U.K. deal-maker Stefano Pessina confident in profitable 2013-2014 for Alliance Boots
Alliance Boots posted a double-digit adjusted profit gain of 12.7% to $1.2 billion for its year ended March 31. Almost half of that profit is staked by Walgreens with its 45% share of the European pharmaceutical distributing powerhouse.
A couple days later, Alliance Boots along with Walgreens and AmerisourceBergen announced the necessary regulatory clearances on that strategic partnership, cementing the three companies in place as the largest generic pharmaceutical acquisition company in the world. That deal will further enable the companies to realize greater profit margins.
That's one of the reasons behind the confidence expressed by Alliance Boots executive director Stefano Pessina. Worldwide, there will continue to be pressure on respective economies. Because both actual healthcare costs and the cost to manage that health care will likely continue to rise, that places Walgreens/Boots/ABC in the catbird seat as potentially the lowest-cost provider.
It's not just a larger pharmaceutical distribution engine that will help move Alliance Boots' actual profit higher. Like Walgreens in the U.S., Boots is looking to expand its patient services at the ground level through its U.K. pharmacy. Earlier this year, Alliance Boots extended its hearing care partnership with Sonova through a 49% minority investment in its U.K. subsidiary that operates Boots hearing care practices across the U.K.
And the company's healthy cash flow and access to funding will further help Alliance Boots target additional strategic acquisitions in the future, enabling the company to quickly realize its intent to extend into prospect-rich markets like China and Latin America.
It certainly appears Alliance Boots, and by proxy Walgreens, are only now setting the stage for the main feature. Expect both company's growth in adjusted profit to continue.