To cover a huge 1.1 million HIV market in the U.S., Walgreen Co. (WAG - Analyst Report) has formed an alliance with the Centers for Disease Control and Prevention (CDC). Per the agreement, the company will develop a HIV patient-centered care model. According to Walgreens, this will be done through a national project to advance clinical integration and medication therapy management and will be helpful in improving HIV prevention and treatment outcomes.
According to the agreement, 700 HIV-specialized pharmacies and specially trained Walgreens pharmacists with their lead medication care plans will provide data evaluation and outcomes reporting to thousands of HIV positive project participants. Walgreens pharmacists will meet these project participants directly and create care plans that focus on medication adherence and address other needs that include health education for added chronic conditions.
The recent Walgreens study gives a clear picture of the HIV market. Data of more than 15,000 HIV patients undergoing care through HIV-specialized WAG pharmacies reveal that they adhere more strictly to their medication than those receiving care through a non-specialized Walgreens pharmacy. According to the company, these adherent HIV patients will get a better health outcome leading to reduction in transmittable virus. This report should highlight the importance of medication adherence.
In order to stimulate customer demand amid a challenging macroeconomic scenario, Walgreens has been taking a number of strategic steps. Apart from focusing on its chronic care assessment, the company has also decided to focus on supply chain performance. WAG’s three-pronged deal with AmerisourceBergen Corporation (ABC - Analyst Report) underlines a strategic collaboration, equity alignment and distribution agreement. While Walgreens is riding the generic wave, the deal augments its buying capacity by a massive $3.5 billion.
Besides, Walgreens is poised to generate higher profits from escalating sales of higher-margin generic drugs.The higher first-year synergy from the Alliance Boots deal is another upside. Walgreens also hikes dividends regularly. Further, the customer loyalty program is gaining traction as reflected in increasing registrations. This should improve customer traffic for Walgreens.
Currently, the stock carries a Zacks Rank #3 (Hold). While we choose to remain on the sidelines regarding WAG, better ranked drug retailers include Herbalife Ltd. (HLF - Snapshot Report) and CVS Caremark Corporation (CVS - Analyst Report), both carrying a Zacks Rank #2 (Buy).