Walgreens 2015 Annual Report Download - page 21

lead to a decrease in overall consumer spending. In addition, reduced or flat consumer spending may drive us and
our competitors to offer additional products at promotional prices. All of these factors could materially and
adversely impact our business operations, financial condition and results of operations.
European economic conditions together with austerity measures being taken by certain European
governments could adversely affect us.
The acquisition of Alliance Boots significantly increased our assets and operations within Europe and,
accordingly, our exposure to economic conditions in Europe. A further slowdown within the European economy
could affect our businesses in Europe by reducing the prices our customers may be able or willing to pay for our
products and services or by reducing the demand for our products and services, either of which could result in a
material adverse impact on our results of operations. In addition, in many European countries, the government
provides or subsidizes healthcare to consumers and regulates pharmaceutical prices, patient eligibility, and
reimbursement levels to control costs for the government-sponsored healthcare system. In recent years, in
response to the economic environment and financial crisis in Europe, a number of European governments have
announced or implemented austerity measures to reduce healthcare spending and constrain overall government
expenditures. These measures, which include efforts aimed at reforming healthcare coverage and reducing
healthcare costs, continue to exert pressure on the pricing of and reimbursement timelines for pharmaceutical
drugs. Countries with existing austerity measures may impose additional laws, regulations, or requirements on
the healthcare industry. In addition, European governments that have not yet imposed austerity measures may
impose them in the future. Any new austerity measures may be similar to or vary in scope and nature from
existing austerity measures and could have a material adverse effect on our international business operations and
results of operations.
The industries in which we operate are highly competitive.
The level of competition among retail pharmacies and pharmaceutical wholesalers is high. Changes in market
dynamics or actions of competitors or manufacturers, including industry consolidation and the emergence of new
competitors, could materially and adversely impact us. Our retail pharmacy businesses face intense competition
from local, regional, national and global companies, including other drugstore and pharmacy chains, independent
drugstores and pharmacies, mail-order prescription providers and various other retailers such as grocery stores,
convenience stores, mass merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar
stores and other discount merchandisers, some of which are aggressively expanding in markets we serve.
Businesses in our Pharmaceutical Wholesale division face intense competition from direct competitors, including
national and regional cooperative wholesalers, and alternative supply sources such as importers and
manufacturers who supply directly to pharmacies. Competition may also come from other sources in the future.
As competition increases in the markets in which we operate, a significant increase in general pricing pressures
could occur, which could require us to reevaluate our pricing structures to remain competitive. For example, if
we are not able to anticipate and successfully respond to changes in market conditions in our pharmaceutical
wholesale division, including changes driven by competitors, suppliers or manufacturers, it could result in a loss
of customers or renewal of contracts or arrangements on less favorable terms. Any failure to anticipate and
timely and appropriately respond to evolving market conditions could result in decreased revenue and have a
material adverse effect on our results of operations.
If the merchandise and services that we offer fail to meet customer needs, our sales may be adversely
affected.
We could be adversely affected by changes in consumer spending levels and shopping habits and preferences,
including attitudes towards our retail and product brands. The success of our retail pharmacy businesses depends
on our ability to offer a superior shopping experience, a quality assortment of available merchandise, and
superior customer service. We must identify, obtain supplies of, and offer to our customers attractive, innovative
and high-quality merchandise on a continuous basis. Our products and services must satisfy the needs and desires
of our customers, whose preferences may change in the future. It is difficult to predict consistently and
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