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Drug Wars

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Key Success factors in the drugstore chain industry
• Convenient locations of drugstores in targeted neighborhoods and markets
• Cost control/Inventory control
• Effectively competing with Pharmacy benefit manager programs
• Consumer friendly shopping experiences (drive-thrus, extended hours, specialized staff, targeted product offerings, store design).
Walgreens has continued to build stores in well researched areas, making stores conveniently located in high volume areas and areas with a large senior population. This strategy has worked remarkably well for Walgreens over the years to gain a competitive advantage. They have also looked for ways to cut costs to remain competitive in a changing market, by focusing on supply chain management they were able to save billions of dollars. The culture of the organization allowed Walgreens to adapt its strategy to compete with PBMs by creation of their own in store program to comply with company health plans. They were effectively able to identify this issue and strategically align themselves to compete in the market. Throughout the years Walgreens has relied on their recognition of being a consumer friendly store, and has continued to add elements to stores to better serve select target markets.
The merger of Express Scripts and Medco brings together two large and successful PBMs under one roof. The merger of the companies will allow for more buying power from drug makers and will help them scale down costs due to higher efficiencies. This merger will again make it more difficult for Walgreens to compete in the market and maintain market share. According the Express scripts website, the company has been seeking cost competitive agreements with retail pharmacies in order to provide their customers with affordable medications; however Walgreens prices are not a fit for their network . Walgreens must adjust their current strategy to align themselves with Express Scripts/Medco since they serve a large share of the market. Alternatively they could seek to align themselves with another PBM to balance the loss of customers from the Express Scripts network. Ideally these companies should work together to serve the needs of customers and to provide lower cost medications.

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