Walgreens to buy rival Rite Aid for $9.4 billion, creating drugstore giant - LA Times

The proposed deal follows a wave of mergers elsewhere in the healthcare industry, with insurers, hospital operators and pharmaceutical companies all combining to gain more leverage with suppliers and cut costs as the Affordable Care Act and other issues roil the outlook for revenues and profits.

In July, for instance, Anthem Inc. reached a $54-billion deal to buy rival Cigna Corp. and create the nation's largest health insurer.

But some observers questioned how much the public is being helped by having fewer players in each of the health industry's major industries.

Companies can make the argument that a larger company is necessary to negotiate better deals, but that might not translate to a boon for consumers, said Carmen Balber, executive director of Consumer Watchdog.

“It's fair to assume that drug prices will increase for consumers because of this merger,” Balber said. “There are less companies negotiating with the pharmacy managers, and there are less companies negotiating with the pharmaceutical companies.”

In downtown Los Angeles, where Walgreens and Rite Aid stores face off across the intersection of 7th and South Hope streets, Jeffrey Portnoy said his only worry about Walgreens buying Rite Aid was the effect on drug prices.He also said there would likely be a review of the stores' overlapping coverage areas and that the Department of Justice would require them to shed some stores in certain regions, including California.

Walgreens overall has about 13,100 stores in 11 countries, and it operates a leading pharmaceutical wholesale and distribution network with sales in 19 countries. The company employs about 370,000 people. Rite Aid has about 89,000 employees.



Walgreens to buy rival Rite Aid for $9.4 billion, creating drugstore giant - LA Times