Walgreens 2013 Annual Report Download - page 7

2013 Walgreens Annual Report 5
Last spring, Walgreens and Alliance Boots announced a strategic,
long-term relationship with the largest pharmaceutical supply chain
company in America, AmerisourceBergen, to form a collaborative
wholesale-retail model here in the United States. The 10-year strategic
long-term contract, which will distribute brand and generic
pharmaceuticals to more than 8,100 Walgreens locations across
the country, officially launched in September.
This relationship will enable Walgreens, Alliance Boots and AmerisourceBergen
to benefit from greater scale and global opportunities, and work together
on programs to improve service levels and efficiencies, while reducing costs
and increasing patient access to pharmaceuticals. Together, our three
companies will help address global healthcare challenges by making it easier
for manufacturers to bring products to market, increasing accessibility to the
benefits of global sourcing and best practices for community pharmacies,
and providing patients with better access to healthcare. The collaboration
will also generate opportunities to attract partners in new markets and
prospects in existing markets around the globe.
With Alliance Boots and AmerisourceBergen, we are positioned to become
the leading pharmacy-led health and well-being enterprise in the world,
with 11,000 drugstores and 370 wholesale distribution centers, with a
presence in 25 countries, with a pharmaceutical supply chain unmatched
in the world (including associates and joint ventures).
Walgreens is already bringing the best of Boots to communities across
America. This year, we launched the Boots No7 Men skincare product line
following the successful introduction of the Boots No7 women’s skincare
line and other Boots products in four of our flagship locations. The debut
of Boots No7 and Mark Hill Salon Professional products to U.S. markets
is just a hint of what’s to come.
The Walgreens-Alliance Boots strategic partnership also provides significant
value creation for shareholders. When we announced our partnership, we
set a target to achieve combined synergies of $100–150 million in the first
year. We exceeded that target. The Alliance Boots and AmerisourceBergen
partnerships represent a significant strategic step forward for Walgreens,
today and tomorrow.
Looking back, 2013 was a year of advancing our near-term performance,
long-term strategic transformation, and profitable growth. We think this
is an exciting time to be part of the Walgreens family as we build on our
heritage of service and innovation for a new century around the globe.
Advancing Walgreens Corporate Citizenship
Meanwhile, in the past year, our company and people also continued
to advance the Walgreens heritage as a solid corporate citizen in four
distinct areas:
• Healthy company: The National Business Group on Health, a non-
profit association of large U.S. employers, honored Walgreens for its
ongoing commitment to promoting a healthy workplace and encourag-
ing workers and families to pursue and maintain healthy lifestyles.
• Healthy people: Walgreens and the National Urban League continued
our joint Way to Well health tour, providing free health tests, assessments,
education and consulting services to residents in urban and minority
communities who experience disproportionately higher rates of preventable
disease. Walgreens and AARP also collaborated on a Way to Well health
tour. We also joined with Greater Than AIDS, health departments and
local AIDS service organizations to provide free HIV testing in support
of National HIV testing day. The more than $8.5 million raised by
Walgreens customers to help pay for treatment support and screenings
for breast cancer patients earned our company the Susan G. Komen
Foundation’s prestigious “Mission Possible” award.
• Healthy communities: After tornados devastated parts of Oklahoma,
our teams mobilized additional shipments of essential supplies to area
stores, made an initial donation of three semitrailers of food, water and first
aid supplies to the Oklahoma chapter of the American Red Cross and
offered customers an opportunity to make donations at its Oklahoma,
Arkansas and Missouri drugstores. Walgreens also donated more than
$350,000 to Hurricane Sandy relief efforts in New York and New Jersey.
• Healthy world: Walgreens is partnering with the United Nations
Foundation this coming flu season to help provide up to three million
life-saving vaccines to children in developing countries through a
donation to the Foundation’s Shot@Life campaign. On the environmental
front, Walgreens is building the nation’s first “net zero” retail store in
Evanston, Illinois – a building that is designed to produce more energy than
it uses – harnessing alternative energy equipment from solar panels,
wind turbines and a geothermal energy system below the store’s founda-
tion. This is not a showcase project – we’re investing in alternative energy
strategies across our stores nationwide as part of our overall sustainability
plan to reduce energy use (and costs!) by 20 percent by 2020.
Looking Ahead – With Appreciation
Walgreens continues to advance our strategic transformation, driven by a
bold and – we believe – game-changing vision for community pharmacy
in America and beyond.
With our strategic foundation in place, management’s focus in fiscal 2014
will be on the disciplined execution of our long-term strategic vision and
day-to-day business – all to continue delivering double-digit growth in
earnings per share, increasing return on invested capital, and providing
top-tier shareholder returns.
To share credit where due, we want to pay tribute to our 248,000 team
members in communities across the country – people who come to work
every day, night and weekend, believe in Walgreens vision and purpose,
cherish the chance to serve our customers and patients, execute with
thought, pride and precision, and lead and inspire the company at every
level. Every day we see them living our cultural beliefs: “Be one, be real,
be bold, build trust, love customers, own it, live it.” Every day, these
incredible people turn change and challenge into opportunity and value.
We are so proud of them and what they bring.
Thanks also to our Board of Directors, which has been steadfast in
its support and guidance as we further advance and accelerate the
Walgreens transformation.
Most of all, it is you – our shareholders and owners – who deserve the
lion’s share of appreciation for believing in Walgreens today and our
limitless promise for tomorrow. We look forward to moving ahead together
as we redefine Walgreens for a new generation as a place, in your
communities, that always strives to help people get, stay and live well.
James A. Skinner Gregory D. Wasson
Chairman of the Board President and Chief Executive Officer
October 18, 2013