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Walgreens Business Model
What Does Walgreens Offer?
Retail Pharmacy USA – Pharmacy Drugs: This includes the sale of prescription drugs and provision of pharmacy-related services in the US.
Retail Pharmacy USA – OTC & Other: The components of this segment include the sale of healthcare and retail products including non-prescription drugs, beauty, toiletries and general merchandise.
Retail Pharmacy International: This division represents Walgreens’ pharmacy-led health and beauty retail businesses in eight countries.
Pharmaceutical Wholesale: It mainly operates under the Alliance Healthcare brand and supplies prescription medicines, other healthcare products and related services to pharmacies in 11 countries including the United States.
Who Are The Clients?
Walgreens sells both prescription and non-prescription drugs through its retail stores. Further, it also provides pharmacy services like prescription fulfillment through mail order, telephone, and Internet. Its clientele mainly consists of -
Retail ConsumersPharmaciesDoctorsHospitalsHealth Care Centers
What Are The Alternatives?
Walgreens’ business model faces stiff challenges and competition from offerings by its global competitors such as:
CVS HealthWal-Mart pharmacy Rite-AidMedco Health SolutionsICORE HealthCare
Although total revenues have grown at an average annual rate of 6.8% over the last three years, we expect it to slow down to 2.8% for the next three.
This would enable Walgreens' total revenues to cross $144.8 billion by 2021.
Total Revenue
% Change in Total Revenue
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Retail Pharmacy USA - Pharmacy Drugs revenues would grow at a slower pace over the next three years, as compared to the last three.
Walgreens' number of retail prescriptions have seen steady growth over 2016-2018 and is expected to continue its momentum in the subsequent years. This would enable it to cross 92.8. 1 million in retail prescriptions by 2021.
Although revenue per prescription has swelled at an average annual rate of 6% over the last three years, we expect it to reduce by 3% y-o-y in 2019 followed by 1% growth over the next two years.
This would enable the segment revenues to grow at an average annual rate of 4.2% and cross $80.7 billion by 2021.
Retail Pharmacy USA- Pharmacy Drugs [=A*B]
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Number of Prescriptions Filled by Walgreens (US) [A]
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Revenue per Retail prescription [B]
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YOY change in Retail Pharmacy USA- Pharmacy Drugs
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Retail Pharmacy - International revenues have decreased from $12.8 billion in 2016 to $11.8 billion in 2018.
Average revenue per store has decreased at an average annual rate of 5.6% over the last three years, which was the main reason behind the downfall in segment revenues.
We expect it to improve from $2.4 million in 2018 to $2.5 million by 2021. This coupled with slight improvement in number of drugstores would enable the segment revenues to cross $12.3 billion by 2021.
Retail Pharmacy International [=A*B]
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Number of Walgreen International Retail Drugstores [A]
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Average Revenue Per Store [B]
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YOY change in Retail Pharmacy International
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Pharmaceutical Wholesale revenues are expected to cross $23.1 billion by 2021
Segment revenues dropped by 2.9% in 2017, before improving by 17% to $22.7 billion in 2018. We expect it to grow at an average annual rate of 0.7% over the next three years.
Pharmaceutical Wholesale
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YOY change in Pharmaceutical Wholesale
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Related Analysis
Walgreens Valuation: Expensive or Cheap?Walgreens Earnings: Performance and 2019 ForecastWalgreens Stock (NYSE:WBA)More Trefis Consumer Staples Data
