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Annual Meeting: Walgreens bullish about its prospects

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CHICAGO — Walgreen Co. is poised to emerge from the economic downturn stronger than ever, its executives told investors at the company’s annual meeting last month.

The 7,150-store drug chain says that such initiatives as its remodeled stores and localized selection should push shoppers to buy more, and its continuing expansion into broader health care services will make it well positioned to be an integral player in the nation’s revamped health care system.

“We are skating to where the puck will be,” president and chief executive officer Greg Wasson said to the nearly 2,000 shareholders and investors at the meeting in the Grand Ballroom of Chicago’s Navy Pier.

“If we have 30 million to 35 million more people with prescription coverage, that is a good thing,” he said. “The health care industry is a good one to be in. I can’t think of anything that will grow as fast.”

Wasson said Walgreens’ more than 70,000 pharmacists, nurse practitioners and other providers could help uninsured Americans who have difficulty accessing affordable medical care.

The ongoing downturn in the economy has created what Wasson termed “a new consumer,” with changed spending habits. And this new customer mind-set, he stressed, is not likely to change anytime soon.

“The retailer of the future will be the one who wins with this new consumer,” Wasson said. “We feel we will be one of those companies.”

Since taking over as Walgreens’ top executive a year ago, Wasson guided an extensive reshaping of the company’s operations, taking it from one rooted strictly in community drug stores to one with a comprehensive health care offering that has it operating work-site pharmacies, in-store clinics and specialty pharmacies across the country. It has also developed a strong e-commerce presence.

At the same time, Wasson has moved to trim costs and make Walgreens stores more customer-friendly.

Under a plan unveiled in 2008, Walgreens is still targeting savings of $500 million this fiscal year and $1 billion per year starting in fiscal 2011.

The company plans to slow its store opening rate to between 2.5% and 3% next year, down from 9% in 2008.

As Walgreens moves forward, executives said a key to the company’s future growth will be its ability to provide more outpatient services.

While Walgreens expanded its ability to provide seasonal and H1N1 flu vaccines in the last year, it also is looking to provide more immunizations.

Executive vice president of pharmacy services Kermit Crawford said the company has been aggressively lobbying states across the country to allow its pharmacists to provide immunizations in its stores.

He noted that the lobbying initiative has helped Walgreens provide nearly 5.5 million seasonal flu shots this flu season versus 1.2 million a year ago.

“The immunization and vaccination industry is an approximately $30 billion to $40 billion industry,” Wasson said. “We believe we can play a big role going forward.”

But he noted that health care reform will not be without its challenges. Cuts to reimbursement payments, for instance, could pressure medical care providers to scale back their costs and services, particularly in the area of the federally funded Medicare and Medicaid programs.

“Anybody in health care today has to be focused on cost reduction,” Wasson said. “Health care reform will present challenges and opportunities.”

Meanwhile, Walgreens has promoted three executives.

Crawford has been elevated from senior vice president of pharmacy services to executive vice president of pharmacy services; Dana Green has been promoted from senior vice president to executive vice president and general counsel; and divisional vice president of innovation and new product development Colin Watts has been promoted to a corporate vice president.


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