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Walgreen Gears up to Fight Pertusis - Analyst Blog

With the recent outbreak of pertussis in Illinois, more than 580 pharmacies of Walgreen ( WAG ) across the state are providing immunizations to protect against pertussis (tetanus/diphtheria/pertussis-Tdap vaccine). All Take Care Clinics of 45 Select Walgreens in Illinois are also offering daily immunizations. Select Walgreens also offer a wide range of Centers for Disease Control and Prevention (CDC) recommended immunizations, including those for flu, shingles, pneumonia, meningitis and others.

The McHenry County of Illinois recently reported more than 200 whooping cough cases, which includes more than 30 area schools. According to Illinois Department of Public Health (IDPH), more than 1,100 people in Illinois have contracted pertussis in 2011. Illinois, which reported the highest number of whooping cough cases in recent years, is however, expected to better tackle pertussis with this immunization campaign provided by the company.

Headquartered in Illinois, Walgreen is the largest national retail pharmacy chain in terms of revenue and profitability. The company's strategy of store expansion coupled with operating acumen and fiscal conservatism has made the company a leader in the retail drug store industry.

Presently, Walgreen is well placed to maintain its leading position in providing flu shots and other immunizations. Apart from the federal government, Walgreen provides maximum flu shot immunizations than any other single entity in the US. As the largest provider of flu shots, the company delivered 6.4 million flu shots last year.

During the flu season last year, although industry-wide demand for shots was lower than expected, Walgreen continued to drive market share. The company is undertaking several initiatives to become a prominent player in the $40 billion immunization market. Presently, the company offers immunizations across its 7,700 stores including all Duane Reade pharmacies in New York and more than 350 Take Care Clinics. CDC now recommends flu shots for everyone aged six months or more.

Moreover, vaccination is now recommended every season for full protection against influenza. To meet its objective of expanding into the immunization market, Walgreen works with more than 27,000 certified immunizing pharmacists. Through the flu shot program, Walgreen expects to serve the health care professional shortage areas (HPSA). According to the Health and Human Services ( HHS ), more than 20% of the US population lives in the HPSA. Based on its wide network of pharmacies and clinics, the company provided more than one-third of its flu shots in HPSAs during the 2009-2010 flu season.

Walgreen is also aggressively tackling HIV/AIDS in the US. Currently, the company is working in sync with Greater Than AIDS to identify future testings and reach out to those in need. The company is also collaborating with AIDS United and national AIDS service organizations to help enhance the organization's mission to terminate HIV/AIDS in the US and Puerto Rico.

However, we are concerned based on the impact of the current high unemployment levels and lower discretionary spending. Moreover, the company faces intense competition from major players like CVS Caremark ( CVS ) and Rite Aid Corporation ( RAD ).

Walgreen currently retains a Zacks #4 Rank (short-term Sell rating). Over the long term, we have a 'Neutral' recommendation on the stock.

CVS CAREMARK CP ( CVS ): Free Stock Analysis Report

RITE AID CORP ( RAD ): Free Stock Analysis Report

WALGREEN CO ( WAG ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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