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Walgreens Focus on Retail Pharmacy

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In a concerted effort to improve patient access to vaccines across Indiana, Walgreens (WAG) supplied additional doses of vaccine to 204 locations in the state. The move is a strategic beneficial maneuver as the new Indiana State law takes effect, from Jul 1, 2013.

As advocated by the Centers for Disease Control and Prevention (:CDC), pharmacists in Indiana are entitled to provide immunizations to all adolescents and adults with a prescription. Following the new state legislation, five of these vaccines will be available without a prescription and without any prior appointment at Walgreens pharmacies on a regular basis.

Subsequently, Influenza, Tetanus, diphtheria, pertussis (Tdap), Human papillomavirus (:HPV), or Meningococcal vaccines will be accessible at Walgreens pharmacies across Indiana to patients aged over 11 years. The easy accessibility to these vaccines is intended to improve protection for individuals against meningitis, pneumonia and whooping cough among other infectious disease.

Moreover, patients over 65 years of age in the state will not require a prescription for Pneumococcal vaccine. The flu shots will also be available from Aug 2013.

Our View

With the new state legislation in place, demand for vaccines in Indiana is likely to soar. While Walgreens’ decision appears to be a rational and lucrative opportunity to garner incremental revenues, other players providing vaccines such as CVS Caremark Corporation (CVS) and Safeway Inc. (SWY) also stand to gain from the new state laws.   

In the most recent quarter, Walgreens gained 80 basis points of the pharmacy market share. With this move, the company has positioned itself to gain further market share as the laws begin to take effect.

Currently, the stock carries a Zacks Rank #3 (Hold). Other stocks such as Herbalife Ltd. (HLF), carrying a Zacks Rank #2 (Buy) warrants a look.

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