Vol. 35, No. 1 www.chaindrugreview.com January 7, 2013 CDR names Wasson, Pessina Retailers of the Year NEW YORK — When the with the intention of acquiring Chain Drug Review has editors of Chain Drug Review the balance in two and a half named Greg Wasson of Wal- looked back at 2012 with an eye years, is transformative for the greens and of toward identifying the execu- industry as well as the compa- Alliance — along with the tives who had the biggest im- nies directly involved. Going management teams they lead pact on the industry, one event and the people behind it clearly stood out: the unprecedent- Retailer of the Year ed partnership Walgreen Co. and , two of the forward, pharmacy operators — as its 2012 Retailers of the world’s premier retail and health and drug distributors will have Year for triggering that shift in care companies, have forged. to think internationally if they perspective. If all goes accord- The deal, under which Wal- want to keep pace with the lat- ing to plan, the executives will greens has assumed a 45% own- est developments in the delivery construct a company that is the ership position in Alliance Boots and business of health care. Continued on page 25 Greg Wasson Stefano Pessina ’s Thompson tabbed top Rx exec CAMP HILL, Pa. — Pharma- gent pharmacy business. Year by Chain Drug Review. tomer service, not only in the cists at Rite Aid Corp. are mak- For his leadership in marshal- “We have been highly fo- pharmacy but in the front end ing a bigger commitment to ling his team and executing a cused on a multiyear strategy as well,” says Thompson, who health care. well-thought-out pharmacy to improve the level of service joined Rite Aid in July 2004 and Embracing a broader role, the has served in his current post drug chain’s pharmacy team is since September 2009. on a mission to not just provide Pharmacy Executive of the Year “The second piece was to vital medications but also help position our pharmacists to the people and the communi- plan, Rite Aid executive vice delivery by our pharmacists deliver more clinically oriented ties they serve improve their president of pharmacy Robert and pharmacy teams. It began services, because we believe overall health and wellness. Thompson has been named several years ago with an in- that’s the way of the future for Robert Thompson The result has been a resur- Pharmacy Executive of the tense focus on improving cus- Continued on page 41 Thrifty White lauded for pharmacy innovation PLYMOUTH, Minn. — Thrifty tions, Thrifty White has been The initiatives recognize that to cost the system as much as White Pharmacy is reinvent- recognized as Chain Drug Re- boosting adherence and man- $290 billion annually. ing the essential component of view’s Pharmacy Innovator of aging medication therapy will Thrifty White has transferred chain drug retailing. the Year for 2012. make pharmacists central to about two-thirds of its mainte- The retailer’s actions are re- nance prescription dispensing casting pharmacists as patient from its 89 stores to state-of- counselors and practitioners of Pharmacy Innovator of the Year the-art, robotically dependent medication therapy manage- central-fill facilities in Fargo, ment. For seeking to end the Programs rolled out by Thrifty efforts to improve patient out- N.D. Scripts are filled faster long-standing limitations on White over the past two years comes and revamp the entire and more economically than pharmacists from the rote de- give pharmacists responsibili- health care system for the bet- at store level, with no dimin- mands of dispensing prescrip- ties befitting their education. ter. Nonadherence is estimated Continued on page 42 Robert Narveson

New CEO takes Big stride made in turnaround at Rite Aid helm at CACDS CAMP HILL, Pa. — Rite Aid weeks that ended December 1 2012 quarter. The decline in rev- financial officer and chief ad- Corp. reported its first quarterly swung to a net profit of $61.9 enues reflects 10 fewer stores ministrative officer Frank Vi- tORONTO — Denise profit since May 2007, thanks million, or 7 cents per share, in operation year-over-year as trano noted that Rite Aid’s Carpenter has been named largely to generic drug sales from a net loss of $54.5 mil- well as a 1.5% drop in same- retention of business from president and chief executive that bolstered gross margin lion, or 6 cents per share, in store sales. the -ESI impasse officer of the Canadian Asso- as well as improved front-end the prior-year period. Analysts Although front-end compa- remains strong. “New incre- ciation of Chain Drug Stores. sales. The results were a pleas- polled by FactSet had expected rable-store results grew 1.1%, mental ESI script benefit in the Before joining CACDS, she ant surprise to Wall Street, and a loss of 3 cents per share, on that improvement was over- quarter is estimated to be $18 served as president and CEO management raised its guid- ­average. whelmed by a 2.7% drop in million to $22 million,” he told of the Canadian Nuclear As- ance on net results for fiscal Revenues, however, edged pharmacy sales, which lost analysts. “We continue to be- sociation (CNA) from 2009 to 2013 (see story on page 9). downward 1.2% to $6.24 billion about 924 basis points from lieve we received our fair share 2012. In that capacity Carpen- The bottom line for the 13 from $6.31 billion in the fiscal new generic drug introduc- of new ESI scripts through Sep- ter led the development and tions. The number of prescrip- tember 15 and are now retain- implementation of a multiyear tions filled in comparable stores ing the lion’s share of those new strategic plan to support a re- rose 3.6%, reflecting a benefit patients, even after Walgreens newed vision of growth for the from the dispute between Wal- reentered the ESI network. De- country’s nuclear industry. RETAIL PHARMACY green Co. and Express Scripts cember month-to-date same- To realize this vision for an Inc. (ESI), which has since been store scripts remain strong due expanded industry, CNA en- FORECAST ’13 resolved. The pharmacy gener- to continued high ESI retention hanced its government and OUTLOOK ated 67.8% of total drug store and an increase in flu-related regulatory affairs programs Chain Drug Execs Look Ahead ’13 sales, while third-party pre- prescriptions.” and policy priorities as well as scriptions drove 96.5% of the In addition to the improved Continued on page 8 Page 15 Page 91 pharmacy’s top line. gross margin, bottom line re- During a conference call chief Continued on page 8

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News/Retailer of the Year

CDR RETAILERS OF THE YEAR Dream is well on the way to becoming reality NEW YORK — The first con- Pessina’s focus was clearly cen- and well-being enterprise. Un- variety of benefits, both appar- 2012 — Greg Wasson tact between Walgreen Co. and tered on the massive value that der the terms of the agreement, ent and subtle, for both compa- President, CEO Alliance Boots was made in 2009 could be generated by combin- Walgreens will acquire 45% of nies. Decisions have been made, Walgreen Co. when Greg Wasson, Walgreens’ ing the scale and dimension Alliance Boots, with a commit- teams formed, steps taken with — Stefano Pessina, president and chief executive of the two companies in pro- ment to possibly gain the other the objective of transforming Executive Chairman officer, stopped in London with curement. The idea of selling 55% over the next three years. both organizations by bring- Alliance Boots his senior management team, on the Boots brands in Walgreens As a result, Alliance Santé Par- ing the strengths of each to the the tail end of a round-the-world stores came much later. ticipations (of which Pessina is a other. 2011 — Walgreen Co. For his part, Wasson was director) will become the largest Among the most visible employees trip to examine and evaluate the best of global retailing, a trek equally ­enthusiastic about the Walgreens shareholder with a changes to date: Walgreens in- 2010 — Joe Magnacca that began in the Far East and overall concept. stake that it intends to hold for troduced the Boots No7 beau- President, ended in Europe. Shortly after this prospect had the long term. ty brand at the opening of its A few months later, Stefano emerged, Wasson, to hear him For this visionary, game- 8,000th drug store, at Sunset & — John Spina Pessina, executive chairman of tell it, awoke at 3 a.m. with an changing acquisition, what it Vine, in Hollywood last month. VP of Retail Integration and Alliance Boots, and Wasson met epiphany: “I realized we could means and what it promises, The serious work of integrat- New Format Development in person at the year-end meet- ing the two organizations will Walgreen Co. ings of the National Association begin with the new year. But the — Bob Zimmerman of Chain Drug Stores in New steps already taken have been VP of Corporate Development, York City. By then the two ex- considerable. Walgreen Co. ecutives had begun to develop The two companies even now 2009 — Greg Wasson a personal rapport, an ease with think about themselves and President, CEO each other, and an understand- each other differently. Comfort Walgreen Co. ing of the objectives, ambitions levels at all touch points at the and priorities of their respective two organizations have reached 2008 — Larry Merlo organizations. levels that analysts could not President CVS/pharmacy Wasson’s interest in Alliance have envisioned six months ago. Boots had begun to focus on the Pessina and Wasson speak 2007 — Tom Ryan international company’s house several times a week and meet Chairman, President, CEO brands as well as its extensive frequently, either in Europe or in CVS Caremark Corp. drug store presence and phar- the United States. Pessina is a — Chris Bodine maceutical wholesaling opera- member of Walgreens’ board of President, CVS Caremark tions, each of were developed in directors, while Wasson works Health Care Services many countries across Europe, frequently and easily with the — Larry Merlo Asia, the Middle East and Africa. Alliance Boots’ Stefano Pessina and Walgreens’ Greg Wasson. senior executives at Alliance President For Pessina, well-known and Boots. CVS/pharmacy lauded for his global vision, per- do more together — possibly and for the many ways it will Indeed, so confident is Pessina — Howard McLure spective and ambitions — a view much more.” almost certainly transform the about the acquisition and its un- President that had already transformed Next morning he mentioned global drug store landscape be- folding progress that, character- Caremark Pharmacy Services Alliance Boots from a small drug this promising vision to Wal- fore this decade is out, the edi- istically, he is already exploring wholesaler into a leading global greens chief financial officer tors of Chain Drug Review have other priorities, other possibili- 2006 — Tony Civello organization — the object was Wade Miquelon. To Wasson’s named Wasson and Pessina, ties, other alliances. Chairman, President, CEO to gain a significant presence surprise and delight, Miquelon along with their respective se- “This acquisition is unfolding in the United States, the one said that he had had the same nior management teams, who exactly as I expected it to,” he 2005 — Walgreen Co. remaining major market with- revelation. understood and supported this said on a recent trip to New York 2004 — CVS management team out a significant Alliance Boots So began an 18-month process acquisition, the publication’s City. “I have found just what I presence. This meeting led to that ended with the announce- 2012 Retailers of the Year. expected to find. I expect the 2003 — NACDS an agreement to continue talk- ment, last June, that Walgreens Today, six months after the next year will begin to deliver 2002 — Wayne Harris ing — and begin swapping ideas and Alliance Boots had reached deal was announced, Pessina the synergies both companies Chairman, CEO and ­information. an agreement to form a strategic and Wasson have become equal expect.” Eckerd Corp. By the time the two executives partnership to create the world’s partners in forging an alliance For his part, Wasson is im- — Eckerd associates next met, in 2010 in Chicago, first global pharmacy-led health that has already produced a Continued on page 26 Eckerd Corp. 2001 — Mary Sammons President,COO Rite Aid Corp. CDR names Wasson, Pessina Retailers of Year 2000 — Tom Ryan Continued from page 1 brace international operations deal melds two powerful players work together [with suppliers] Chairman, President, CEO worldwide leader in community is particularly noteworthy. Even with a strong heritage in health for the good of pharmacy pa- CVS pharmacy and “well-being re- in an era of rapid globalization, care and retailing in a manner by tients and front-end ­customers.” 1999 — Alan Levin tailing,” with more than 11,000 U.S. drug chains have, until now, which each of them will benefit Walgreens and Alliance Boots, Chairman, CEO, Happy Harry’s stores in 12 countries; the No. 1 been notably gun-shy about from synergies and joint exper- each of which has a strong track 1998 — David Bloom pharmaceutical wholesaler in moving into other ­countries. tise across a broad spectrum of record of innovation, are already Chairman, CEO terms of items handled, with A multinational perspective is business ­disciplines. hard at work to capitalize on the Shoppers Drug Mart Corp. more than 370 distribution cen- nothing new for Pessina, Alli- Expectations for the combined potential created by the melding 1997 — Martin Grass ters in 21 countries; and the big- ance Boots executive chairman. company are high. Revenue is of the iconic brands. The goal is Chairman, CEO, Rite Aid Corp. gest purchaser of prescription He has built a small family busi- projected at $130 billion in fiscal to deliver more benefits to con- medications and many other sumers by providing access to — Stanley Goldstein health care products. new brands and products; roll Chairman, CEO, CVS Corp. Wasson, who during his al- One goal is to find better ways to work out best practices from each — Tom Ryan most four years as Walgreens’ company to enhance the cus- President, CEO, CVS/pharmacy president and chief executive of- together for the good of customers. tomer experience; make health 1996 — Walgreen Co. employees ficer has presided over the com- care more affordable; deploy pany’s emergence as a destina- new concepts and capabilities 1995 — Bob Hannan tion for health and daily living ness in his native Italy into a 2016, with LIFO earnings before in such areas as store formats, President, CEO, needs, characterizes the part- world leader in the distribution interest and taxes estimated to loyalty programs, personalized 1994 — Dave Maher nership with Alliance Boots as and retail sectors, one with a come in at between $8.5 billion offers and e-commerce; and le- Senior Executive VP, COO an opportunity to accelerate im- presence that extends from Al- and $9 billion. One billion dollars verage Alliance Boots’ service American Drug Stores plementation of Walgreens’ core liance Boots’ offices in London in synergy savings, mostly from efficiencies in drug distribution. 1993 — D. Dwayne Hoven strategies, which, in addition to to more than 25 countries in Eu- the purchasing of prescription On the following pages Chain Chairman, CEO, D.S. creating a new Well Experience rope, the Middle East and Asia. medications, are anticipated. Drug Review profiles its Retail- in its stores, include advancing The partnership with Walgreens The numbers are striking. ers of the Year for 2012, and 1992 — Alex Grass Chairman, CEO, Rite Aid Corp. the role of community pharma- achieves Pessina’s long-stand- More impressive still is the op- charts the progress Walgreens cy and establishing an efficient ing objective of giving Alliance portunities the new entity has and Alliance Boots have begun Continued on page 26 global platform. Boots entree to the U.S. market. to, in the words of Wasson, “find toward realizing Wasson and Walgreens’ decision to em- More important, he says, the different and better ways to Pessina’s vision.

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News/Retailer of the Year Similar cultures offer solid foundation for partnership DEERFIELD, Ill. — Although premises, and then oversaw a pharmacy chain in Norway the companies were started the opening of additional stores and companies in Spain and the and rose to prominence on dif- in Nottingham in 1881, and the Netherlands. ferent continents, operating in first stores outside that city in Then, in 2006, Alliance different cultures and facing dif- 1884 (the year the company re- UniChem PLC merged with ferent regulatory environments, cruited its first pharmacist). Boots Group PLC to form Al- Walgreens and Alliance Boots By 1914 Boots had more than liance Boots PLC, a company share common values and pri- 550 stores across the United that now has more than 3,330 orities, based on long histories Kingdom. The outlets sold health and beauty retail stores dedicated to serving their cus- a range of products well be- (3,200 of them with a pharma- tomers’ health care needs. yond those typically stocked cy) and a drug wholesale opera- The merger of the two firms by chemists. At the same time tion that delivers to more than was conceived by Walgreens Boots began making its own 170,000 pharmacies, doctors, president and chief executive products, supported by the health centers and hospitals. It officer Greg Wasson and Alli- company’s research on new has a presence in 25 countries. ance Boots executive chairman pharmaceuticals. Walgreens, meanwhile, now Stefano Pessina after a number In 1901, meanwhile, Charles operates more than 8,000 drug of meetings between members R. Walgreen Sr. bought the Walgreens, like Alliance Boots, has its roots in health care. stores in all 50 U.S. states, as of their executive teams, who drug store where he had been well as in the District of Colum- then collaborated on a series of working as a pharmacist. would influence modern drug ny’s own labs as well. bia and Puerto Rico. projects. That allowed execu- The second Walgreens store store design. In 1977, while the Boots and Walgreens finalized its initial tives from the two companies to opened in 1909 and the chain In 1950 Walgreens began to Walgreens chains were con- investment in Alliance Boots work together and get to know grew steadily after that. Nine build self-service drug stores, tinuing to grow, Stefano Passi- in early August, buying a 45% one another, and they quickly stores were incorporated as instead of the clerk-service na founded the pharmaceutical equity stake for $6.7 billion in realized how much they had in Walgreen Co. in 1916, and in stores that had been the norm wholesale company Alleanza cash and stock. What’s next is common. 1926 the chain’s 100th store for the industry. By 1953 Wal- Farmaceutica in Italy. that Walgreens has a six-month “We quickly began to see a opened in Chicago. greens was the largest self-ser- What followed was a series period, starting two and a half good cultural fit,” Wasson re- Walgreens’ early history was vice retailer in the country. of mergers over the next two years after the closing of that called recently. “Many of us marked by innovation and ex- Boots, too, was innovating decades that created a pharma- initial investment, to decide were trained as pharmacists pansion. The company invented and expanding. The company ceutical wholesale powerhouse whether it wants to proceed and have the same orientation. the malted milkshake in 1922. opened its 1,000th store in in Europe. In 1991 Alliance San- with the purchase of the re- There was a meeting early on In 1933, helping to celebrate 1933. On the product develop- té was formed by the merger maining 55% of Alliance Boots when we had teams from each Chicago’s World’s Fair, the ment front, Boots launched its between Alleanza Salute Ita- for $9.5 billion in cash and stock. company working together on company opened four stores No7 cosmetics line in 1935 and lia, and ERPI and IFP, France. According to executives, the some things and I leaned over on the Century of Progress fair- its Soltan sun care line in 1939. Alliance Santé merged with two companies have comple- to Stefano and said, ‘Except for grounds. Those stores experi- In 1969 Boots introduced the UniChem of Portugal to form Al- mentary assets and capabili- the accents, you really can’t tell mented with new lighting tech- pain reliever ibuprofen, which liance UniChem in 1997. More ties, and significant potential who belongs on which team.” niques and fixture designs that was developed in the compa- acquisitions followed, including for global growth. Walgreens and Alliance Boots both have long and sto- ried histories that have put the CDR RETAILERS companies on parallel tracks, while leaving each with unique Dream on way to becoming reality OF THE YEAR strengths that are expected to Continued from page 25 Boots people have told us that blur the lines that separate the Continued from page 25 make the combined entity even pressed with the similarity of there’s much that they can learn two organizations. And the day stronger. the two cultures as well as with from our pharmacy systems and when Walgreens-Alliance-Boots 1991 — Stewart Turley The companies that would be- the companies’ complementary programs.” becomes a truly global organiza- Chairman, President come Alliance Boots had their strengths. “We’ve been particu- As well, both executives are tion is approaching more rapidly Jack Eckerd starts first. opened than either party could have en- larly impressed with range and confident that the exchange of 1990 — Jerry Heller the first Boots store in Notting- quality of the Boots private la- ideas and programs will come visioned as recently as this past President, CEO, May’s Drug ham, England, in 1849, selling bel brands as well as the scope quickly and easily. “We each June. herbal remedies. About two and impact of the company’s understand our strengths, and The credit for all that has hap- 1989 — Harvey Rosenthal years later the first part of what wholesale operations (Alliance we’re prepared to take advan- pened and all that almost cer- President, CVS Corp. would later become the phar- Healthcare),” he says. “We’ve tage of what each company is tainly will happen over the next 1988 — Richard Eils maceutical wholesale side of Al- also been pleased, and some- known for,” says Pessina. “I’ve 18 months goes to two singular- President, Thrifty Corp.1987 liance Boots had its start when what surprised, by the success long admired Walgreens. I be- ly impressive executives. They — Stewart Turley Maison Thomas was founded in the company has had in orga- lieve that the Walgreens drug jointly dared to dream of a strate- Chairman, President, Jack Eckerd Agen, France. nizing Europe’s independent stores are among the most gic partnership that, as recently It was John Boot’s son, Jes- drug stores under the Alphega exciting I’ve seen anywhere as a year ago, would have been 1986 — Jim Armor President, Thrift Drug se, who directed the first real Pharmacy banner. And we’re in the world. And I have to be- unthinkable even as a dream. expansion of the drug chain intrigued with the generic drug lieve the Walgreens people are More impressively, they 1985 — Sheldon (Bud) Fantle that would become known as program Alliance Boots has impressed with Alliance Boots. are rapidly transforming that Chairman, President, CEO Boots the Chemist. He moved ­developed. its international dimension, dream into a breathtaking real- Stores the original business to larger “For their part, the Alliance great teams, track record and ity that promises to change for- financial performance.” ever the way drug stores and 1984 — Charles R. Walgreen III Chairman, CEO, Walgreen Co. So confident are the two ex- drug wholesaling look, act and ecutives about the future of the behave, and the impact that — Fred Canning partnership that they no longer transformative behavior will President, Walgreen Co. couch the ultimate outcome in come to exert on the global re- terms of “if,” but rather in terms tail community. 1983 — Henry Panasci Chairman, CEO, Fay’s Inc. of “when.” The period of get- Chain Drug Review, in its 35- ting to know each other, initially year history, has recognized 1982 — Sid Dworkin expected to take a year, has ap- many deserving drug chain President, CEO, Revco D.S. parently, and successfully, come executives as Retailers of the to a close, and both companies Year. Both Greg Wasson and 1981 — Alex Grass President, CEO, Rite Aid Corp. are moving quickly to stream- Stefano Pessina have been line their operations, create and previously given that recogni- 1980 — Sheldon (Bud) Fantle expand cross-functional teams, tion by this publication. The President, CEO and begin to adopt and utilize belief here, however, is that Peoples Drug Stores each other’s strengths. this award has never been pre- 1979 — Robert Bolger The talk at Walgreens’ Deer- sented to two people who have President, NACDS field, Ill., offices and throughout more richly deserved it — for a the Alliance Boots empire is work in progress that is unprec- 1978 — Stewart Turley about the next step in the trans- edented in the annals of chain Chairman, President, Jack Eckerd Boots is the dominant force in the U.K. drug store market. action, one that will increasingly drug retailing.

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