Help us end the fiscal year strong. Donate by June 30. Give Now

Walgreens buys Rite Aid as industry consolidates

Nova Safo Oct 28, 2015
HTML EMBED:
COPY

Walgreens buys Rite Aid as industry consolidates

Nova Safo Oct 28, 2015
HTML EMBED:
COPY

Chicago-based pharmacy giant Walgreens is getting bigger, announcing a deal to buy competitor Rite Aid for more than $9 billion.

The deal comes just a few months after CVS acquired Target’s pharmacy business. Late last year, Walgreens merged with the European drug chain Alliance Boots.

“Folks are all competing to get a bigger share of the newly insured from the Affordable Care Act,” said Brian Owens, director of drug channel research at Kantar Retail. “So, there’s more competition for low-cost prescription drugs.”

To compete on cost, pharmacy chains are consolidating, said analyst John Boylan of Edward Jones. 

“A bigger company can get bigger discounts from people that they purchase from,” he said. It can also negotiate better deals for prescription reimbursements.

The merger between Walgreens and Rite Aid is likely to get close scrutiny from federal regulators, who want to maintain competition in the marketplace. Walgreens may have to sell some stores in certain markets, said Owens.

Meanwhile, Wal-Mart might be the next big chain to consider acquisitions, he said.

“We know that Wal-Mart wants to be the No. 1 health care provider in the United States.”

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.