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  • negfeedback2000 negfeedback2000 Nov 11, 2003 12:09 PM Flag

    missing 1 bil

    usally is, stupid
    lets see, drug makers sales hurt by cheaper generics, other drug retailers hurt by cheaper generics, but wag doesn't even mention them.

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    • >>lets see, drug makers sales hurt by cheaper generics, other drug retailers hurt by cheaper generics, but wag doesn't even mention them.<<

      It's really very simple. Drug companies are hurt by generic competition because those are sales lost to the competition.

      Retailers like WAG (and CVS) actually BENEFIT from generics becasue they get higher margins on the generic drugs. Rx SALES figures (but not income) can be adversely affected by the lower generic prices. CSFB estimated that generics cost WAG 110 basis points in SSS (1.1%) in October.

      Why doesn't WAG make a big deal of this in its conference calls? Because they don't have to. If your Rx SSS are up 14.8% and well ahead of your competitors, it would be unseemly to talk about how they "would have been up 15.9%" but for the impact of generics. It would sound like they were trying to pump up the stock by making excuses when none are needed. Better to let the earnings results speak for themselves.

      Besides, the whole notion that there is a generics impact to sales is questionable in an environment of 7% inflation in drug prices INCLUDING the impact of generics.

      Now, if you're CVS or RAD and your Rx SSS are up only 8.0% or 6.8%, barely keeping pace with inflation and well behind your larger and faster growing competitor, you're going to feel pressure to make "woulda coulda shoulda" excuses and claim that sales would have been higher but for the new generics. They want to emphasize to their investors that Rx profits will be a bit higher than the SSS figures would indicate because they understand that the SSS figures are disappointing.

      • 1 Reply to sleestack86
      • Thank you for your thoughts.
        I looked futher at the monthly sales numbers at both sites. Wag's only go back to last year so I'm only talking about this past year's numbers.
        It seems odd that monthly numbers don't seem to have much of a ramp upward. It is as if there is a jump from the end of the year into the next, then, sales seem fairly flat January through September. I think one should be able to see some kind of ramp up in numbers as the stores that were opened each month, past and present, start adding to the numbers. CVS numbers seem to vary more. Wag's numbers seem odd by comparison, IMO, as business is bound to vary from month to month, as seen in the month of December by increased business due to Xmas.
        Further, the majority of people I talk to, in various businesses, report business being down and not getting better yet. So, there are still a lot of people watching their money.
        High unemployment, recession etc. And Wag can post numbers without missing a beat.
        I know that Wag gets a majority of biz from scripts and they say most of the scrips are covered by insurance but CVS doesn't?
        If one looks at the various earnings reports, one reads of slow business enviorment, higher energy costs, legal expenses, labor costs etc. The list goes on and on as to why earnings are poor.
        I know all you Wag rah rahs will take offense but, one must be very careful in this day and age of insider trading, accounting and mutual fund scandals.
        Tomorrow I'll see if I can see this growth with the generic drug makers, logicaly they should be showing good growth too because the brand name drugs arent.

    • Didn't need too. Walgreens doesn't need excuses. They just produce RESULTS.

      CVS definitely needs excuses.