Why neighborhood pharmacies are closing
Published On Oct 18, 2024, 6:00 AM
The article discusses the ongoing closures of pharmacy chains like CVS, Rite Aid, and Walgreens in the U.S., driven by factors such as shifts in consumer behavior, population changes, and increasing pressures from pharmacy benefit managers (PBMs) which dictate pricing strategies. CVS had previously announced plans to close 900 locations, Rite Aid is restructuring and closing more stores due to bankruptcy, and Walgreens plans to shut down 1,200 locations. Experts like George Hill highlight that the industry is over-saturated and must realign with market demands. They suggest that the retail pharmacy model is still relevant for quick medication access but requires strategic adjustments.
Stock Forecasts
CVS
Neutral
The closures of stores among CVS and Walgreens indicate a significant challenge in the retail pharmacy sector with competitive pressures leading to cost-cutting measures. However, the ongoing demand for immediate pharmacy services suggests potential for recovery in the long term as these companies optimize their operations.
WBA
Negative
Walgreens' decision to close numerous underperforming stores reflects a struggle to maintain profitability amidst increased operational costs and competitive pricing from PBMs. Without a substantial shift in strategy, further challenges may persist, leading to cautious investor sentiment.
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