CVS projects that it may gain as many as 23 million new prescriptions, increase profits by 11% after Walgreen's three-year contract to provide drugs for Express Scripts expires on Dec. 31
December 21, 2011
– CVS Caremark Corp. projects that it may gain as many as 16.9 million to 23 million new prescriptions and increased profits by 11% after Walgreen Co.’s three-year contract to provide drugs for Express Scripts Inc. expires on Dec. 31, Bloomberg reported on Dec. 20.
Approximately 90 million prescriptions will be up in the air after Walgreen and Express Scripts, an employee-benefits manager, failed to resolve a six-month disagreement regarding the amount of the reimbursements that Walgreen would receive from Express Scripts.
The high end of CVS’s projection, presented to analysts in a slide show presentation on Dec. 20, presumes Walgreen would lose 85% of the prescriptions that it currently sells through Express Scripts and that 30% of those customers would start going to CVS to fill their prescriptions.
CVS reported that approximately 85% of its stores are located within a five-mile radius of a Walgreen drugstore and that approximately 43% of its stores are located within a one-mile radius.
The unresolved dispute between Walgreen and Express Scripts “could present a very significant opportunity for us,” said CVS Chief Financial Officer Dave Denton, “We think many customers are more likely to move to another major chain.”
Michael Polzin, a spokesperson for Walgreen, refused to comment on CV’s projection.
Walgreen’s contract to fill prescriptions for Express Scripts has been valued at over $5 billion annually.
The primary source of this article is Bloomberg, New York, New York, on Dec. 20, 2011.