Will Wal-Mart's Drug Price Cuts Affect Other Pharmacies?

Wal-Mart Stores Inc.’s (WMT) latest push into the growing healthcare market, with lower prices on prescription and over-the-counter drugs, may be “evolutionary, not revolutionary,” says UBS analyst Neil Currie, but it’s still a good move that supports the retail behemoth’s growing reputation as pharmacy discounter.

On Monday, Wal-Mart announced enhancements to its $4 prescription drug program, offering a 90-day generic drug prescription for $10. It also expanded the program to include additional women’s health medicines and rolled back prices on roughly one-third of its OTC medicines to $4 or less. The price reductions “will continue to expand healthcare access to the lower-income demographic,” says Mr. Currie in a note to clients, adding it would be “serving the underserved market.” The world’s largest retailer says it has saved consumers C$1.16 billion since starting its $4 generic-drug program in 2006.

But Mr. Currie says that the existing program has had a muted impact on retail drug stores like Rite Aid Corp. (RAD), CVS Caremark Corp. (CVS), and Walgreen Co. (WAG), he says, “as they serve distinctly different customers.” He adds that there is potential for a greater impact to drug stores from Wal-Mart’s decision to offer greater rollbacks on more than 1,000 generic versions of OTC medications such as Zantac, Claritin, and Pepcid.

While he expects Wal-Mart’s actions will have a near-term impact on investor sentiment towards Rite Aid, CVS and Walgreen, Mr. Currie says the long-term prospects for pharmacy retailers are rosier, and he is retaining his buy recommendations on both companies.

Comments

[apppro:]

I still do not understand why no name pundits are allowed to make these 'blog' posts and have them come across as REAL NEWS! Yahoo, etc. need to take a harder & more discerning look at how they list ‘News’ vs. ‘personal blogs’.
I would much rather listen to Goldman Sachs & The AP. While I’m not a fan, I also would rather listen to Cramer.
Either way, I certainly do not want to listen to a blogger, and that’s exactly what WE are – bloggers. Nothing less! Nothing more!

2008 May 07 07:05 AM

[notsosmart:]

thats the point. it does not really matter who you listen to because its all bs except for the real insiders who make the bucks(long & short)&keep very still & mum.

2008 May 07 10:34 AM

[Frankie62:]

On the subject of discounted drugs - I noticed last week that Tom Thumb pharmacies have lowered the price of my beta blocker to $4.

2008 May 07 11:42 AM

[flyboy21:]

This is another anti-competitive move by Giant WalMart. While it may be nice to get your beta-blaocker for $4, Think how much it will be when there are no other drugstores in your town. In Florida Walmart is fighting a state law that prohibits selling gasoline below cost. You think it's charity on their part? They can afford to lose on gasoline while the other stations in town must either make a few cents on each gallon or close down. When they're the only game in town, you're screwed.

2008 May 08 12:43 PM

[Rita:]

Three cheers for Wal-Mart. And now they've started selling 3 months of those generics for $10. Wow! For my other meds that aren't generic I use the prescription discount card that I found at rxdrugcard.com. Low membership fee. Drug prices posted to check before you join.

2008 Jun 12 02:57 PM

[User 213986:]

Poor folks have poor ways. Buy from who's cheaper if you have to choose between medcine and food like me. For you folks who have money go to the other stores and keep them open for us. From what I see those with the money are so tight they go to Wally World anyway.

2008 Jun 22 01:36 PM

[Rita:]

Generic medications are a great way to keep your prescription drug costs down. I’ve seen ads on TV for Caduet. It has two ingredients. One is Amlodipine and the other is Atorvastatin. With my RxDrugCard I can get 30 tablets of Amlodipine for $9 and 30 tablets of Simvastatin for $9. I’ll bet they are charging more than $18 for this new drug! The unthinking public is going to pressure their doctors into giving them something just because it’s new, when something old or generic would do the job for cheaper.

2008 Sep 12 03:55 PM