WalMart will expand a drug price war against Walgreen,CVS.Not likely from reading a Merril Lynch report which explained this possibility in some detail.As I remember they explained Walgreen as being very cost efficient from growing from small to today competing with Mom and Pop chains as did WalMart,but with better service.Also the drug distribution network has little room for profit and WalMart would shoot them selves in the foot trying a move such as this.They are not playing with an out of step company like when they started their business.CVS and Walgreen are pretty lean,better located and better set in this business that WalMart ever will be with stores and service uncomparable to anything WalMart can achieve.I believe a little time and this will wash out in our favor
It�s pretty evident now that WMT�s $4 PR is having no effect on WAG. Before Medicare Part-D, the discounters had a huge advantage appealing to cash paying seniors without insurance. After Medicare Part-D, price has been removed from the equation. With the playing field leveled, in terms of price, the advantage has shifted strongly over to WAG�s convenient locations. WMT is losing, and will continue to lose, market share of a key pharmaceutical demographic group � seniors.
WMT had to respond and did so with the $4 gimmick. But it�s now competing for a steadily shrinking group � cash payers. And keep in mind the $4 list contains old cheap generics that generate minimal revenue. It was brilliant PR, but it�s already becoming old news.
There is one threat to WAG expansion that has been overlooked � the shortage of pharmacists. So far, technology and over-time have kept the problem at bay. But there are increasing incidences of pharmacies cutting operating hours because pharmacist�s shifts can�t be filled. This is an industry-wide problem, which bit CVS hard a couple years ago. I believe the company that best addresses this problem, over the next 10 years, will be the most successful.
I own WAG -- several purchases, one of which is really underwater - but I'm not selling.
The Walmart thing is making a difference. My old mom is getting some of her generics there and is saving money. I am getting two of mine there and I am saving a ton of money. Short story is that it isn't a gimmick if you can get a drug that was costing you 25 bucks a month for 4 bucks a month.
I am keeping WAG because I think they have high quality stores and I think management will compete on the cheap generics.