For a big company, these guys respond to market pressures, and they can't be ignored.
Wal-Mart plans to begin selling nearly 300 generic prescription drugs for a sharply reduced price, offering a big lure for bargain-seeking customers and presenting a challenge to competing pharmacy chains.
Now, you may or may not agree with their corporate philosophy, but consumers will probably eat this up.
This is a significant initiative.
The world’s biggest retailer said Thursday that it will test its sales program, in which 291 generic drugs will be sold at $4 for a month’s supply, in Florida. The drugs involved provide treatments for conditions ranging from allergies to high-blood pressure.
Competitors are not only taking note, but taking action.
Rival discount retailer Target said Thursday it would match Wal-Mart’s new drug program and lower prices on generic drugs in its stores in the Tampa Bay, Fla., area. Target said the price reductions would take effect immediately.
Wow. Corporate America is usually the tortoise not the hare.
“We’re able to do this by using one of our greatest strengths as a company — our business model and our ability to drive costs out of the system, and the model that passes those costs savings to our customers,” Bill Simon, executive vice president of the company’s professional services division, said in announcing the plan at a Tampa, Fla., store. “In this case were applying that business model to health care.”
And it's quite a business model.
Simon wouldn’t be specific about why Florida and specifically the Tampa Bay area was chosen for the rollout of the initiative, saying only that there was a need for it here.
Gee, could it have something to do with the gazillions of retirees in Florida? And this could have even greater ramifications, if you can imagine that.
David Maris, an analyst who covers generic companies at Banc of America Securities, agreed the plan could force down the price of generic drugs if rolled out nationally.
Shares of pharmacy chains Walgreens and CVS fell on the news.
That's not a shock. So, do you think that Wal-Mart faced down the drug companies and won?
In a conference call with reporters, Simon said that the generic drugs would not be sold at a loss to entice customers into the stores, a strategy that has been used in Wal-Mart’s toy business.
He said Wal-Mart is working with drugmakers to help them be more efficient, but added, “We are working with them as partners. We are not pressuring them to reduce prices.”
Economic pressures can be quite pursuasive, though.
“The Wal-Mart effect continues,” Hastings said. “The magnitude of Wal-Mart is still so gigantic that even incremental moves like this one will have a profound effect on [its] competition and on the economy in general,” he said. He said it is “very likely there will be price competition” as a result of Wal-Mart’s move.
Boy, this is just something to marvel at. I'm sure this won't change people's feeling about them significantly, but it's kind of fun being a fly on the wall.
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