He says the WBA board appointed him CEO (he had been in the role on an interim basis), rather than choose a new company head that it would have had to orient and educate during a period of rapid and extensive change.
The role presents him with “certain personal and logistical challenges,” Pessina said during the company’s third quarter conference call. But he added that he had the support of the board and especially executive chairman Jim Skinner.
“Stefano has done an extraordinary job leading the new enterprise, focusing our strategy while enhancing our financial performance,” said Skinner. “The integration of Walgreens and Alliance Boots is proceeding exceptionally well, with Stefano’s vision for the company driving the organization forward. Through his leadership, our organization is meeting the challenges of combining our two companies, and many of the opportunities we anticipated from our strategic combination are now becoming a reality.
“In order to continue this momentum and to recognize the progress that is already being made, the board concluded Stefano is the very best person to achieve our vision to be a truly global health care champion, the first choice for pharmacy, health care and well-being across the world.”
WBA has been working hard and fast to deliver on its plan, Pessina said, and the benefits are already beginning to be seen with reasonable growth in revenues and margins and continuous strong cash generation. The impact of the new strategy has been most visible in tight cost controls and disciplined financial management, he said. But he vowed to give operations “the investment they need to grow and prosper.”
Having accelerated cost cuts, WBA reaped certain benefits earlier than expected in the third quarter, he added. “Of course, we cannot extract these benefits more than once. However, the process of identifying benefits is ongoing, not final, so when we have completed this first wave of restructuring, we will reveal it and review all areas of our business to identify further potential cost saving.”
Pessina commended colleagues “for their willingness and openness to accept change even when it is most uncomfortable, in the interest of improving and growing our company. I would assure them that change is a sign of life and, if embraced in this manner, it becomes more of an ally than an enemy.”
It’s a reminder, he said, that while work must be prioritized, no element of the business can be ignored in the drive for efficiency and best practices.
“We are far from being complacent about the challenges we face and the hard work it will take to deliver everything we want,” he added. “But we are making good progress and traveling in the right direction.” The potential of WBA remains “immense,” he said.
“We are in markets that are changing, here in the U.S. where you are seeing this quite dramatically,” he remarked. “But as I have said many times, we are at the beginning of a new chapter for our company and are actively reviewing every opportunity that the changing environment offers us. I strongly believe that we have a significant role to play in shaping the future of our industry.”
Pessina’s skill in creating formidable business combinations was honed over four decades. After studying nuclear engineering, he joined his family’s Naples, Italy-based pharmaceutical company and set about growing it by acquiring small Italian drug wholesalers. In 1991 the Alliance Santé Group was created after a merger with French wholesalers. A 1998 merger with the British firm UniChem PLC resulted in Alliance UniChem Group, which Pessina led until 2004.
In 2006 Alliance UniChem merged with the well-known British pharmacy operator Boots Group to form Alliance Boots. The following year the company went private in a $22 billion leveraged buyout — one of the largest LBOs in history.
Pessina was appointed a nonexecutive director of Walgreens in August 2012. He had been executive chairman of Alliance Boots since July 2007. He previously served as Alliance Boots executive deputy chairman.