Grocery Giant Albertsons to Acquire Rite Aid

March 7, 2018

From RADAR on Drug Benefits

Grocery retail giant Albertsons Companies said it has reached an agreement to acquire major drugstore chain and PBM Rite Aid Corp. in order to "create local networks in attractive geographies."

Under the deal, the integrated company will operate about 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington, D.C., serving 40-plus million customers per week. The deal is estimated at $24 billion, including debt.

The combined company's revenues would total about $83 billion, according to CNBC. If approved, Rite Aid Chairman and CEO John Standley will become CEO, and Albertsons Chairman and CEO Bob Miller will serve as the chairman.

The pharma industry has seen a spate of merger and acquisition activity since the second half of 2017. Walgreens Boots Alliance is said to be in the early stage of negotiations to acquire drug wholesale company AmerisourceBergen, and UnitedHealth Group's Optum seeks to expand in specialty pharmacy, looking to acquire Avella Specialty Pharmacy, the tenth largest specialty pharmacy firm.

"New alliances & nontraditional acquisitions are disrupting the structure of the industry," Oliver Wyman analysts said. Several patterns are emerging, such as "value chain convergence to manage total healthcare cost."

Oliver Wyman sees risks and changes for health plan providers. "Unless you are Anthem, Aetna, or UnitedHealthcare, you do not have your own PBM in-house. And one of your major PBM partner options, CVS, just teamed up with a likely competitor of yours. How do you manage this change?...Should you consider working with a smaller, independent PBM, or with a nontraditional drug manufacturer?"

Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.