This drug war does not involve gangs, cartels, or street corner marijuana sales. There were no drive-bys or retaliatory hits; however, this drug deal is going to have repercussions for all Americans…if it is found to be legal.
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The deal is the massive $17.2 billion pharmacy buyout of Rite Aid by Walgreens. The sale, which still has to be evaluated under federal anti-trust laws, would make Walgreens the largest pharmacy chain in America.
Currently, CVC holds the number one seat with 7,800 stores nationally. Walgreens and Rite Aid hold the number two and three spots, respectively. The merger would give Walgreens 13,000 stores in the United States, nearly 70 percent more than CVS. Walgreens operates in 10 other countries as well.
Initially, Rite Aid stores would be able to keep their names. But, in time, they will go the way of the Duane Reade stores acquired in 2010 in New York and the Boots Alliance pharmacies in Europe.
Many in the market do not think the deal will go through as it stands. The disparity would be too large between Walgreens and everyone else, and if you put Walgreens and CVS together, after the merger, there wouldn’t be another major player in the market. In fact, according to The Detroit Free Press, if the merger went through 99 percent of the market would be in the hands of these two chains. CVS would still maintain about 58 percent of the market, even with fewer stores, and the post-merger Walgreens would command 41 percent of the market. That doesn’t leave much room for anybody else. As a result, analysts believe the anti-trust laws established to prevent monopolies are going to stop the merger.
Walgreens’ CEO, Stefano Pessina, said the merger would lead to “”more heath and wellness solutions…in stores and online.” Employees are worried about what will happen to the stores in the areas where the stores are currently competitors just blocks away from each other. It is speculated that whichever store is currently least profitable will close. Of course, other factors such as the age of the building, lease terms, and parking would also be considered.
While Walgreens said the merger “would save more than $1 billion by cutting costs and enhanced purchasing power.” Employees are worried that they are some of the costs that are going to be cut.
It seems that no drug war is without its casualties.
