TMCnet News
Fitch: Walgreen/Prime Extends US Pharma ConsolidationWalgreens and Prime Therapeutics Monday announced a long-term strategic alliance, highlighting the continuing consolidation of the pharmaceutical channel, particularly in the US, according to Fitch Ratings. In the past four years, nearly all major retail and mail-order pharmacies, pharmacy benefit managers (PBMs), and pharmaceutical wholesalers have found partners to create mega buying groups, preferred dispensing networks, or streamlined supply chains. These moves are largely aimed at maximizing market share and influence while streamlining costs. The Walgreens-Prime alliance gives Walgreens control of a mail-order pharmacy - a business in which it has historically lagged competitors - with significant growth opportunity, in partnership with the fourth-largest US PBM in Prime. Expanded mail-order capabilities give Walgreens the ability to better compete with the Caremark arm of CVS Health, as Fitch thinks mail-order volumes will grow over the longer term. Fitch expects Walgreens will benefit from solid growth in prescription volumes from the Prime network, beginning January 1, 2017. Prime's clients, which include several of the largest Blue Cross Blue Shield plans, are expected to benefit from larger shares of health insurance exchanges following recently announced exits by UnitedHealth and Aetna. Also supporting longer-term growth, the newly combined mail-order and specialty business will benefit from Walgreens' buying power, supporting Prime's value proposition to current and prospective clients. Despite nearly all other channel participants aligning, Express Scripts notably remains independent. Many analysts had speculated that if Walgreens chose to partner with a PBM, it would be Expess Scripts, particularly given the distribution agreement between Express Scripts and wholesaler AmerisourceBergen. Walgreens and AmerisourceBergen agreed last week to accelerate the exercise of warrants, giving Walgreens a more than 20% ownership stake in AmerisourceBergen and the right to elect two members of its board of directors. Fitch remains unclear at this time how Express Scripts' independent strategy will affect its longer-term market positioning, or if the firm will stay on its charted course. At minimum, the Express strategy seems contrary to that of the rest of the industry, albeit trends are nascent and the effects of consolidation are still shaking out. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160829005973/en/ |
