Walgreens, Alliance Boots, AmerisourceBergen deal to benefit Good Neighbor Pharmacy

VALLEY FORGE, Pa. — AmerisourceBergen's base of 3,452 independently owned Good Neighbor Pharmacies will be another benefactor out of the wholesaler's blockbuster agreement with Walgreens and Alliance Boots, AmerisourceBergen CEO, president, director and chairman Steven Collis told analysts during a conference call Thursday.

"We've … already begun to look at opportunities for enhancing our Good Neighbor Pharmacy programs with the help of Walgreens and Alliance Boots," he said, "whether it is through an improved Pro Generics formulary, proprietary front-of-store products or new share clinical systems that will facilitate third-party contracting, we believe there will be compelling new offerings for our independent customers in the years ahead.

"Our new partners share our goal of strengthening Good Neighbor Pharmacy and enhancing and preserving the role of independent community pharmacy," Collis added. 

But the greatest benefit from the deal will be buying leverage. "We have before us an extraordinary opportunity to leverage global supply chain efficiencies and best practices with the largest pharmacy retailer in the United States and the leading international pharmacy-led health and beauty group," Collis said. "I am more convinced than ever that this partnership will unlock tremendous value across the supply chain."

Collis broke the deal into three basic components, beginning with a 10-year distribution agreement with Walgreens that goes into effect Sept. 1. The Walgreens contract will yield $25 billion in incremental revenues for AmerisourceBergen in the fiscal year 2014, Collis said. 

The second component is the access Amerisource gains to generics and other products through the Walgreens-Alliance Boots development joint venture. "Importantly, AmerisourceBergen will, over time, be able to source products through the [joint venture], not just for the Walgreens stores but for our entire customer base," he said. 

Third is the assimilation of best practices across all three companies, or as Collis described it, "the platform leverage." "We have agreed to work collaboratively to share best practices and leverage the expertise of all three partners across all of our various platforms," Collis explained.

"We share a vision for enhancing and preserving the role of community pharmacy throughout the world, and we bring unique capabilities to facilitate that worthwhile goal," Collis added. "I have just returned from the [National Association of Chain Drug Stores] Annual Event in Florida, where I personally met with many manufacturers and chain customers. At several of the meetings, the three companies and our teams had joint meetings. These interactions affirmed that the vision and strategy for our relationship creates truly unparalleled knowledge, capabilities and leadership."

The timing for many of those synergies is still two years out, Collis noted. "This is a fairly complex work that involves many other parties," he said. "The benefits from the Walgreens-Alliance Boots development relationship [will] really start accruing in fiscal year 2015."

AmerisourceBergen posted $20.5 billion for its second quarter ended March 31, a 4.1% increase. The wholesaler also reaffirmed its expectations for fiscal year 2013 adjusted diluted earnings per share from continuing operations in the range of $3.04 to $3.14.