Walgreens 2005 Annual Report Download - page 6

Can you – should you – keep expanding at this pace?
Bernauer: Yes, we can…and yes, we should. This
nation’s demographics over the next several decades
will be a steady wind at our back. As the most efficient
operator of chain drugstores, we would be crazy not
to expand as rapidly as we can find good sites. And
I do mean good sites. We’re famously picky about real
estate selection. That won’t change. My confidence
is reinforced by what a Chamber of Commerce
representative told a reporter recently in Frederick,
Maryland, about an hour out of Washington, D.C.
“More than anything,” she said, “I’d love a Walgreens
for our community.”
But won’t mail order steal prescriptions from stores?
Rein: Some, sure…but there is more than enough
prescription business coming for mail and strong
retail to grow. Walgreens is certainly strong – we filled
10.6 percent more prescriptions in fiscal year 2005
than the prior year. That compares to a 2.3 percent
industry-wide increase in the same time period.
At the end of August, we had garnered a 15 percent
share of all retail prescriptions filled in the nation.
We believe the new Medicare prescription drug
benefit coming in January will further feed growth,
creating a steady stream of new prescription takers –
people who previously have not been able to afford
their proper drug therapy.
And don’t forget – we have our own billion-dollar
mail business.
How will the Medicare plan impact Walgreens?
Bernauer: We anticipate drawing a healthy share of
patients – most new to our pharmacy service – who
sign up for one of the new Medicare prescription
drug insurance plans. Why? Because Medicare takes
price out of the equation, meaning once people
choose a plan, they’ll generally have the same co-pay
anywhere in their retail network. With that choice,
we believe a large number will opt for Walgreens
neighborhood proximity, fast in-and-out service and
many senior-friendly prescription advantages.
What we can’t predict is how many people will
sign up. There is a high level of confusion in the
marketplace. My personal belief is that enrollment
will take off more slowly than many predict and
gather steam as people realize they can save
significant dollars on their prescription drugs.
What are your main initiatives for 2006?
Rein: Continued store expansion, improved customer
service and growth of our healthcare offerings in
specialty pharmacy, assisted living, clinic pharmacies
and pharmacy benefits management.
We also have two goals on the “soft” side – hard to
quantify but important to the further development of
our business and our workforce. First is our initiative
to more fully and creatively meet the needs of women
shoppers, who account for about 75 percent of
our business. From the products we carry… to the
cleanliness of our coolers… to how high we stock
Number of Prescriptions Filled
In millions
Prescription Market Share
In percent
42005 Annual Report