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Wasson, Pessina are CDR's Retailers of the Year
January 7th, 2013
Stefano Pessina and Greg Wasson
NEW YORK – Striking a blockbuster deal that could shift the industry's perspective, Walgreen Co. chief executive officer Greg Wasson and Alliance Boots executive chairman Stefano Pessina — and their management teams — have been selected as the 2012 Retailers of the Year by Chain Drug Review.
When the editors of Chain Drug Review looked back at 2012 with an eye toward identifying the executives who had the biggest impact on the industry, one event and the people behind it clearly stood out: the unprecedented partnership that Walgreens and Alliance Boots, two of the world’s premier retail and health care companies, have forged.
The deal, under which Walgreens has assumed a 45% ownership position in Alliance Boots with the intention of acquiring the balance in two and a half years, is transformative for the industry as well as the companies directly involved. Going forward, pharmacy operators and drug distributors will have to think internationally if they want to keep pace with the latest developments in the delivery and business of health care.
2012 RETAILERS OF THE YEAR:
Greg Wasson, Walgreens
Stefano Pessina, Alliance Boots
If all goes according to plan, the executives will construct a company that is the worldwide leader in community pharmacy and “well-being retailing,” with more than 11,000 stores in 12 countries; the No. 1 pharmaceutical wholesaler in terms of items handled, with more than 370 distribution centers in 21 countries; and the biggest purchaser of prescription medications and many other health care products.
Wasson, who during his almost four years as Walgreens’ president and CEO has presided over the company’s emergence as a destination for health and daily living needs, characterizes the partnership with Alliance Boots as an opportunity to accelerate implementation of Walgreens’ core strategies, which, in addition to creating a new Well Experience in its stores, include advancing the role of community pharmacy and establishing an efficient global platform.
Walgreens’ decision to embrace international operations is particularly noteworthy. Even in an era of rapid globalization, U.S. drug chains have, until now, been notably gun-shy about moving into other countries.
A multinational perspective is nothing new for Pessina. He has built a small family business in his native Italy into a world leader in the distribution and retail sectors, one with a presence that extends from Alliance Boots’ offices in London to more than 25 countries in Europe, the Middle East and Asia.
The partnership with Walgreens achieves Pessina’s long-standing objective of giving Alliance Boots entry to the U.S. market. More important, he says, the deal melds two powerful players with a strong heritage in health care and retailing in a manner by which each of them will benefit from synergies and joint expertise across a broad spectrum of business disciplines.
If all goes according to plan, the executives will construct a company that is the global leader in both community pharmacy and "well-being retailing."
Expectations for the combined company are high. Revenue is projected at $130 billion in fiscal 2016, with LIFO earnings before interest and taxes estimated to come in at between $8.5 billion and $9 billion. One billion dollars in synergy savings, mostly from the purchasing of prescription medications, are anticipated.
The numbers are striking. More impressive still is the opportunities the new entity has to, in the words of Wasson, “find different and better ways to work together [with suppliers] for the good of pharmacy patients and front-end customers.”
Walgreens and Alliance Boots, each of which has a strong track record of innovation, are already hard at work to capitalize on the potential created by the melding of the iconic brands. The goal is to deliver more benefits to consumers by providing access to new brands and products; roll out best practices from each company to enhance the customer experience; make health care more affordable; deploy new concepts and capabilities in such areas as store formats, loyalty programs, personalized offers and e-commerce; and leverage Alliance Boots’ service efficiencies in drug distribution.
So confident is Pessina about the acquisition and its unfolding progress that, characteristically, he is already exploring other priorities, other possibilities, other alliances.
“This acquisition is unfolding exactly as I expected it to,” Pessina said on a recent trip to New York City. “I have found just what I expected to find. I expect the next year will begin to deliver the synergies both companies expect.”
For his part, Wasson is impressed with the similarity of the two cultures as well as with the companies’ complementary strengths.
“We’ve been particularly impressed with range and quality of the Boots private label brands as well as the scope and impact of the company’s wholesale operations (Alliance Healthcare),” he says. “We’ve also been pleased, and somewhat surprised, by the success the company has had in organizing Europe’s independent drug stores under the Alphega Pharmacy banner. And we’re intrigued with the generic drug program Alliance Boots has developed.
“For their part, the Alliance Boots people have told us that there’s much that they can learn from our pharmacy systems and programs.”
*To read the full 11-page Retailer of the Year report on Walgreens and Alliance Boots, as well as the Pharmacy Executive of the Year and the Pharmacy Innovator of the Year, please see the Jan. 7, 2013, print issue of Chain Drug Review.
• 2012 Pharmacy Executive Of The Year
• 2012 Pharmacy Innovator Of The Year