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!

[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.

[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.

[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.