Walgreens is one of the most recognizable pharmacy brands in the United States, with a history dating back over 120 years. As of 2023, Walgreens operates nearly 9,000 retail pharmacies across the country, offering prescription drugs, health and wellness products, and a range of other services. However, the pharmacy industry is highly competitive, with numerous players vying for market share. In this article, we‘ll take a deep dive into Walgreens‘ top competitors and the overall competitive landscape of the U.S. pharmacy market.
Walgreens Overview
Walgreens Boots Alliance (WBA) is the holding company that owns Walgreens, Boots (a leading pharmacy chain in the UK and Europe), and a number of other pharmaceutical manufacturing and distribution businesses. In fiscal year 2022, WBA generated over $132 billion in sales, with Walgreens‘ U.S. retail pharmacy business accounting for around 80% of that total.
Walgreens‘ business model revolves around its retail pharmacies, which offer prescription drugs, over-the-counter medications, health and wellness products, beauty and personal care items, household essentials, and photo services. The company also operates walk-in health clinics at some locations, provides specialty pharmacy services for complex conditions, and offers a mail-order pharmacy option.
One of Walgreens‘ key strengths is its extensive brick-and-mortar footprint, with stores located within five miles of 75% of the U.S. population. This makes it convenient for customers to fill prescriptions and shop for other items. Walgreens also has a strong brand reputation and customer loyalty program, with over 100 million members in its Balance Rewards program.
However, Walgreens also faces some challenges, such as reimbursement pressure from PBMs, competition from online and mail-order pharmacies, and a need to invest in digital capabilities to keep up with changing consumer preferences. The company has been undergoing a cost-cutting and transformation program to address these issues and position itself for long-term growth.
Top Competitors
While Walgreens is a major player in the U.S. pharmacy market, it faces intense competition from a variety of rivals. Here are some of the top competitors:
1. CVS Health
CVS Health is Walgreens‘ largest and most direct competitor, with over 10,000 retail pharmacy locations across the country. In addition to its pharmacies, CVS also owns a leading PBM (Caremark), a health insurer (Aetna), and a long-term care pharmacy business (Omnicare). This integrated model allows CVS to offer a wide range of healthcare services and drive synergies across its businesses.
In fiscal year 2022, CVS Health generated over $314 billion in revenue, making it one of the largest healthcare companies in the world. The company has been investing heavily in its stores, adding HealthHUB locations that offer expanded health services and products. CVS also has a strong digital presence, with a popular mobile app and online prescription ordering and delivery options.
2. Walmart
Walmart is best known as the world‘s largest retailer, but it also operates one of the largest pharmacy chains in the U.S., with over 4,700 locations. Walmart‘s key advantage is its "everyday low price" strategy, which allows it to offer some of the lowest prices on generic prescription drugs. The company also offers a $4 generic prescription program and a mail-order pharmacy option.
In fiscal year 2023, Walmart‘s U.S. pharmacy business generated around $35 billion in revenue, representing a significant portion of the overall market. Walmart‘s pharmacies benefit from the high foot traffic in its stores and the convenience of one-stop shopping for customers. However, Walmart may not offer the same range of health services and expertise as dedicated pharmacy chains like Walgreens and CVS.
3. Rite Aid
Rite Aid is the third-largest retail pharmacy chain in the U.S., with around 2,500 locations as of 2023. Like Walgreens and CVS, Rite Aid offers prescription drugs, health products, and a range of other items in its stores. The company also operates a PBM called Elixir and has been expanding its health service offerings in recent years.
However, Rite Aid has struggled financially in recent years and has closed many underperforming stores. In fiscal year 2022, the company generated around $24 billion in revenue, down from previous years. Rite Aid has been working to turn around its business by investing in digital capabilities, expanding its pharmacy services, and focusing on high-performing markets.
4. Kroger
Kroger is one of the largest grocery chains in the U.S., with around 2,700 stores across 35 states. The company operates pharmacies in most of its locations, offering prescription drugs, vaccinations, and other health services. Kroger‘s pharmacies benefit from the convenience of one-stop shopping and the company‘s loyalty program, which offers discounts and personalized offers.
In fiscal year 2022, Kroger‘s pharmacy business generated around $14 billion in revenue, making it a significant player in the market. Kroger has been investing in its pharmacy operations, expanding its specialty pharmacy business and partnering with PBMs to drive prescription volume. The company also offers a mail-order pharmacy option and has been experimenting with tele-pharmacy services.
5. Albertsons
Albertsons is another major grocery chain that operates pharmacies in most of its stores. With around 1,700 pharmacies across 34 states, Albertsons is a significant regional player in the pharmacy market. The company offers similar products and services to Kroger, with a focus on one-stop shopping convenience and customer loyalty.
In fiscal year 2022, Albertsons‘ pharmacy business generated around $8 billion in revenue. The company has been investing in its pharmacy operations and exploring partnerships with healthcare providers to expand its offerings. For example, Albertsons recently partnered with Rite Aid to offer co-branded pharmacies in some of its stores.
Other Competitors
In addition to these top competitors, Walgreens faces a range of other rivals in the pharmacy market, including:
- Online pharmacies like Amazon Pharmacy and GoodRx, which offer low-cost prescription drugs and convenient home delivery options. Amazon, in particular, has the scale and resources to disrupt the traditional pharmacy model.
- Regional grocery chains with pharmacies, such as Publix, H-E-B, and Wegmans. These companies offer similar convenience and loyalty programs to Kroger and Albertsons and have strong brand recognition in their markets.
- Independent pharmacies, which account for around one-third of all pharmacies in the U.S. These pharmacies offer a more personalized and community-oriented experience than large chains and may have loyal customer bases.
- Specialty pharmacies that focus on complex and expensive medications for conditions like cancer, HIV, and autoimmune disorders. Examples include Accredo (owned by Express Scripts) and BriovaRx (owned by OptumRx).
- Long-term care pharmacies that serve nursing homes, assisted living facilities, and other institutional settings. Examples include PharMerica and Omnicare (owned by CVS).
- Health clinics and urgent care centers that offer basic health services and may have their own pharmacies or partnerships with local pharmacies. Examples include MinuteClinic (owned by CVS) and RediClinic (owned by Rite Aid).
Competitive Landscape
The U.S. pharmacy market is highly concentrated, with the top three companies (CVS, Walgreens, and Walmart) controlling around 50% of the market. However, the market is also highly competitive, with companies vying for customers on factors like price, convenience, service, and selection.
One of the key challenges facing traditional pharmacies like Walgreens is the growth of online and mail-order options. With the rise of e-commerce and increasing consumer demand for convenience, more people are turning to digital channels for their pharmacy needs. This trend has only accelerated during the COVID-19 pandemic, as people seek to avoid in-person interactions.
Another challenge is the growing role of PBMs in the pharmacy supply chain. PBMs act as intermediaries between pharmacies, drug manufacturers, and health insurers, negotiating prices and controlling which drugs are covered by insurance plans. The largest PBMs, such as CVS Caremark, Express Scripts, and OptumRx, have significant leverage over pharmacies and can pressure them to accept lower reimbursement rates.
At the same time, there are also opportunities for pharmacies to differentiate themselves and capture market share. For example, some pharmacies are investing in expanded health services, such as vaccinations, health screenings, and disease management programs. Others are focusing on niche markets, such as specialty pharmacy or long-term care. And many are investing in digital capabilities to offer more convenient and personalized experiences to customers.
Consumer Perspective
As a consumer, choosing between Walgreens and its competitors often comes down to factors like location, price, and personal preferences. Some people may prioritize the convenience of a nearby Walgreens store, while others may be willing to drive further to save money at a Walmart or Costco pharmacy. Some may prefer the personalized service of an independent pharmacy, while others may value the digital capabilities of an online pharmacy.
Ultimately, the best pharmacy for a given individual will depend on their specific needs and circumstances. However, some general tips for consumers looking to compare pharmacies include:
- Check prices: Many pharmacies offer price comparisons or discount programs for common generic drugs. Websites like GoodRx can also help consumers compare prices across different pharmacies.
- Consider convenience: Think about factors like location, hours of operation, and drive-thru or delivery options when choosing a pharmacy.
- Look for additional services: Some pharmacies offer vaccinations, health screenings, or medication management services that can be valuable for certain patients.
- Read reviews: Online reviews can provide insight into the customer service and overall experience at different pharmacies.
- Ask about insurance: Make sure the pharmacy accepts your insurance plan and understand what your out-of-pocket costs will be for your medications.
Conclusion
The U.S. pharmacy market is a complex and dynamic space, with a range of competitors vying for market share. While Walgreens is one of the largest and most well-known players, it faces significant competition from companies like CVS, Walmart, and online pharmacies. To stay competitive, Walgreens will need to continue to invest in its stores, services, and digital capabilities, while also navigating challenges like reimbursement pressure and changing consumer preferences.
As a consumer, it‘s important to shop around and compare options when choosing a pharmacy. Factors like price, convenience, and service can vary widely between different companies, and the best choice will depend on your individual needs and circumstances. By doing your research and being an informed consumer, you can find the pharmacy that offers the best value and experience for you.
