WAGIn the highly competitive prescription drug market, Walgreens is no longer competing only against the well-known traditional drugstores, but also with other new competitors that are increasingly proving to be strong competitors our two main traditional competitors are: CVs and Rite Aid.
On the other hand, we are facing increasing competition from some discounters such as Wal-mart and target
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and also from, online pharmacies.
First, let’s talk about Rite Aid..
Despite the fact that Rite Aid is the largest drugstore chain on the East Coast of the U.S, we don’t consider it, at least for now, a significant threat to us. After the acquisition of Brooks and Eckerd drugstores in 2007, Rite Aid is now financially the weakest compared to Walgreens and CVS
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, and as a result, Rite Aid added to itself a huge long term debt.
Our second traditional competitor I wonna talk about today is CVS

…as a matter of fact, we consider CVs our major competitor among all other competitors. It’s the second largest chain in the U.S. Also, it’s is the nation’s largest pharmacy service provider, having purchased Caremark group in 2007, which handles a good portion of CVS annual revenues.
Although we might have similar operational activities, we, up to a certain extent, take different approaches to achieve our growth. While we choose to organically grow by opening new stores, CVS assumes a riskier business model by growing through acquisitions. There are many disadvantages of considering such risky strategies:
First:
The acquisition of CARE MARK had made CVS face many difficulties in integrating its retail drug with Pharmacy Benefit Management businesses, which as a result led to a great loss in contracts in 2010.
Second, and most importantly:
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Considering highly aggressive strategy of acquiring other businesses to provide growth can lead to great loss if a major economic downturn is to impact the drugstore industries.
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We also face increasing competition from some online pharmacies and discounters.
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Online pharmacies and discounters such as Wal-Mart and Target offer cheap products to customers; however,
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They don’t gain revenues from most prescription drug insurance plans. It’s good to know that in our case, only less than 8 percent of our sales are out of pocket sales.
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Another disadvantage is that online pharmacies and discounters lack the customer service capabilities that we provide.
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Among all competitors, we successfully differentiate ourselves in the drugstore market:

* First, we are the largest drugstore chain in the U.S., with 7600 stores across the U.S. We have the highest number of stores at the best locations * -------------------------------------------------
We also rank #1 with the lowest market cap, and S&P rating of A+.

* Moreover, unlike CVS we assure low risk investment. Also, the conservative, low risky approach to organically achieve our growth by opening new stores can assure healthier operations, and thus, a more consistent growth. * -------------------------------------------------
Also, the customer service capabilities we provide at our stores and online make us a more convenient drugstore to the customers. * -------------------------------------------------
And of course the more convenient we are to our customers, the more loyalty we get in return from our customers.
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Now I’m gonna pass it to Dan, our vise president of operation to let him talk about our health care reform.

Although only less than 8 percent of our sales are out of pocket sales, we take care of our uninsured customers by offering discounted prescription pricing programs (Prescription Savings Club and “Generic” Drug Program) to help our customers get their products for lower prices