Sometimes generic medication isn't always a bargain. This leads to non-compliant patients, who cut pills, do not fill prescriptions, or order their medication from Canada. Walgreen's may have the answer. Walgreens, the nation's largest pharmacy chain will now be able to use the size and scale of AmerisourceBergen and Alliance Boots to buy generic drugs at cheaper prices. This will help the chain to "outmuscle" domestic competitors, Like CVS Caremark, and power into new markets.
Walgreen's is confident that they will be able to lower prices through agreements with generic manufacturers on a global scale, helping them expand into Europe. In addition to Europe, Walgreen has their eye on Asia and Africa's pharmacy market, for there is a lot of growth potential. Although a risky and aggressive move, since other companies have not partnered up to this extent before, they will have a leg-up while shifting the pharmacy/wholesaler generic pricing landscape.
AmerisourceBergan will become the second largest distributor behind McKesson in the United States this year, as they are replacing Cardinal Health's contract with Walgreen that expires this August. I think the deal will absolutely put pressure on other companies to join forces, whether at the retail level or further down the supply chain.
This is an interesting new concept that I think is on the rise, since generics will play a very large role in the impending healthcare changes. I think we will still have to wait to see how much actual savings are realized. Generic manufacturers can't afford to cut too many corners, since they still need to profit while continuing to create medication in line with FDA regulation.
The real test: If Walgreen can compete with WalMart in the generic pricing arena.
Check out article at WSJ.com
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