This document summarizes and compares CVS and Walgreens, the top two companies in the drugstore industry. CVS has over 6,000 store locations and 20% of the pharmacy market share. Its strategic goals include growing its pharmacy benefits management and retail pharmacy businesses. Walgreens has over 8,500 stores and 19.1% of the prescription market share. In 2014, CVS announced it would stop selling tobacco, while Walgreens initially took a wait-and-see approach on the issue. The document outlines both companies' histories and considers options for Walgreens in response to CVS's tobacco removal decision.
Original Description:
An analysis of Walgreen's options after CVS drops tobacco from store shelves.
This document summarizes and compares CVS and Walgreens, the top two companies in the drugstore industry. CVS has over 6,000 store locations and 20% of the pharmacy market share. Its strategic goals include growing its pharmacy benefits management and retail pharmacy businesses. Walgreens has over 8,500 stores and 19.1% of the prescription market share. In 2014, CVS announced it would stop selling tobacco, while Walgreens initially took a wait-and-see approach on the issue. The document outlines both companies' histories and considers options for Walgreens in response to CVS's tobacco removal decision.
This document summarizes and compares CVS and Walgreens, the top two companies in the drugstore industry. CVS has over 6,000 store locations and 20% of the pharmacy market share. Its strategic goals include growing its pharmacy benefits management and retail pharmacy businesses. Walgreens has over 8,500 stores and 19.1% of the prescription market share. In 2014, CVS announced it would stop selling tobacco, while Walgreens initially took a wait-and-see approach on the issue. The document outlines both companies' histories and considers options for Walgreens in response to CVS's tobacco removal decision.
Brannan Millard, Clarence Lee Jr., Lindsey Sin, Srikanth Rao
Top 5 Companies in the Drugstore Industry Segment* RANK COMPANY MARKET CAP. 1 CVS CAREMARK CORPORATION COMMON (CVS) $86.6 BILLION 2 WALGREEN CO. COMMON STOCK (WAG) $63.9 BILLION 3 RITE AID CORPORATION COMMON STOCK (RAD) $6.3 BILLION 4 GNC HOLDINGS INC. CLASS A COMMON STOCK (GNC) $4.5 BILLION 5 PHARMERICA CORPORATION COMMON STOCK (PMC) $741.5 MILLION CVS Company Details Strategic Goals: 1) Pharmacy Benefit Management Growth 2) Driving Growth in Retail Pharmacy 3) Continue MinuteClinic Momentum CVS Company Details Revenue: $133 Billion projected for 2014 ($2 Billion from tobacco and tobacco related products) Healthcare Product Offerings: Prescription Drugs, Retail-Based Healthcare Clinics,Contact Lenses CVS Market Share 1) Total Revenue - $124 Billion for 2013 2) Store Locations - 6,288 3) Pharmacy - approximately 20% market share ($73 Billion net revenue for CVS Pharmacy Seg.) -increased 24.7% from 2011
Strategic Goals:
Create a Well Experience Transform the Role of Community Pharmacy Establish an Efficient Global Platform
Walgreens Company Details Total Revenue - $73.23 billion* Store Locations - 8582 nationally Pharmacy - 19.1% of Prescription Market Share* $46 billion of total net revenue is prescription sales* Walgreens Company Details
Prescriptions, Clinics, Contact Lenses Walgreens Company Details: Health Care Services
A Quick History... 1967: CVS opens first store with a pharmacy 1970s 2000s: CVS acquires or purchases hundreds of other pharmacy stores 2006: CVS acquires Minneapolis based MinuteClinic 2007: CVS stops selling cigarettes in pharmacies 2014: CVS stops selling cigarettes in all stores 1901: Walgreens opens first store in Chicago 1922: Introduced a malted milkshake, which led to it establishing ice cream manufacturing plants 1950s: Modernizes by switching to barcode scanning 1986: Acquires the MediMart chain from Stop & Shop 2011: Walgreens acquires Drugstore.com Growing Market Share Aging Population Affordable Care Act - new customers (30mill. users by 2015) Chronic Disease - the U.S. population suffers from 1 or more chronic disease Strategy
Clinical Focus - MinuteClinic Pri. Care - Rx Plans - Formulary Expansion American Care Act - Smoker Health Insurance Premium Increase 2
Distribution Focus - Express Scripts Global Expansion - Foreign Alliances Sell Tobacco - Public Educational Programs 1 Brand Image: Making Healthcare Better
Medicaid Brand Image: Corner of Happy and Healthy
Medicare What will Walgreens do? Tobacco Market Share
Health Care Market Share CVS announces removing tobacco from shelves by October 2014 Walgreens announces a wait-and-see approach Compete Keep Tobacco (announcement) Phase out Tobacco Drop Tobacco & Other Harmful Products Do NOT Compete Keep tobacco (no announcement) Walgreens Decision Tree ROUND 1 ROUND 2 February 2014 ...shortly after October 2015
Next Steps SHORT TERM: Choose not to compete - make no announcement - keep tobacco Preserve revenue sales from tobacco Monitor CVS, health care environment under American Care Act, tobacco sales Increase reduced risk products
Next Steps LONG TERM: Phase out & eventually drop tobacco Increase reduced risk products Focus on aging population Focus on global expansion