the second largest drug store in the US; it was founded in 1901 by Charles R. Walgreen with a drugstore on the corner of Bowen Ave and Cottage Grove, Chicago. In recent years, Walgreens has faced competition from both lower cost pharmacies and supermarket giants like Wal-Mart.

Rite Aid, a smaller concern, began in 1962 as a single store in Scranton, Pennsylvania called Thrift D Discount Center. The price that Walgreens is paying for Rite Aid as part of the deal is reportedly $9.4 billion (17.2 billion when including the debt). The new company will become the largest drugstore in the US, surpassing CVS.

A potential advantage with the merger is a lowering of drug prices through the new conglomerate being able to negotiate lower prices, particularly with generic medicines.

Despite competition, the selling of medicines and other items is big business in the US

Both Walgreens and CVS have market capitalizations of around $100 billion. Rite Aid is a smaller player, however it is still valued at $26.5 billion.

Unlike Walgreens, which provides a wide range of drugs and a clinic service, Rite Aid Corp operates like a budget store. The merging of the two companies will allow for more services to be offered through the Rite Aid stores (whether they continue to trade as “Rite Aid” or are re-branded).

According to Pharmaceutical Processing magazine, pharmacies (‘drugstores’) in the US are struggling to serve the ageing baby boom population. There is also a shift occurring with how people access and receive healthcare. In response to the complex US health insurance system, those on lower incomes are increasingly seeking health advice from drugstores rather than visiting family doctors.

About the author

Tim Sandle

Dr. Tim Sandle is a chartered biologist and holds a first class honours degree in Applied Biology; a Masters degree in education; and has a doctorate from Keele University.

  • oldchuck

    $9.4 MILLION??

    • TheLatestNews

      Thank you for noticing this mistake we have already corrected it – it’s billion.

  • Victor Grayson

    Interesting article!