CVS vs. Walgreens
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Game Theory Presentation - CVS & Walgreens Brannan Millard, Clarence Lee Jr., Lindsey Sin, Srikanth Rao
description
An analysis of Walgreen's options after CVS drops tobacco from store shelves.
Transcript of CVS vs. Walgreens
Game Theory Presentation - CVS & Walgreens
Brannan Millard, Clarence Lee Jr., Lindsey Sin, Srikanth Rao
Top 5 Companies in the Drugstore Industry Segment*
RANK COMPANY MARKET CAP.
1 CVS CAREMARK CORPORATION COMMON (CVS)
$86.6 BILLION
2 WALGREEN CO. COMMON STOCK (WAG) $63.9 BILLION
3 RITE AID CORPORATION COMMON STOCK (RAD)
$6.3 BILLION
4 GNC HOLDINGS INC. CLASS A COMMON STOCK (GNC)
$4.5 BILLION
5 PHARMERICA CORPORATION COMMON STOCK (PMC)
$741.5 MILLION
CVS Company DetailsStrategic Goals: 1) Pharmacy Benefit Management Growth2) Driving Growth in Retail Pharmacy3) Continue MinuteClinic Momentum
CVS Company Details Revenue: $133 Billion projected for 2014 ($2 Billion from tobacco and tobacco related products)
Healthcare Product Offerings: Prescription Drugs, Retail-Based Healthcare Clinics,Contact Lenses
CVS Market Share
1) Total Revenue - $124 Billion for 20132) Store Locations - 6,2883) Pharmacy - approximately 20% market share ($73 Billion net revenue for CVS Pharmacy Seg.) -increased 24.7% from 2011
Srikanth Rao
Is this the 2013 revenue? Previous slide mentions a projected Revenue of $133 for 2014.
Strategic Goals:
● Create a Well Experience● Transform the Role of Community Pharmacy● Establish an Efficient Global Platform
Walgreens Company Details
● Total Revenue - $73.23 billion*● Store Locations - 8582 nationally● Pharmacy - 19.1% of Prescription Market
Share*● $46 billion of total net revenue is prescription
sales*
Walgreens Company Details
Prescriptions, Clinics, Contact Lenses
Walgreens Company Details: Health Care Services
A Quick History...1967: CVS opens first
store with a pharmacy
1970s – 2000s: CVS acquires or purchases hundreds of
other pharmacy
stores
2006: CVS acquires
Minneapolisbased
MinuteClinic
2007: CVS stops selling cigarettes in pharmacies
2014: CVS stops selling
cigarettes in all stores
1901: Walgreens opens first store
in Chicago
1922: Introduced a malted
milkshake, which led to it
establishing ice cream
manufacturing plants
1950s: Modernizes by
switching to barcode scanning
1986: Acquires the MediMart
chain from Stop & Shop
2011: Walgreens acquires
Drugstore.com
Growing Market Share
• Aging Population
• Affordable Care Act - new customers (30mill. users by 2015)
• Chronic Disease - ½ the U.S. population suffers from 1 or more chronic disease
StrategyClinical Focus - MinuteClinic
● Pri. Care - Rx Plans - Formulary ExpansionAmerican Care Act - Smoker Health Insurance Premium Increase2
Distribution Focus - Express Scripts● Global Expansion - Foreign Alliances
Sell Tobacco - Public Educational Programs1
Brand Image: “Making Healthcare Better”
Medicaid
Brand Image: “Corner of Happy and Healthy”
Medicare
What will Walgreens do?Tobacco Market Share Health Care Market Share
CVS announces removing tobacco
from shelves by October
2014
Walgreens announces a wait-and-see
approach
Compete
Keep Tobacco (announcement)
Phase out Tobacco
Drop Tobacco & Other Harmful Products
Do NOT Compete Keep tobacco
(no announcement)
Walgreens Decision TreeROUND 1 ROUND 2February 2014 ...shortly after October 2015
Next StepsSHORT TERM: • Choose not to compete - make no
announcement - keep tobacco• Preserve revenue sales from tobacco• Monitor CVS, health care environment under
American Care Act, tobacco sales• Increase reduced risk products
Next StepsLONG TERM: • Phase out & eventually drop tobacco• Increase reduced risk products• Focus on aging population• Focus on global expansion
