Walgreens Boots Alliance’s potential takeover bid for AmerisourceBergen can be the latest example of consolidation within the health-care industry, where once-distinct lines are continuously blurring.
The Wall Street Journal reported Monday which Walgreens can be in talks to acquire the portion of major drug distributor AmerisourceBergen the item doesn’t already own. The pharmacy chain first bought a stake in AmerisourceBergen in 2013 in addition to has grown the item to 26 percent within the nearly all 5 years since.
Walgreens in addition to AmerisourceBergen declined to respond to CNBC’s requests for comment.
The deal would certainly follow Walgreens’ strategy of partnering which has a company to evaluate the item before outright buying the item, though they don’t always. Therefore the report wasn’t entirely shocking, although the item was surprising to some, given rival pharmacy chain CVS Health can be taking a different approach with its planned acquisition of health insurer Aetna.
Both deals, in theory, could lower costs in addition to drive traffic to retail stores, although they would certainly do so in different ways.
The plans come as Amazon’s entry into the health-care space stokes anxiety about the logistical mastermind disrupting the industry the same way the item has numerous others. Amazon can be partnering with J.P. Morgan in addition to Berkshire Hathaway to create a not-for-profit health-care company aimed at using technology to lower costs. which move, combined with chatter about different steps Amazon may take, have rocked health-related stocks.
“I wouldn’t say This particular can be in response to CVS-Aetna or Amazon,” said Leerink analyst David Larsen. “the item may have been accelerated given the CVS-Aetna deal, although I would certainly say the item’s sort of their normal operating playbook. the item’s interesting how Walgreens can be moving downstream to distribution where CVS can be moving upstream to a managed care plan. the item’s just different strategies.”
The idea behind CVS’ planned $69 billion acquisition of Aetna can be the two can lower health costs by creating an integrated health system which combines pharmacy in addition to health benefits with retail clinics. Walgreens buying AmerisourceBergen could lower costs in a different way.
Distributors buy drugs through manufacturers in addition to handle the logistics of getting them to providers in addition to pharmacies. They negotiate prices with pharmaceutical companies, creating them an important piece of the supply chain. Buying AmerisourceBergen would certainly put which piece of the chain under Walgreens’ control.
The deal would certainly add financial value for Walgreens over time, analysts said. Walgreens can be valued at $67.82 billion, in addition to AmerisourceBergen incorporates a market capitalization of $19.65 billion, according to Thomson Reuters data.
However, some questioned the rationale for a possible deal. Jefferies analyst Brian Tanquilut called the item “a little bit of a headscratcher” in a research note.
“(Walgreens Boots Alliance) has been openly discussing their intention of continuing to pursue vertical-integration deal opportunities, although acquiring the rest of (AmerisourceBergen), while financially rational, begs the question on what incremental strategic value the deal would certainly bring, especially in light of recent moves by CVS in addition to (Aetna) in addition to even (Express Scripts) buying eviCore,” Tanquilut wrote.
the item’s critical to remember these deals, though newsworthy, will not be CVS’ nor Walgreens’ last, said Cowen analyst Charles Rhyee. Despite the hype, he doesn’t think Amazon has all the answers, noting different tech companies have tried in addition to failed to change health care.
“the item’s almost like thinking on what Amazon will do you’re assuming people in (the health-care industry) have no idea what they’re doing in addition to are still sitting on their hands,” Rhyee said. “I don’t think which’s necessarily the case. If the item was such a simple problem, the item would certainly have been solved a long time ago. There’s room for a lot of potential ideas to solve the item.”