Chain Drug Review, April 29, 2019

State of the Industry The Chains Walgreens Boots Alliance WBA sets its sights on transforming retail health care DEERFIELD Ill When Walgreen Co and Alliance Boots over six years ago forever changed the landscape of health care and retailing by creating a partnership that led to the formation of the first global pharmacy led health and wellness business it toppled established notions about the strategic scope and breadth of assets needed to compete effectively in those rapidly changing sectors Today Walgreens Boots Alliance WBA continues to set its sights on the equally transformational objectives of making its pharmacies true health care neighborhood health destinations reimagining the front end retail business and developing digital assets that are as compelling to consumers as its stores in the United States and the United Kingdom have been for more than a century All of those efforts revolve around the shopper and the patient according to executive vice chairman and chief executive officer Stefano Pessina We have continued our work to build on our partnerships in the quarter We have started some new partnerships and we have begun testing a number of new initiatives Pessina said during the companys earnings call earlier this month Alex Gourlay co chief operating officer of WBA added that with the rapid pace of change in the industry its becoming more and more critical for retailers to evolve their business models to meet those needs in order to provide the best customer experience It all starts with listening to our customers as we further transform our business to respond to the way people want to access new health care services as well as shop for everyday value in health and beauty Gourlay explained that that transformation has been enhanced through forming new partnerships and alliances as well as further developing some relationships on the retail side and also in pharmacy and health care These collaborations are helping to create a modern retail offering that builds on Walgreens convenient locations and in the last year we took some significant steps to differentiate our stores The emerging partnerships and other efforts under way at WBA to augment its already robust role in meeting consumer needs reflect an emphasis on what Pessina identifies as three key areas health care retailing and digital capabilities Pessina said the December deal with LabCorp is a significant expansion of the 18 month old pilot program that brought the laboratory services providers collection facilities to 31 Walgreens drug stores in Colorado Florida Pharmacies are becoming health destinations North Carolina and Illinois Favorable consumer response has prompted the companies to commit to raising that number to 600 in the next four years On the technology front WBAs recent partnership with Microsoft Corp looks to fundamentally transform retail health care the role of community pharmacy in peoples daily lives and patients health well being and experience by harnessing advanced digital technology and retail solutions As an industry we can expect to see a growing emphasis on driving better patient outcomes as part of value based care models and the role we play in providing greater access to pharmacy and health care services will become even more important noted Gourlay Its one of the driving forces behind the work were doing to transform our pharmacies to become more of a neighborhood health care destination To do this we need both physical and digital solutions that can impact cost and outcomes Gourlay said pointing to WBAs announcement in December of a strategic partnership with Verily an Alphabet Inc company The collaboration brings together Verilys health care technologies and the convenience and accessibility of our stores and trusted pharmacy services he said In addition to working together on a new program to improve medication adherence well have the opportunity to leverage Verilys health care technologies including sensors and software to help prevent manage screen and diagnose disease while our retail locations provide greater access to these solutions for patients I am particularly excited by our new strategic partnership with Verily added Pessina This is a fantastic opportunity to bring these products and programs to a wide patient population quickly and efficiently to the benefit of the patients and the payers at the same time Going forward the agreement with Verily will see us collaborate closely on the development of new products and concepts and higher linked programs among our employee base while preparing plans for wide public commercialization In the area of adherence the company is offering an integrated marketing and communications campaign called Wake Up Call to address the fact that some 50 of patients sometimes fail to take their daily medications as prescribed which can create significant health and financial risks for them and their caregivers We are committed to the health and well being of the communities we serve and adherence is an important area where we can lead change among our customers said Gourlay Walgreens pharmacy team members can support with advice and resources ranging from face to face pharmacist consultations to digital tools to help customers overcome adherence barriers depending on their individualized needs Another successful innovation that Walgreens launched in the past year he pointed out Walgreens Boots Alliance TOP EXECUTIVES Stefano Pessina executive vice chairman CEO Walgreens Boots Alliance WBA Alex Gourlay co COO WBA Ornella Barra co COO WBA HEADQUARTERS 108 Wilmot Road Deerfi eld Ill 60015 Phone 847 940 2500 Website walgreensbootsalliance com INDUSTRY RANK 1 in sales 2 in stores Full year corporate results 8 31 18 1 Sales 1315 billion 113 Net earnings 50 billion 232 Net margin 38 Retail Pharmacy USA segment Sales 984 billion 127 Operating earnings 49 billion 167 2 Operating margin 5 Comparable store sales 03 fiscal 2018 Q4 versus fiscal 2017 Q4 Number of drug stores 9560 Number of states operating 50 plus the District of Columbia Puerto Rico and U S Virgin Islands Number of U S drug stores opened converted in fiscal 2018 1460 net opening including converted stores from Rite Aid Average store size approximately 13400 sq ft Distribution Warehouses 15 U S Other businesses photofinishing e commerce retail based walk in clinics approximately 400 community based specialty pharmacies more than 315 mail service facilities 2 FedEx pickup and drop off locations 1 Corporate earnings were reduced by special items totaling a net of 961 million in fiscal 2018 and 143 billion in fiscal 2017 2 Operating income for the U S pharmacy segment was reduced by special items totaling a net of 103 billion in fiscal 2018 and 151 billion in fiscal 2017 N A Not available is Find Care which was developed in response to customers desire for a true omnichannel experience Find Care is a digital marketplace with some of the leading and most recognized names in regional and national health care trusted by patients serving them in their communities Gourlay said The drug chain is being equally aggressive in redeveloping its front end business Walgreens introduced a pilot program with Kroger Co to develop a one stop shopping experience where customers can access products and services from both brands And weve since begun to expand Continued on page 114 Chain Drug Review April 29 2019 113