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When Walgreen Co. shareholders late last month gave their overwhelming approval to the acquisition of the 55% of Alliance Boots GmbH that the company did not already own, they formally ushered in a new era.
When Walgreen Co. shareholders late last month gave their overwhelming approval to the acquisition of the 55% of Alliance Boots GmbH that the company did not already own, they formally ushered in a new era.
At this inflection point in the history of the nation’s largest drug chain, it is instructive to recall just how radical a departure the transaction represents — both for Walgreens and for the American chain drug industry.
Before unveiling its strategic partnership with Alliance Boots in June 2012, Walgreens was noted for its conservative business philosophy, one characterized by a go-slow approach to adopting new concepts, a long-standing aversion to purchasing competitors, and a range of vision restricted primarily to the U.S. market. As a result of internal forces and its tie-up with the London-based pharmacy operator and drug wholesaler, Walgreens today is bent on innovation, is committed to growth through acquisition and has a presence in some 25 nations on four continents.
The sea change at the company has already had a ripple effect on its competitors in this country and beyond, considerably raising the stakes in the quest for scale in pharmaceutical purchasing and other aspects of the community pharmacy business. Subsequent moves by CVS Health, McKesson Corp. and Cardinal Health can, at least to some degree, be attributed to the emergence of the Walgreens-Alliance Boots combination.
The now completed merger gives the company a set of assets that, at this stage of the game, would be difficult for any of its rivals to assemble. But that, in and of itself, will not guarantee success. Some deals of this scope and complexity founder, and many more of them fail to live up to the lofty expectations that follow their announcement.
The biggest factor that Walgreens Boots Alliance has going for it is the presence of Stefano Pessina, the visionary who built a family-owned drug distributor in his native Italy into a heavyweight in pharmacy retailing and wholesaling around the world. Formerly executive chairman of Alliance Boots, Pessina is now vice chairman and interim chief executive officer of the combined company. His perspicacity, experience in international markets, and proven track record of making mergers and acquisitions work are the best indication that the future of Walgreens will turn out to be as illustrious as its past.
