Drug Retailers Targeting Flu Season

Drug retailers such as Walgreen (WAG - Analyst Report), Rite Aid Corp (RAD - Analyst Report) and CVS Caremark Corporation (CVS - Analyst Report) are gearing up to tackle this year’s flu season. Along with recently announced fiscal results, Walgreen announced that based on a successful flu shot program, customers are coming to community pharmacist for broader healthcare services. However, at present, the incidence of flu is almost 15% below the previous year.

Walgreen recently came up with findings from the first of a two-part Walgreens Flu Impact Report series. The study reveals the impact of flu and related illness on people’s life.

According to the report, the last flu season led to a loss of 100 million work days along with $7 billion in lost wages and 32 million missed school days. According to the Centers for Disease Control and Prevention (CDC), approximately 13% of the US population suffers from flu every year, which increases to 20% during the active flu season.

Walgreen's president of pharmacy, health and wellness, Kermit Crawford, stated that immunization rates increased during the last flu season with more than 40% of the total population in the US receiving flu shots. He also believes that the recent report should act as a catalyst to promote the importance of immunization.

Walgreen also announced the availability of immunization across its 7,700 stores. This also includes all Duane Reade pharmacies in New York and more than 350 Take Care Clinics. The company also informed that flu shots (priced at $31.99 without insurance) will be available daily at its pharmacies for which no appointment would be necessary.

The CDC now recommends flu shots for everyone over six months of age. Moreover, vaccination is now recommended in every season for full protection against influenza. To meet its objective of tapping into the immunization market, Walgreen has more than 27,000 certified immunizing pharmacists lined up.

During the flu season last year, although industry-wide demand for shots was lower than expected, Walgreen administered 6.4 million flu shots and continued to grow its market share. The company is undertaking several steps to become a prominent player in the $40 billion total immunization market. Besides the federal government, Walgreen provides maximum flu shot immunizations than any other single entity in the US.

Walgreen’s competitor, CVS Caremark is also set to tackle this year’s flu season with the recently launched “You vs. Flu” campaign, under which seasonal flu vaccinations will be sold through all CVS/pharmacy and MinuteClinic to help consumers fight flu. CVS will charge $29.99 per flu shot and it will also provide a $5 gift card in case any part of the cost remains uncovered by health insurance.

Drugstore chain operator Rite Aid has trained 11,000 certified immunizing pharmacists to provide vaccinations at every pharmacy. The company has given over 364,000 flu immunizations, much higher than the year-ago period. The company is aiming at doubling the number of flu shots this year and has set a target of 1.5 million shots.

We are currently maintaining a long-term Neutral recommendation on Walgreen, in line with CVS Caremark, both carrying Zacks #3 Ranks in the short term.

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